On the slide
Online games have been able to support Shanda's other two businesses, but the games alone will not make Chen's dream of becoming a media tycoon come true
Shanda was among the first companies to introduce online games to China and used to be the number one choice for game lovers.
But the situation changed in 2004 when Tencent, one of the largest and most used Internet service portals, launched its self-developed game platform online.
Because Tencent had a large number of users for its online chat program QQ, its game platform soon drew attention from online users. By 2009, Tencent had surpassed Shanda as the number one online games provider.
In 2011, through its massive multiplayer online role-playing game by Blizzard Entertainment, another Chinese Internet company called NetEase also passed Shanda, becoming the second biggest online game provider in China behind Tencent.
Although Shanda has tried to save its place in the online gaming world, failing to create its own game has limited the future of the company, said an industry insider.
In addition, the nature of the online gaming industry is changing. Instead of personal computers (PC), smart phones and tablet PCs are believed to be the new terminals for online games. If Shanda continues to focus on games that are more suitable for PCs, it will lose users, said the insider.
Never fade away
Shanda is now shifting its online games to some Social Networking Services (SNS) like Renren.com, where users can log into their personal SNS websites and play games directly.
"Shifting to SNS will be a transition for Shanda, and in the future 90 percent of profit from online games will come from SNS," said Tan Qunzhao, CEO of Shanda Games Ltd.
Shanda Literature and Ku6 are not profitable now, but the two websites have their fixed registers, and if Shanda wants to develop into a media giant, these two businesses are indispensable.
But these online services will not be enough. As a result, in 2010 Chen began to develop a Location-Based Service (LBS), in order to make a connection between the virtual world and the actual world.
Although in China Shanda has many competitors in the LBS field, Chen is confident about his business. However, he must develop a practical plan for his company in order to succeed.
