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From the Q&A portion of The9's Q2 2006 earnings conference call:

Operator

Your next question comes from the line of Jason Brueschke of Citigroup. Please proceed.

Jason Brueschke - Analyst, Citigroup

I am going to talk a little bit generally is my question. What I am interested in talking about is your ability to -- it seems like you need to go out and be very effective in winning new game licenses that are being developed in Korea and other parts of the world, much more so than anybody else in China. Could you maybe describe what it is that you guys are doing that allows you to go into competition head-to-head for Hellgate: London, Guild Wars, GE?

You can consistently win the best games, and thus you have a better new game pipeline. Is it something about what you guys are doing internally? Is it an ability for you guys to offer better economics? Is it a function of success begets success? It seems to me at this point, you guys are the destination of choice for any new game that is being developed really just about anywhere in the world. Thank you.

Jun Zhu - Chairman and Chief Executive Officer, The9

There are some aspects I will mention. First, internally we have a very sophisticated system to measure and evaluate what are the best games. The efficient evaluation enabled us to -- we have a better understanding compared to our peers.

The reason why we secure those games is not what has been rumored outside -- we offer the highest price. Even in the very competitive licensing agreements negotiation process, the final price we offer in the agreement is not the highest price.

Although we have a minimum guarantee and licensee arrangements, they are defined in certain clauses by the contract, and we think those arrangements are very reasonable.

I will also say the attitude I think is very important. Our attitude is always that we will offer a win-win deal for customers. Also, our chief strategy is to be the vendor of choice for all the foreign game developers in China.

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