GAME

Shanda Games Limited (GAME)

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Start Time: 21:00

End Time: 22:03

Shanda Games Ltd. (GAME)

Q1 2013 Earnings Conference Call

May 22, 2013, 21:00 PM ET

Executives

Xiangdong Zhang - CEO and Chief Producer

Richard Wei - CFO

Tunghai Chien - President

Ellen Chiu - IR

Analysts

Timothy Chan - Morgan Stanley

Thomas Chong - Bank of China

Mark Marostica - Piper Jaffray

Evan Zhou - JPMorgan

George Meng - Macquarie Securities

William Hill - Barclays

Andy Yeung - Oppenheimer & Co.

Muzhi Li - Citigroup

Presentation

Operator

Welcome to Shanda Games Limited First Quarter 2013 Financial Results Conference Call. The conference call will be recorded and available for replay in its entirety. A copy of Shanda Games 2013 first quarter results announcement can be found and downloaded from its Investor Relations website at http://ir.shandagames.com. At this time, all lines have been placed in a listen-only mode and the floor will be open for questions following today's presentation.

I would now like to turn the call over to Ellen Chiu, Shanda Games' Investor Relations Director. Please proceed, ma'am.

Ellen Chiu

Thank you. Good morning and good evening, everyone. On behalf of Shanda Games, I would like to welcome everyone to our 2013 first quarter financial results conference call. With me today are Mr. Xiangdong Zhang, our CEO; Mr. Richard Wei, our CFO.

Before we begin, I would like to remind you that management comments during the call will include forward-looking statements that are based on our current expectations, and are intended to qualify for the Safe Harbor liability for such statements established in the US Private Securities Litigation Reform Act of 1995. All statements are the statements of historical fact during the conference call are forward-looking statements, which are subject to significant risks and uncertainties.

Actual results may differ materially from those contained in the forward-looking statements. So you are please recommended to read the Safe Harbor statement and Shanda Games’ third quarter 2012 earnings release. In addition, please note for discussion purposes all numbers are translated in to US numbers based on exchange rate of 6.341 RMB per US dollar.

Now I would like to turn the call over to our CEO Mr. Xiangdong Zhang.

Xiangdong Zhang

Thank you, Ellen. Thank you all for joining us today. I would like to start by introducing Mr. Tunghai Chien who now serves as our President. Mr. Chien has extensive experience in mobile games development and overseas expansion, which I believe will help us on the future potential of our current strategy, as mobile game has become a critical part of our business, accounting for 10% of total revenue this quarter and in effect to better demonstrate the results of our current strategies.

Let's begin providing a breakdown of our revenues into MMO games revenues, mobile games revenues and other revenues starting this quarter. This development reflect the changes taking place in new business segments as a result of our strategy to expand overseas and further develop mobile games. We continue to introduce our proprietary intellectual property including mobile and MMO games to overseas markets while at the same time developing more franchise to enhance our game portfolio.

As the user traffic increases to our rapidly growing mobile user base, we will leverage this user base for cross promotion of our own games. Nine months ago, I was appointed by the Board of Directors to serve as the company in the CEO and to oversee redefining of the company. Management has since been diligently working on assuring new business opportunities and expanding our strategies.

The mobile games segment has become one of our main strategic focuses. We have launched several mobile games in China and overseas, including [Woool of Paladin], mobile version of war and Million Arthur. The [significant] launch of Million Arthur in South Korea and Taiwan represents a milestone in our mobile games development. Million Arthur currently remains highly popular and was ranked number five on Google Play's global top gamers by the amount of revenue in March 2013.

According to (inaudible), an industry leader in (inaudible) Million Arthur contributed 9% of total revenues in the first quarter, which does not include revenue contribution for China yet. It plans to launch the game in China in June with Singapore and Malaysia launch expected to follow this summer. The success of Million Arthur demonstrates the enormous potential that game has when launched in the direct market. We intend to learn from and based upon our achievements by generating more titles that match local user preference in the future.

In addition to Million Arthur, we have a number of mobile games in the pipeline including the mobile version of Dragon Nest, which is scheduled to be launched in South Korea and Taiwan in the second half of this year. Through our strategic partnership with Square Enix, we will continue to strengthen our mobile game pipeline by jointly developing and the lessons in future games. So the mobile game market has presented ample opportunities which we – and to see the future in both our core brands and franchise.

While our mobile franchise formed an integral part of our overseas expansion, we will continue to develop our mobile game segment through our subsidiary. In Korea in the meantime, we will continue to [fluctuate] to the mobile game market in China. With just the pace we have seen in our mobile game segment, we have managed to amount a broad base of mobile users.

In the first quarter of 2013, we have average daily active users of approximately 300,000. We're going to return and grow this user base where we'll take advantage of the mobile [traffic] to cross promote our MMO games. This will facilitate the introduction of our new content, including both mobile games and MMO games in the future. Aside from China, we continued to push our games to overseas markets, leveraging the solid fluctuation we have in overseas with the release of Dragon Nest, we plan to deliver more MMO to gamers to our global service platform or GSP.

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