TX2's PCU reached a new high of 302500 last Saturday. Based on my tracking in Chart 1, NetEase's (NTES) popular online game Tian Xia II (TX2) reached 302500 Peak Concurrent Users (PCU) on Saturday, January 2 at around 3PM Beijing time. This is the game's all-time high usage, with an overall server utilization rate of 93%. My tracking also shows TX2's total usage surged more than 50% Q/Q in 4Q09, driven by its September 20 open beta. I estimate TX2 was NetEase's fourth biggest game in 4Q09, generating about $18 million revenue in 4Q and accounting for approximately 11% of NetEase's online game revenues.
TX2's growth will slow down despite this record PCU. Based on my checks, TX2's new PCU record was created by several generous promotional activities during the Christmas/New Year's Day period. This reminds me of the recent record PCUs created by NetEase's flagship games FWWJ on August 2 and WWJ2 on October 1 (Chart 2) - special activities created strong one-day usage, but players quickly returned to their normal playing patterns after the promotions ended. TX2 will likely follow a similar usage pattern, in my opinion. Based on TX2's recent usage trend during non-promotional days, I continue to believe that TX2 has matured into a "cash cow" game for NetEase. Its cash flow generation will be strong in the first half of 2010, but its quarter-over-quarter growth will slow down significantly and will not repeat the explosive growth recorded in 4Q09.
Chart 1: Usage Trend of Tian Xia II (TX2)
Disclosure: No positions