Executives
Ellen Chiu – IR Director
Alan Tan – Chairman and CEO
Richard Wei – CFO
Analysts
Timothy Chan – Morgan Stanley
Fey Sung – Goldman Sachs
Jet Lee – Citi
Thomas Cheng – RBS
Chao Wang – Merrill Lynch
Jialong Shi – CLSA
Andy Yeung – Oppenheimer
Mark Marostica – Piper Jaffray
Shanda Games Ltd. (GAME) Q3 2011 Earnings Call November 17, 2011 8:00 PM ET
Operator
Ladies and gentlemen, thank you for standing by and welcome to the Shanda Games Ltd. 2011 Third Quarter Results Conference Call. The conference call will be recorded and available for replay in its entirety. A copy of the Shanda Games 2011 third quarter results announcement can be found and downloaded from its Investor Relations website, ir.shandagames.com. At this time, all lines have been placed in a listen-only mode, and the floor will be open for questions following today’s presentation.
I would now like to turn the call over to Ellen Chiu, Shanda Games’ Investor Relations Director. Please proceed, ma’am. Thank you.
Ellen Chiu
Thank you. Good morning and good evening, everyone. On behalf of Shanda Games, I would like to welcome everyone to our 2011 Third Quarter Results Conference Call. With me today are Mr. Alan Tan, our Chairman and CEO and Mr. Richard Wei, our CFO.
Before we begin, I would also like to remind you that management comments during the call will include forward-looking statements that are based on our current expectations and are intended to qualify for the Safe Harbor from liability for such statements established in the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts during the conference call are forward-looking statements, which are subject to significant risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. So please do take a minute to read the Safe Harbor statement in Shanda Games’ third quarter 2011 earnings release.
In addition, please note for discussion purposes, all numbers were translated into U.S. dollar based on the exchange rate of RMB6.3549 per U.S. dollar.
Now, I would like to turn the call over to our Chairman and CEO, Mr. Alan Tan.
Alan Tan
Thank you, Ellen and thank you all for joining us today. It is evident from our earnings release Shanda Games had now delivered four consecutive quarters of sequential revenue growth. In the third quarter of 2011 our total net revenues reached historic high, increasing 2.5% quarter-on-quarter and 23.4% year-over-year.
Our solid results, it was profitable that we are having in the right direction and our evolution we are clearly being supported by our strong franchises, strong pipeline, new platform and rising all of the presented. By bringing the mostly innovative and engaging online gaming content along with the mobility to move across our platform. We are developing some of the largest most active online gaming communities in the world. This helps our transition continue to build on the effective implementation of our AAA strategy. As a reminder AAA stands for the three critical elements, All-Star, All-Platform, and All-Region.
Let me start with update on the All-Star components of our strategy. Today more consumers than ever before has been we have and emerging themselves within Virtual Wars and our tremendous game portfolio is certainly driving some of the interest. Our All-Star gaming strategy gives us focus on carrying the best titles through licensing agreements, in-house development and investments in our platform. Of course, whether it is Legend of Immortals or third party games for developing a better rate content. We are very much focused on rolling out promotional activities free games while organizing both out chemical and (inaudible).
In October, we were awarded the Innovative Online Gaming Award and achievement for Outstanding Digital Content Award at the China International Digital Content Exposition. This has reaffirmed our position as an industry leader in both content creation and innovation. I would like to take a few moments to talk in depth about the monetization of the branches in the third quarter. We have exciting games in our pipeline that we have lined up for last quarter of 2011 and first half of 2012. Our all stock strategy is just like our approach to the game business so we tap into new genres that will cater to gamers in China.
In the year-to-date, we are two and we will, were the driving force behind our revenue. The past three quarters have also yielded us strong growth from new games such as AION, Dragon Nest and Legend of Immortals.
Third quarter, Mir II, Woool and the Dragon Nest have contributed 44%, 14% and 13% of total revenue in the third quarter respectively. The quarter-over-quarter increase of Mir II’s contribution is primarily due to the expansion packs released to mark the 11th anniversary of the game.
