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KongZhong sees mobile game revenues shrink as it transitions from feature phones to MMORPGs

KongZhong sees mobile game revenues shrink as it transitions from feature phones to MMORPGs
Chinese mobile and online gaming company KongZhong (NASDAQ: KONG) has announced its Q3 results for the three months ending 30 September 2012.

Revenues were $49.9 million, up 28 percent year-on-year.

Net income was $6.2 million, compared to a $17 million loss 12 months ago.

Going mobile

Breaking out the specific figures for mobile games, sales were $5.3 million of this total (or 10.5 percent), down from $10 million in Q3 2011.

The gross profit arising from mobile game operations was $2.5 million, compared to $3.6 million 12 months ago. However, the profit ration in Q3 2012 was 48 percent, up from 36 percent in 2011.

The main reason for this decline is the transition from feature phone to smartphone gaming. Smartphone revenues were $1.8 million, up 33 percent sequentially compared to Q2 2012.

KongZhong's mobile games have been downloaded over 25 million times, with 1.5 million monthly active users recorded during July to September 2012.

It said it's currently pivoting its internal teams to mobile MMORPGs over the next three to six months, with 20 games planned for release in 2013.

Tank rush

As well as mobile games, KongZhong operates online PC and browser games in China; notably Wargaming.net's World of Tanks.

It will also be running World of Warplanes, Meteor's Hawken and ArenaNet's Guild Wars 2 in the country when they are released.

The company generated $21 million in cash flow from operating activities during the quarter, ending the period with cash and cash equivalents worth $98 million, down $1.8 million from its 30 June total.

It plans to spend up to $20 million buying back shares.

[source: KongZhong]

A Pocket Gamer co-founder, Jon can turn his hand to anything except hand turning. He is editor-at-large at PG.biz which means he can arrive anywhere in the world, acting like a slightly confused uncle looking for the way out. He likes letters, cameras, imaginary numbers and legumes.

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