Gandalf and Frodo Going to China? CDC Games Says "Yes"

Filed in archive IPOs on July 23, 2007

Beijing-based CDC Games company is bringing Gandalf, Frodo, and the rest of Middle Earth to the Middle Kingdom, with beta testing on a Chinese version of The Lord of the Rings Online: Shadows of Angmar (LotRO) underway since last week.

It seems like half of what I write about now is online gaming in China. But the growth of digital media is big business in what is quickly becoming the world's largest online marketplace.

LotRO is the most popular, fastest growing of the Massively multiplayer online role-playing games (or "MMORPG") genre if you believe the newspaper clippings and press releases. CDC Games is beta testing a Chinese version of it AND discussing a US$200 million spin off IPO that would see the games company listed on the NASDAQ separately from its parent company, China-based CDC Corp.

CDC Games was created as a subsidiary of CDC Corp. in 2005 as a way of taking the gaming business out of the parent company's portfolio of activities.

The games company has played a pivotal role in the development of China's games industry. In the early stages of online gaming, the MMORPG genre had a pay-to-play model that users found restrictive. CDC pioneered the play-for-free, pay-for-merchandise model that allows anyone with an Internet connection to play the game but requires that they spend money online to purchase items for their characters if they want to do well at the game. The new model has been responsible for much of the growth in online gaming in China.

The IPO offering for CDC Games is expected to occur in the last quarter of this year.