The quarter-over-quarter decline of Dragon Nest’s contribution was mainly due to a delay in the release of expansion pack from July to late September 2011. During first quarter revenue contribution, however, expanded to grow. Not Monk we began open but it has be very positive yield of feedback aligned with our strategy of building strong long term gains, where our original title by adding new content and improving usability. As a result, industry has managed to recognize original – to return to the game and at the same time return on new generation of users.
Judging by the initial user number we have to day any form of cannibalizing on MIR II and our other 2-D MMO games. Really on the excitement generated by our games at our All-Star event earlier this year we showcased more new titles at the China International DITO conference editable stations in October.
We are real, what we do for the public for the first time, an in-house developed 1G market platform, which offered tool kits that allow user to build their own virtual wars. Thailand, the first universe credit and portal and a total to all other universe on the platform was also announced as an event. The impressive game features in the functionality here of War Zero recognized where there is the safest China game development award (inaudible).
Our All-Star strategy continues to stock entitles from multiple channels and I’ll focus our attention on content that we will issue as obtainable growth. This is how we approach each of our games to guarantee they will be best they can be. We are also expanding this deep and diverse the game portfolio to other platforms and one that’s better.
I will now give you an update on our All-Platform strategy. We believe the gaming world is currently using our product relation of devices and the media usage through which people can access and they interact with in-payment contents. Gamers have been gravitation towards devices and our products, which provide more mobility and the flexibility.
This product evaluation is not the driving force behind the continued growth of our biggest and the best game pattern, but it is also creating significant opportunities for us as the way to move to develop a new and the unified ways to gamers to protect our content and interact socially.
Moving on GAME has precise on the content and play online games through mobile devices regardless of where they are, we intent to capitalize on this massive revolution the online and social interaction and gaming.
We have specialty games first enhancing of our for mobile games, which include Magic War, and a mobile version of Nut Hell and War, our mobile game platform came live in the fourth quarter. Internet browsers have also become another important period through which our online games can be accessed.
Gamers are beginning to split at times among different products as their attention quickly lose focus on something new and exciting. We have thus begin to focus on that resulted on launching web games with this in mind we have also begin to develop micro-client and new version of our existing markets entomologies including some our significant such as MIR II and Crazy Cards and a newly launched MIR III.
This will only enable and market use to be downloaded and played as if they are web games, we also provide games with nano graphics on game type that define MMR market. We believe this approach will lower the barriers to entry to MMR creating a simple yet an effective way to reach out and new generation of gamers to our core contract.
On a special note, well last month worked for our first program to launch 3 Wax, a charitable web game who’s parted to go towards and go for the trades for rights for distributions through their global network.
Although, it is still early, most of these mobile games market, we are continuing to grow quickly. We expect the web games to also continue their steady growth as we introduce new technologies which I would also larger cover larger audiences.
We will continue to discover new opportunities in these two new business segments on day-to-day basis and are always on the low cost for potential investment of duties. Our scale and expertise and experience provide us a competitive advantage that has allowed us to take out very best industry to integrate within our platform strategy.
Finally, I would like to provide an update on our origin strategy. In addition to seeing growth in China, we continue to expand the results to bring our unique portfolio of games to important countries and the regions overseas.
During the third quarter Dragon Nest was the first game to be launched by our Southeast Asia global service platform or GSP in Singapore and in Malaysia where we began directly operating the game in the two greater frontiers. We are planning to install open enhancing of our second game through our Southeast Asia GSP during the first quarter of next year. We estimate that our overseas revenue from Demon Earth, you already operated the continual to grow necessarily and have all the phase of revenue growth as they expand in scope.
Aside from our generally overrated games, we continue to export our game titles to other countries and regions globally and are thinking significantly increase in revenue and a new account credit rating abroad, in particular measure remodel will be launched by our legacy in Taiwan in the first quarter of the next year.
