The9 Partners with Qing Cheng for Mobile Game Success in China's Lower Markets

The9 Forms Strategic Joint Venture with Qing Cheng

The9 Limited (Nasdaq: NCTY) has recently made waves across the gaming sector with the establishment of a joint venture intended to invigorate mobile game operations in China's less-developed regions. This initiative comes at a crucial time, as the gaming market in these areas has shown potential for substantial growth.

Partnership Details

The joint venture agreement, signed between The9's fully-owned subsidiary Shanghai The9 Information Technology Co., Ltd. and Chengdu Qing Cheng Network Science and Technology Co., Ltd., will see The9 owning a 51% stake while Qing Cheng retains the remaining 49%. This collaborative effort is set to transform The9's operations and enable a more focused approach in the penetrating lower-tier markets of China.

Qing Cheng, recognized for its expertise in mobile gaming operations, has committed to leveraging its unique distribution channels specifically designed for these emerging markets. The aim is to cultivate a consistent supply of high-quality mobile games that cater to gamers in these regions. George Lai, The9's Executive Director and CFO, emphasized the importance of this collaboration in enhancing their distribution capabilities and bolstering their position in the gaming market.

Projected Financial Growth

Qing Cheng has set ambitious financial targets, projecting an annual profit of over RMB 80 million (around USD 11 million) for 2025, with the expectation of at least a 50% increase in subsequent years. The venture's profits are planned to be distributed quarterly, demonstrating a commitment to shared success among partners.

A unique aspect of the partnership is the financial incentive structure connected to performance milestones. Qing Cheng has been granted a substantial number of restricted shares that will be released incrementally as specific profit margins are achieved in the coming years. This ensures both parties are aligned on financial objectives and performance outcomes.

Market Insights and Strategic Directions

According to the 2024 Sinking Market Insight Report by QuestMobile, the influx of mobile users in China's lower-tier cities sits at an impressive 647 million, representing over 52.6% of the overall mobile internet market. This growing demographic presents an untapped market eager for engaging mobile gaming experiences. The partnership plans to take advantage of this trend, using innovative marketing tactics to entice customers.

Peng Cheng Bin, CEO of Qing Cheng, pointed out their strategic advantages derived from comprehensive offline distribution and dedicated gaming influencers, which foster deep community ties and customer loyalty. By launching promotions such as in-game discounts and rewards—resembling e-commerce strategies—they aim to facilitate higher gamer engagement without significantly increasing operational costs. The ultimate goal is to establish themselves as a leading entity in the mobile gaming sector akin to being the