Giant Interactive Revenues Plunge with move away from hyper-Free-to-Play in ZT Online

Commenting on the third quarter 2008 results, Yuzhu Shi, Giant's Chairman and Chief Executive Officer, said, "During July of the third quarter, we implemented an adjusted gaming structure for ZT Online and reduced the scope of monetized features in order to emphasize daily consumption rather than in-game promotional items. Though these adjustments resulted in a reduction in our revenue in the third quarter, we remain confident that this strategic decision is an important initiative towards expanding our user base, extending the life-cycle of ZT Online and driving long-term, sustainable growth."

Net revenue was RMB265.20 million or US$39.06 million, a decrease of 34.6% from RMB405.25 million a year ago, mainly on lower online game net revenue, which was adversely impacted by adjustments made to the monetization features within ZT Online. Analysts expected revenues of $63.41 million for the quarter.

Gross profit declined 40.9% year-over-year to RMB212.5 million or US$31.3 million, and gross profit margin fell to 80.1% from 88.8% in the third quarter 2007.

Active paying accounts for online games declined 31.6% to 937 thousand, and average revenue per user dropped 4.4% to RMB282.1. Meanwhile, average concurrent users for online games rose 9% from last year to 543 thousand.