Shanda, Netease investors - have no fear

Includes: NTES, SNDA
by: Ezra Marbach

In 2004, Chinese authorities shut down more than 12,000 Internet cafes - where many online gamers access the Internet. But investors in Shanda Interactive (ticker: SNDA) and Netease (ticker: NTES) need not be concerned about a drop-off in gaming revenues. Here's why:

More gamers, more broadband use, IPTV:

A report recently indicated that white-collar workers and women
are increasingly playing
online games. Where are they playing? At home, using a broadband connection. With Shanda reportedly developing IPTV, and broadband use increasing exponentially, gaming is expected to grow. IPTV will provide another platform
for increased online game play.

If IPTV comes to fruition, Chinese parents and their children will also be happy. Chinese parents are more and more concerned about their children's
online activities, and are outlawing them from visiting Internet cafes. IPTV
not only gives those children access to online games but allows parents
monitor their online activities.

In the meantime, gamers can
continue enjoying online games using their home computers.

All in all, online gaming continues to grow. And so do the number of public offerings from online gaming companies. Case in point: last week's offering from Korean firm, Gravity (ticker: GRVY).