The9 Establishes Joint Venture to Focus on Mobile Game Operation and Distribution in China's Sinking Market
The9 (NCTY) has announced a strategic joint venture with Chengdu Qing Cheng Network Science and Technology to focus on mobile game operation and distribution in China's sinking market. The9 will hold a 51% stake in the venture, while Qing Cheng will hold 49%.
Qing Cheng has committed to achieving an annual profit of RMB80 million (US$11 million) in 2025, with a guaranteed 50% profit increase annually in 2026 and 2027. The9 will grant Qing Cheng 110,232,600 restricted shares, which will be unlocked based on profit achievements.
According to QuestMobile's 2024 report, mobile Internet users in lower-tier markets reached 647 million, representing 52.6% of China's mobile Internet market. Qing Cheng employs an e-commerce-like strategy with virtual incentives to enhance gamer participation in lower-tier cities through offline distribution channels and gaming KOLs.
The9 (NCTY) ha annunciato una joint venture strategica con Chengdu Qing Cheng Network Science and Technology per concentrarsi sull'operazione e distribuzione di giochi mobili nel mercato in declino della Cina. The9 deterrà una partecipazione del 51% nella joint venture, mentre Qing Cheng avrà il 49%.
Qing Cheng si è impegnata a raggiungere un utile annuale di 80 milioni di RMB (11 milioni di dollari USA) entro il 2025, con un aumento garantito del 50% dei profitti annuali nel 2026 e 2027. The9 concederà a Qing Cheng 110.232.600 azioni riservate, che saranno sbloccate in base ai risultati di profitto.
Secondo il rapporto 2024 di QuestMobile, gli utenti di Internet mobile nei mercati di livello inferiore hanno raggiunto 647 milioni, rappresentando il 52,6% del mercato mobile di Internet in Cina. Qing Cheng adotta una strategia simile all'e-commerce con incentivi virtuali per migliorare la partecipazione dei giocatori nelle città di livello inferiore attraverso canali di distribuzione offline e KOLs di gioco.
The9 (NCTY) ha anunciado una empresa conjunta estratégica con Chengdu Qing Cheng Network Science and Technology para centrarse en la operación y distribución de juegos móviles en el mercado en declive de China. The9 tendrá una participación del 51% en la empresa conjunta, mientras que Qing Cheng tendrá el 49%.
Qing Cheng se ha comprometido a alcanzar un beneficio anual de 80 millones de RMB (11 millones de dólares estadounidenses) en 2025, con un aumento garantizado del 50% en los beneficios anuales en 2026 y 2027. The9 otorgará a Qing Cheng 110.232.600 acciones restringidas, que se desbloquearán según los logros de beneficios.
Según el informe de QuestMobile de 2024, los usuarios de Internet móvil en mercados de niveles inferiores alcanzaron 647 millones, lo que representa el 52,6% del mercado de Internet móvil de China. Qing Cheng emplea una estrategia similar al comercio electrónico con incentivos virtuales para mejorar la participación de los jugadores en las ciudades de niveles inferiores a través de canales de distribución offline y KOLs de juegos.
The9 (NCTY)는 중국의 침체하는 시장에서 모바일 게임 운영 및 유통에 집중하기 위해 청두 칭청 네트워크 과학기술과 전략적 합작 투자를 발표했습니다. The9는 합작 투자에서 51%의 지분을 보유하고, 칭청은 49%를 보유합니다.
칭청은 2025년까지 연간 8천만 위안(1천1백만 달러)의 이익을 달성할 것을 약속하며, 2026년과 2027년에는 연간 50%의 이익 증가를 보장합니다. The9는 칭청에게 110,232,600주의 제한 주식을 부여하며, 이는 이익 달성에 따라 해제됩니다.
QuestMobile의 2024년 보고서에 따르면, 저위 시장의 모바일 인터넷 사용자 수는 6억4천7백만에 달하며, 이는 중국 모바일 인터넷 시장의 52.6%를 차지합니다. 칭청은 오프라인 유통 채널과 게임 KOL을 통해 저위 도시에서 게이머 참여를 향상시키기 위해 가상 인센티브를 활용하는 전자상거래와 유사한 전략을 사용합니다.
The9 (NCTY) a annoncé un partenariat stratégique avec Chengdu Qing Cheng Network Science and Technology pour se concentrer sur l'exploitation et la distribution de jeux mobiles sur le marché en déclin de la Chine. The9 détiendra une participation de 51% dans la coentreprise, tandis que Qing Cheng détiendra 49%.
Qing Cheng s'est engagé à atteindre un bénéfice annuel de 80 millions de RMB (11 millions de dollars US) d'ici 2025, avec une augmentation garantie de 50% des bénéfices annuels en 2026 et 2027. The9 accordera à Qing Cheng 110.232.600 actions restreintes, qui seront débloquées en fonction des performances en matière de bénéfices.
