Giant Interactive Group, Inc. (GA) Q4 2011 Earnings Call March 5, 2012 8:00 p.m. EST Executives Rich Chiang – IR Director Jazy Zhang – CFO Wei Liu – President Xuefeng Ji – VP of R&D Analysts Timothy Chan – Morgan Stanley Gary Ngan – UBS Mark Marostica – Piper Jaffray Steve Zhang – Macquarie Jialong Shi – CLSA Vicky Lin – Merrill Lynch [Shayan Yang] – Nomura Adam Krejcik – Roth Capital Partners Andy Yeung – Oppenheimer [William Wong] – Barclays Capital Martin Bao – CICC Chao Wang – Merrill Lynch Presentation Operator
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Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results of Giant to be materially different from the historical results or from any results expressed or implied by such forward-looking statements. These factors include but are not limited to the risks discussed in filings with the Securities and Exchange Commission, including our annual report on Form 20-F filed on June 17, 2011. All forward-looking statements are qualified in their entirety by this cautionary statement and Giant undertakes no obligation to revise or update this information to reflect events or circumstances the date hereof.Operator Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with their line. Please stand by while we address this situation. Your lines will be placed on music hold until the conference resumes. Thank you for your patience. Rich Chiang Hi, everyone. Sorry about that. Continuing from where I left off, all forward-looking statements are qualified in their entirety by this cautionary statement and Giant undertakes no obligation to revise or update this information to reflect events or circumstances after the date hereof. In addition, please note that references in the presentation to dollars refer to US dollars. Now, I would like to turn the call over to our CFO, Jazy Zhang. Jazy? Jazy Zhang Thank you, Rich. Good morning and good evening everyone. First, I would like to read the prepared remarks from our President, Ms. Wei Liu, and then I will walk you through our financial highlights and update you on our game development efforts. We concluded 2011 with solid fourth-quarter results and delivered another year of consistent growth from both the financial and operational perspective. Our progress throughout 2011 was made possible by our long-term strategy of focusing on developing games with passion and creativity, games that are of the highest quality and games that are fun to play and that engage and broaden paying user base.
ZT Online 2, our new flagship game, has been the main growth driver over the past year, supporting the steady increase in paying accounts and average user -- sorry, average revenue per user. The success of ZT Online 2 has proved the merits of our game segmentation strategy and our strong internal development capability. We’re very proud of ourselves, that even in this increasingly competitive MMORPG market in China, we were able to produce another hit MMO game. We’re highly confident that with its first expansion pack expected to be released in April 2012, ZT Online 2 will continue to grow and achieve greater success in 2012.With respect to our growth strategy, first, we will continue to focus on MMORPG as we believe it’s still the most profitable segment of the online game market in China, and this is our core competence. Meanwhile, we’re actively working to enter new game genres and new growth areas in China’s online game market. For example, Elsword, our first action casual game which we licensed from South Korea, entered into new open beta testing in December, and our first-person shooter game continues to progress through our development pipeline. Both games represent new genres that are complementary to our core MMORPG competence. Secondly, as we indicated on our last quarter earnings call, we have a new strategic focus, and this is web game development. As social media and web-based gaming platform usage rapidly expands in China, we are aggressively working to position Giant as a future leader in this segment. We recently hired a senior industry expert in web game development and have allocated significant internal RMB resources to web game development this year and beyond. Given our years of extensive experience in developing and operating MMO games, our deep understanding of web game characteristics and user preferences and our progress made in web game graphics and technology, we believe we are well-positioned to deliver a few hit games in the near future. Read the rest of this transcript for free on seekingalpha.com