As you can see in that region our investments in our intellectual property and abroad has started to strongly offend as our four GSPs continue to serve as a strong foundation for our business internationally.
To create awareness in experiment, each of our games was launched with strong marketing campaign to transfer support before each of them to launch. Dragon Nest are the number one MMO game in Singapore and Mario game, it’s performing ahead of our expectations. That’s the reason we make further in road into international markets, but now, launching an increasingly worst performance of games including, MMO, mobile games and web games abroad to capture global market share and turn Shanda Games into a Hot hub main.
We will continue to carry the momentum, they have built with our four games over the past decade into new markets. We surely believe that a big component of our long term health house and its credibility nice abroad. I think, ready to buy our origin strategy.
In summary, our two-way strategy has delivered the innovation and created that has compared us to the forefronts of the global online game industry. Sure of our All-Star judging will continue to leverage our strong and diversified portfolio as a way expanding to mobile games, genres and launch net technologies that provide ease of access to analogies through micro clients and the browsers not only in China, but abroad as well. We believe, we are well positioned for future growth as we assume, innovate and then create the very in online gaming.
So, with that, I would like to conclude my remarks and return the call to Richard.
Richard Wei
Thank you, Alan. As always our full earnings release with financial statements is available on our website as well as most major financial portals. I will now briefly review the highlights of our third quarter results and provide an outlook for the fourth quarter of this year. We’ll take questions afterwards.
During the third quarter of this year, our net revenues increased 2.4% sequentially and 23.4% year-over-year to a record high of RMB1,352.8 million, equivalent to US$212.9 million. As stated in our earnings release from the third will combine our net revenues from MMORPGs and advanced casual games into one statement to reduce confusion among investors.
Our advanced casual games shared many common features with our MMORPG titles and are quite different from the casual games that are available on the social networking sites. We also believe that the features that define MMORPGs from an advanced casual games has become – to the point that we are not able to categorize our games easily.
Next revenues from online games generated in China were RMB1280.7 million equivalent to US$201.5 million, an increase an 2.7% quarter-over-quarter and 22.2% year-over-year. The quarter-over-quarter increase was primarily due to the strong performance of expansion packs released for Mir II and the first full quarter of revenue contribution from Legend of Immortals which was launched mid-way through our second quarter.
This was partially offset by decline in revenue from Dragon Nest due to a delay in the release of expansion packs which is expected to help Dragon Nest’s revenue to grow in the fourth quarter monthly active users or MA-user for all games happen in China for a 21.0 million in third quarter of this year compared with 24.0 million in the second quarter of this year. Quarter over quarter decrease was primarily due to the initial frequent experiments pulling off for Legend Mortals as the impact ratio went up after the initial stage.
The delay in Dragon Nest’s July expansion pack also contributed to this decline. Monthly paying users or MPUs for all games operate in China were 4.6 million in third quarter of this year compared with 4.4 million in the second quarter of this year.
The sequential increase was primarily due to the release of significant content updates to some of our major games during the third quarter. Monthly ARPU for all the games operated in China was RMB91.9, compared with RMB94.6 in the second quarter.
Other revenues, which primarily represent net overseas revenues from game operations, game licensing and advertising, were RMB72.1 million equal to $11.4 million than 1.4% quarter over quarter and up 49.2% year over year. The sequential decline was primarily due to the decline in the license game (inaudible) subsidiary items.
Gross profit increased 3.6% quarter-over-quarter and 28.3% year-over-year to RMB829.8 million equivalent to $130.6 million. Gross margin was 61.3% up from 60.6% in the second quarter of this year and 59.0% in the third quarter of last year. operating income was essentially flat quarter-over-quarter and increased 18% year-over-year to RMB261.4 million, equivalent to US$56.9 million. Operating margin was 26.9% in the third quarter of this year compared to 274% in the preceding quarter and 27.9% in the same period of last year.