Selon le rapport 2024 de QuestMobile, les utilisateurs d'Internet mobile sur les marchés de niveau inférieur ont atteint 647 millions, représentant 52,6% du marché de l'Internet mobile en Chine. Qing Cheng utilise une stratégie semblable à celle du commerce électronique avec des incitations virtuelles pour améliorer la participation des joueurs dans les villes de niveau inférieur via des canaux de distribution hors ligne et des KOLs de jeux.
The9 (NCTY) hat ein strategisches Joint Venture mit Chengdu Qing Cheng Network Science and Technology angekündigt, um sich auf den Betrieb und die Verteilung von mobilen Spielen im sinkenden Markt Chinas zu konzentrieren. The9 wird eine Beteiligung von 51% am Joint Venture halten, während Qing Cheng 49% halten wird.
Qing Cheng hat sich verpflichtet, bis 2025 einen Jahresgewinn von 80 Millionen RMB (11 Millionen US-Dollar) zu erzielen, mit einer garantierten Gewinnsteigerung von 50% jährlich in 2026 und 2027. The9 wird Qing Cheng 110.232.600 beschränkte Aktien gewähren, die basierend auf den Gewinnzielen freigegeben werden.
Laut dem Bericht von QuestMobile 2024 haben die mobilen Internetnutzer in unteren Märkten 647 Millionen erreicht, was 52,6% des mobilen Internetmarktes in China entspricht. Qing Cheng verfolgt eine e-commerce-ähnliche Strategie mit virtuellen Anreizen, um die Teilnahme von Spielern in unteren Städten über Offline-Vertriebskanäle und Gaming-KOLs zu fördern.
- Strategic entry into China's large sinking market with 647 million users
- Guaranteed minimum profit of RMB80 million in 2025
- Committed 50% annual profit growth for 2026 and 2027
- Quarterly dividend distribution based on shareholding ratio
- Access to Qing Cheng's established distribution network in lower-tier cities
- Significant share dilution through issuance of 110,232,600 restricted shares
- Performance-based share unlocking creates uncertainty
- Heavy reliance on partner's performance commitments
Insights
This strategic joint venture marks a pivotal transformation for The9, targeting the vast but underserved lower-tier mobile gaming market in China. The deal's structure reveals several critical aspects that warrant investor attention:
Profit Guarantee Mechanism: The committed
Market Opportunity Analysis: The target market of 647 million users in lower-tier cities represents an immense opportunity, particularly given the relatively lower customer acquisition costs in these regions. Qing Cheng's innovative 'virtual subsidy' approach, inspired by Pinduoduo's successful model, offers a cost-efficient user acquisition strategy that could drive superior unit economics compared to traditional gaming platforms.
Competitive Advantages: Qing Cheng's established offline distribution network and KOL relationships in lower-tier markets create significant barriers to entry. Their virtual incentive model, unlike traditional e-commerce subsidies, maintains profitability while driving user engagement - a important differentiator in the competitive mobile gaming landscape.
Risk Considerations: Key challenges include regulatory oversight in China's gaming sector, execution risks in maintaining promised growth rates, and potential integration issues between The9 and Qing Cheng's operations. The success of this venture will heavily depend on consistent game content supply and effective monetization of the lower-tier market user base.
Joint Venture Partner Committed Annual Profit of
The9 will hold a
Qing Cheng committed that it will utilize its monopolistic and unique distribution channel advantages in the sinking markets to operate different mobile games for the Joint Venture. It will also utilize its strategic game development partners to ensure the Joint Venture will get continuous supply of high-quality games suitable to the lower-tier markets. Qing Cheng committed to The9 that the Joint Venture will have an annual profit of more than
The9 granted Qing Cheng The9 110,232,600 restricted shares (equivalent to 367,442 ADSs). These restricted shares will be unlocked in stages according to the actual achievement of the Joint Venture's 2025 profit as committed by Qing Cheng. If 2025 profit guarantee is achieved, The9 will grant Qing Cheng the second batch of restricted shares according to this mechanism. If the 2026 profit guarantee is achieved, The9 will grant Qing Cheng the third batch of restricted shares according to this mechanism.
"According to the QuestMobile 2024 Sinking Market Insight Report, as 5G and mobile Internet applications continue to explode in
"We have established a unique network covering third-tier and lower-tier cities through in-depth layout of offline distribution channels and designated gaming KOLs. Such sinking market channel advantage enables us to dominate the sinking market and form a competitive barrier that is difficult to replicate. We are using e-commerce way like "
Safe Harbor Statement
This current report contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond The9's control. The9 may also make written or oral forward-looking statements in its periodic reports to the
The9 Limited
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About The9 Limited
The9 Limited (The9) is an Internet company listed on Nasdaq in 2004. The9 is committed to become a global diversified high-tech Internet company and is engaged in online games operation and Bitcoin mining business.
About Chengdu Qing Cheng Network Science and Technology Co., Ltd.
Chengdu Qing Cheng Network Science and Technology Co., Ltd. (Qing Cheng) is a leading mobile game operation and distribution company focusing on serving gamers in the sinking markets in
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SOURCE The9 Limited
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