The9 Acquires 51% of Shanghai ZhongXinShun, Expanding Mobile Gaming Portfolio

The9 Expands Gaming Portfolio through Strategic Acquisition

In a significant move to bolster its presence in the mobile gaming sector, The9 Limited has announced the acquisition of a 51% equity stake in Shanghai ZhongXinShun Network Technology Co., Ltd. The agreement, made through The9's subsidiary, Shanghai The9 Information Technology Co., Ltd., positions the company to capitalize on two popular mobile games, "Glory All Stars" and "Ultraman: Hero Beyond Time." This acquisition not only enhances The9's gaming portfolio but also aligns with its strategy to establish a sustainable gaming ecosystem and create high-value franchises.

"Glory All Stars" has already proven to be a lucrative asset, generating over RMB 2 billion (approximately US$280 million) in cumulative gross revenue, with a stable gross margin of around 40%. The addition of "Ultraman: Hero Beyond Time," an action RPG based on the beloved Ultraman franchise, holds promise for further financial success. Yu Su, CEO of ZhongShun, anticipates that this new title could exceed the performance of "Glory All Stars," particularly given its strong reception during the closed beta test, which attracted over 2.5 million registered users. This initial response highlights the potential for the game to become a significant revenue generator for the Joint Venture.

The financial terms of the Joint Venture reflect a commitment to performance-based growth, with total consideration amounting to RMB 115 million (approximately US$16.2 million), split between cash and The9 restricted shares. Payments are structured to depend on the Joint Venture's profit performance over the next three years, ensuring that both parties are incentivized to achieve mutual success. The agreement outlines a plan to distribute after-tax profits quarterly, which aligns with the interests of both The9 and ZhongShun, further reinforcing their collaborative efforts to develop new proprietary games and establish a long-term franchise ecosystem.

In addition to the immediate financial implications, this Joint Venture presents The9 with an opportunity to leverage its publishing capabilities alongside ZhongShun's development expertise. By focusing on creating blockbuster titles, The9 aims to deliver substantial value to its shareholders. The strategic partnership signals a robust commitment to innovation and growth within the rapidly evolving gaming landscape, positioning The9 to capture a larger market share and respond effectively to consumer demand.

The collaboration not only enhances The9's game offerings but also reflects a broader trend in the gaming industry where companies seek strategic partnerships to maximize their reach and profitability. As mobile gaming continues to thrive, such acquisitions are likely to become increasingly common as firms aim to stay competitive in a crowded market.