In line with out earlier guidance, non-GAAP operating margin was 32.0% in Q3,compard with 33.1% in Q2 of this year and 32.7% in Q3 last year. Our non-GAAP calculation excludes the impact of share-based compensation, amortization of acquisition-related intangible assets and the related income tax effect.
Net income attributable to ordinary shareholders was RMB242.6 million, equivalent to US$53.9 million, up 12.2% quarter-over-quarter and 18.5% year-over-year. Earnings per diluted ADS were RMB1.20, equivalent to US$0.19, compared to RMB1.08 in the second quarter of this year and RMB1.02 in the third quarter of last year.
Non-GAAP net income attributable to ordinary shareholders totaled RMB403.5 million, equivalent to US$63.5 million, up net gain quarter-over-quarter and 20.9% year-over-year. Non-GAAP earnings per diluted ADS were RMB1.42, equivalent to US$0.22, compared with RMB1.30 in the second quarter of this and RMB1.18 in the same period last year.
Turning to balance sheet, the company’s cash and cash equivalents, short-term investments, restricted cash and term deposits, net of loans increased from RMB3,517.2 million as of end of Q2 this year to RMB3,710.4 million, equivalent to $583.9 million as of the end of the Q3 this year.
I will now turn to guidance for fourth quarter of this year. As Q4 is normally a weaker season with fewer holidays would cut our revenues to be approximately slight quarter to quarter, which our non-GAAP operating margin, which excluding the impact of share-based compensation, amortization of acquisition-related intangible assets and the related income tax effects to be flat compared with Q3 non-GAAP operating margin. Share-based compensation expense in Q4 is projected to decline slightly from the Q3 level. In the Q4, we also expect to book approximately the same amount of government financial incentives as we’re getting in Q3.
That concludes my discussions. I will now turn the call back to Ellen.
Ellen Chiu
Thank you, Richard. We will now take your questions. Operator, please go ahead.
Question-and-Answer Session
Operator
Thank you. (Operator Instructions). And first question comes from the line of Timothy Chan of Morgan Stanley. Please ask your question.
Timothy Chan – Morgan Stanley
Hi, Ellen, Richard and Alan. Good morning and thanks for taking my questions. My first question is related to the reception of some recent new titles including Sudden Attack, Bubble Fighter, as well as the performance of Legend of Immortals, could you please share with us the – some of the recent performance? And I have follow-up question after that. Thank you.
Alan Tan
(Interpreted) Thank you for question. For Legend of Immortals, we launched big expansion pack in September. And right now- both the user number and revenue has been steadily going up. And also for Sudden Attack and Bubble Fighter, we launched – we did a medium size of testing in August. And we did also discover some technical issues and also some need for the content adjustments. So we are not – to further improve those two games. Yeah.
On top of that we recently launched in the industry, which utilize the new technology, which is a micro-client and this technology enables us to get the gamers to just stop playing the game withdraw the burden to download the client and that also lower the barriers to enter the game, so right now the initial days and also revenues for mainstream right now is very good and also include our original expectations to the game.
And also other than industry we also have our couple of other 2D MMO games. Based on the data that we have seen we are stringent in cost and the – to other 2D MMO games and we think it successfully attract original net user and as well as attract new user base.
Timothy Chan – Morgan Stanley
Thank you very much. My second question is related to on your MMORPG pipeline over the next two to three quarters, for example when are we going to see the potential launch of Final Fantasy(r) XIV? Thank you.
Alan Tan
(Interpreted) We have a couple games in the pipeline from yearend this year to first half year next. And those titles that we have already announced in our All-Star event this year, and also the Internet (inaudible) earlier last month.
As for the short-term, we’re closely cooperating was the developer strengths right now and we’re going to further improve the game content and game play and also we expect to have a version that we’re going to send to – for the government to approve pretty soon.
Timothy Chan – Morgan Stanley
Thanks very much. I appreciate.
Operator
Thank you. And your next question comes from the line of Fey Sung from Goldman Sachs. Please ask your question.
