Kongzhong, a rising game company in China, announced its Q4 2012 financial results which demonstrated its strong ambition in 2013 and the strong performance of Wargaming.Net's licensed World of Tanks (WoT) during 2012. According to the release, online gaming revenues were $23.84m (RMB154m), presenting a 10.5% increase quarter-over-quarter. WoT made the majority of contribution to the growth as the company's in-house games and overseas game revenues continued to decline. In 2013, the upcoming launch of Guild Wars 2 is believed to hit the market and Kongzhong is confident in the domestic MOG market which is in line with its strategic partnership with Wargaming.
It is safe to say that Kongzhong will now re-focus on the domestic market as there has been little positive feedback of its own online games in the overseas market since its decision to expand to new markets in 2010. As Kongzhong was starting its game business with mobile platform, its development capability of PC online games is relatively weak. As a result, its business strategy has relied on licensing existing worldwide popular games, which, to some extent, has been proved successful by the popularity and contribution of WoT in 2012. The current global success of Guild Wars 2 might secure its acceptance in China and help the company generate sizeable revenues. Also, Kongzhong's efforts to expand its multiplayer games portfolio are in line with current transition away from traditional high fantasy themed role playing games to multiplayer games with more intense gameplay including shooter games and battle arena games, which might help the company to expand its online gaming market share.
However, as big operators are accelerating to improve their in-house development capability and explore overseas markets, Kongzhong is doing the opposite, which leaves the company trying to gain market share in the highly competive domestic market through licensed content as its main source of growth. In light of the lessons learned from The9's significant losses after losing the licensing rights of World of Warcraft, Kongzhong has to prepare for any future possibilities.