Shanda CEO Explains Direct Revenue Growth

| About: Shanda Interactive (SNDA)

Shanda (NASDAQ:SNDA) CEO Tianqiao Chen explains why online transaction revenue has grown last quarter from 17% to 25% in a conference call with analysts:

The reason why direct sales continue to increase as a percent of total revenue has three reasons. First of all, in the initial preparation stage we have designed this system to be easily accessible and we have designed a lot of other incentives to encourage the users to use this particular payment method.

Second is that when the users get used to or accustomed to this payment method, they actually begin to trust Shanda’s brand and platform even more. Word of mouth, in fact, of the good initial results is another reason why this continued to grow.

Just to add that I always believed that Shanda's core competence is really in its payment system, how convenient and easy it is; its customer service and various other services that we provide to our users not just by licensing a game and putting it on server.

Given the low penetration of banking card systems in China, the reason why our direct sales, where the end users pay by credit card/debit card continue to improve, has also something to do with the new model launch. Because under the new model, unlike the previous monthly payment model it's more about impulse buying, so the users are demanding a quicker and more convenient payment method and those users can afford to do so. So that's another reason.