Fey Sung – Goldman Sachs
Hi, thanks for taking my questions, Fey calling on behalf of (inaudible). So, I’ll, let me start with a quick question. So for Legend of Immortals, I remember that accounted for 5% of your revenue in the past quarter. So could you give us an update for this quarter? Thank you.
Richard Wei
It has been clarified. I think in the past we said it’s in our top five list is not 5% revenue. I think you’ve mistaken on that.
Fey Sung – Goldman Sachs
Okay, is there game still Mario top five in terms of reference to the Q3?
Richard Wei
In Q3, yes, it was number five in our titles, the game I think this season it will after the update in September.
Fey Sung – Goldman Sachs
Well, okay. Another just basic housekeeping question, can you repeat the GAME contribution levels that you’ve mentioned in your prepared remarks, new series Dragon Nest, and Woool, that will be hopeful? Thank you.
Richard Wei
Sure. The new series was 44% of revenue in Q3, and Woool Legend series was 17%, Dragon Nest 30%, and the other two we have not disclosed of their percentage, because they are 10%, but the fourth one is AION, and fifth one is Legend of Immortals.
Fey Sung – Goldman Sachs
Thank you.
Operator
Thank you. And your next question comes from the line of Jet Lee from Citi. Please ask your question.
Jet Lee – Citi
Hi, good morning. Thank you for taking my question. We know we have verified in portfolio especially casual games, so regarding our new gratis about the web game, mobiles, web gaming et cetera. So, could you give us guidance about the value of pipeline, the social, web and mobile games. Thank you.
Alan Tan
(Interpreted) Indeed web game and mobile game has become important components of our strategy and as I just mentioned we have been starting closed data stream for four titles, four mobile games, including the mobile version of Latelle (inaudible) and also another new innovative games which is – which is a location based game. And right now it’s still under the closed beta testing phase, so we didn’t, did too much of a large scale promotion, but going forward we will continue to launch new mobile and web games.
For mobile games we are going to be based on our game value platform, which is our internal platform for mobile and social games and will also serve as an important interface for us to develop and launch mobile games in the future.
For web game we have two more important products, one is the web version of Woool and also the other is...
There is an another one, it’s also with high importance.
So other than the development of web version of MRO, we also have been developing our micro client (inaudible) to help the gamers to simply do a plug-in and to so the game has – start playing the game.
Jet Lee – Citi
May I have a follow-up regarding your Dragon Nest. You have said just now, you expect that revenue from second half to continue to grow in the fourth quarter. Could you share your view about the growth potential in next year in terms of growth rate and also the revenue contribution? Thank you.
Alan Tan
(Interpreted) So in view of the third quarter decline of Dragon Nest is mainly due to the delay of expansion pack, which is delayed to first quarter. In Q3, we also launched the game in Singapore and Malaysia of our own platform and also, as well as in the U.S. So, therefore, the expansion pack is delayed to fourth quarter and we expect that to help Dragon Nest to grow in fourth quarter’s results. And as for 2012, we still have plan to launch more essential tax for Dragon Nest and we also expecting Dragon Nest to further grow in some of the other regions outside China and we also have a plan to expand the game to other regions, which we haven’t got into such as Europe.
Operator
Thank you very much. And your next question comes from the line of Thomas Cheng from RBS.
Thomas Cheng – RBS
Hi, good morning. I have a couple of questions. The first one is related to the fourth quarter guidance, the management have us something relate to the performance of Mir II Woool in the fourth quarter, shall we expect these two games to continue on Q-on-Q trend, so I would assume the fourth quarter in fact quarter-on-quarter basically relates to the lack of similarities for advanced casual games. Am I correct to say that?
Richard Wei
I think people in general is the study, we can see them compared to Q3, and so I think actually that the full quarter is excepted to be above flat. In terms of the specific games, Mir II had a fairly strong Q3 and so given that I think Q4 you will likely to see a very modest decline in Mir II, we expect to have a meaningful contribution from Mir III, and I think the Woool series should be about flattish and Dragon Nest just see some increase due to the delay in the extension pack that was given until late September. And we also had a very strong launch in Singapore, Malaysia for Dragon Nest. And so I think Q4 should be higher for Dragon Nest.
