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NCsoft to see China sales surge: report

HONG KONG (Yonhap News) ― NCsoft Corp., a leading online game developer in South Korea, will likely see its sales in China rise sharply this year largely thanks to its new partnership with a Chinese distributor, Goldman Sachs said Wednesday.

NCsoft currently distributes its flagship massively multiplayer online role-playing games ― Lineage I, Lineage II and Aion ― in China through a contract with Shanda Interactive Entertainment Ltd., a Shanghai-based operator of online games.

The company has terminated its contract with Shanda and recently signed an agreement with Tencent Holdings Ltd., China’s No. 1 Internet company by revenue, over the Chinese distribution of its games, including Blade & Soul, which is scheduled to be officially released later this year.

“We believe distribution of Aion with Shanda in China did not go as smoothly as the company expected, as evident from the mismanagement of unlawful user activities and server maintenance problems in 2009,” said Seung Shin, an analyst at Goldman Sachs.

“We estimate that Tencent has a higher market share than Shanda in the Chinese market and therefore distribution of Blade & Soul from the first half of 2013 will generate higher revenues than Aion.”

The expected relaunch of Lineage and Lineage II in China by Tencent will also create new revenues for NCsoft, the investment bank said.

“We do expect new revenues from China will mitigate some of the organic downside of the old titles in the Korean market,” the Goldman Sachs analyst said.

NCsoft saw its fourth-quarter income plunge 45.9 percent from a year earlier on the absence of new game titles. Net profit reached 37.87 billion won ($34.12 million) in the October-December period last year, compared with 70.02 billion won a year earlier.
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