Thomas Cheng – RBS
I see. My second question is related to the other revenues. Can the management give us some color on why the other revenues seem to be slightly down on a quarter-to-quarter basis and given that Dragon Nest has been launched in a number of countries, should we expect other revenues to trend up quarter-on-quarter in the fourth quarter? Thanks.
Richard Wei
Sure in Q3, in our Korean facility actually we had a game called Dark Blood and that game after a strong Q2 went in to a decline in Q3. And so that was the primary reason for a very smart, very slight contraction in our other revenue. And in Q4 given the launch in Singapore and Malaysia, which was done towards the end of September, I think the other revenue segments should grow in Q4.
Thomas Cheng – RBS
I see. Thanks. And I have a final question with regard to the impairment charges under the R&D expenses. Can management give us some color on what is the impairment damage, the impairment charges in the third quarter. And should we expect a similar amount to happen in the fourth quarter. Thank you.
Richard Wei
Sure, the impairment charge in the (inaudible) item was approximately RMB16 million, and it relates to the – basically the write down of certain games that we licensed, that we saw were not likely to generate the revenue that will project that and so their values had diminished, and so we decided to the write them off. With all – extensive Q4, I think that has to be determined every year supposed to be due all your intangible assets on a fairly regular basis and whenever there is impairment that occur, and then you have to take that charge. I think our – we do this on a regular basis, so right now I can’t predict that I will have that in Q4 or not.
Thomas Cheng – RBS
I see, thank you. I will go back to the queue.
Richard Wei
Our guidance to keep forward is for the non-cap operating margin to be flat in Q3.
Operator
Thank you. And your next question comes from the line of Chao Wang from Merrill Lynch. Please ask the question. Chao Wang from Merrill Lynch, your line is open. Please ask the question.
Chao Wang – Merrill Lynch
Hi good morning. Two questions, do you see any pressure from the rising labor cost?. Thank you.
Richard Wei
I think there are wage increases every year, which is typical in the China market, and I think the wage increase for this year are comparable to what was seen in previous years.
Chao Wang – Merrill Lynch
Also no particular regarding strong growth this year?
Richard Wei
Well, it’s been strong every year.
Chao Wang – Merrill Lynch
Thanks, thank you very much.
Operator
Thank you. The next question comes from the line of Jialong Shi from CLSA. Please ask the question.
Jialong Shi – CLSA
Hi, good morning, thanks for taking my question, just got one quick question. We know the online gaming companies have very high cash reserves, and you guys have like, 583 million net cash as of 3Q, so, just wondering, if you would consider to pay back investors in a sort of cash dividend, like some of your competitors did in the near term, thank you.
Richard Wei
I think, we were always looking for what the best use of cash is for our shareholders and that includes looking at potential M&A candidates to know the industry is changing back – and in some cases, we do need to make acquisitions or investments. And so, some of the cash will be used in that in regard, we have also done share buyback, I think we did approximately 30 million worth of share buyback over the past two months or so. And whether to pay a cash dividend not to shareholders that’s kind of ongoing discussion, and is to be decided by board. I don’t have an answer on that right now.
Jialong Shi – CLSA
Thank you.
Operator
Thank you. Your next question comes from the line of Andy Yeung from Oppenheimer. Please ask your question.
Andy Yeung – Oppenheimer
Hi good morning thank you for taking my questions. My first question is about your relationship with NCsoft and also do you have any update on AION?
Alan Tan
(Interpreted) Yes we’ve been in the relationship with NCsoft over the years and also weekly the AION launch in China is pretty successful and we recently renewed a contract NCsoft AION and we will continue to ensure that AION will be favored by the Eternity version in China.
Andy Yeung – Oppenheimer
Okay great. And then my next question is bit about your product pipeline. Do you have any update on the long schedule for – Point Blank?
Alan Tan
(Interpreted) For Point Blank yes we prepared to start for processing in the coming months – in the following months. And I think for the (inaudible) testing to discover, to analyzing, also to modify the game based on the gamers demand.
For our Dragon Ball Online, the game has been highly anticipated by Chinese gamers and we are right now cooperating with the developer to analyze and also hope to include both the usability as well as the content of the game to meet the high expectations of gamers towards this game.
Andy Yeung – Oppenheimer
Okay. Great. Thank you.
Operator
Thank you. Your next question comes from the line of Mark Marostica from Piper Jaffray. Please ask the question.
Mark Marostica – Piper Jaffray
Yes. Thank you. Wanted to inquire about the ARPU behavior in the quarter, it was down modestly sequentially. And then how we anticipate ARPU behaving in the fourth quarter as well. And then I have a couple of other follow ups.
Operator
(Operator Instruction). Thank you. The conference reassumed.
Richard Wei
Hi, sorry. You got stuck. I think the question was with ARPU decline in Q4 as the trend going forward. I think the ARPU basically is a mathematical outcome, take revenue to modify the number of paying users. I think Q3 was slightly high because in two of the games – two of the somewhat casual games, we had low price virtue items that really were not contributing to revenue, and so we decided to often for free and therefore that cost a slight decline in the MPU number of Q2 and so that made Q2 ARPU kind of higher compared to prior quarters. And I think Q3 result is more returned to normal. I think the opportunity going forward, I think we are not really trying to try the ARPU number in any either direction, our main focus really is getting more users into the game growing the user base, and ARPU number is whatever the math comes out to be.
Mark Marostica – Piper Jaffray
Okay. Thank you for the color there. Could you also give us an update of the performance of Maple Story in the quarter?
Alan Tan
(Interpreted) Okay, we launched a bigger expansion packing of (inaudible) that leads to the strengthening of the game performance in first and second quarter. And in third quarter, coming out from the higher base in first half. However, we are going to launch another expansion pack in first quarter next year, which we will help hopefully help the game to grow again.
Mark Marostica – Piper Jaffray
All right. Thanks for the color there. And last question relates to the 2012 pipeline. I know you talked about number of games coming up, but I am just trying to get a sense, if you can give us the timeline first half, second half would you expect to launch in 2012 the various titles? Thanks.
Alan Tan
(Interpreted) Yes, we have couple in all these games in the pipeline. Mir III has already been launched (inaudible) in Q4 and we are going to do special promotions for the game in first quarter and also in second quarter there is another new game in first half – first half, first quarter.
Richard Wei
First half, first quarter there is another new game called (inaudible) which is a size rolling type of game and the initial feedback – internal feedback is pretty positive.
Alan Tan
(Interpreted) Following, we have another two MMO games, one is the 3D (inaudible) and other is Two Kingdoms, of which is another 2D MMO, but with some innovative game play and we also are going to continue the testing of couple of – fresh commercial ability.
I think approaching end of next show, we are going to start the initial testing for (inaudible) as well as Dragon Ball online and we will get those users to back to see when we are going to officially launch the game.
As of our self-development games – we have (inaudible) and those two games we are also going to start testing earlier next year.
And we also have a couple of micro client version for our existing game titles including – and also Crazy Car which will be launched next year and I think we are going to completely put out a micro client version for our key titles.
Also we have ample game titles for our web game in mobile game to be launched next year. So I think overall, we expect next year we will have more traders on multiple platforms to be launched.
Mark Marostica – Piper Jaffray
Thank you.
Operator
Thank you very much and now I’ll handle the conference back to Ellen Chiu.
Ellen Chiu
Thank you again for participating on this call and I look forward to updating you on our progress in the near future.
Alan Tan
Thank you.
Operator
Thank you, ladies and gentlemen that does conclude our conference for today thank you participating you may all disconnect.
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