CMGE sees mobile game revenues drop 7% to $8.9 million

But subscriptions are on the rise

CMGE sees mobile game revenues drop 7% to $8.9 million

China Mobile Games and Entertainment Group Limited (NASDAQ: CMGE) has announced its unaudited financial results for the second quarter ended 30 June 2013.

Revenues were $11.7 million (RMB 72 million), up 19 percent year-on-year.

In terms of mobile game performance, however, revenues during Q2 were $8.9 million (RMB 54 million), down 7 percent.

The company made a net loss of $2.1 million (RMB 13 million), compared with net income of RMB 23 million 12 months ago.

Locked in

During the quarter, the company had 1.4 million paying users, with ARPU of $3.47 (RMB 20.84).

This is high because of CMGE's strong level of subscriptions. Indeed, during Q2, it grew its subscriptions on China Mobile by 30 percent.

"I am pleased to report a strong quarter of revenue growth sequentially demonstrating the strong recovery of our overall financial and operational performance since the end of 2012," said CEO Ken Jian Xiao.

"Revenue increased by 97 percent sequentially as we started to benefit from the execution of our long-term strategy of both self-developing and publishing thirdparty smartphone social games."

CMGE operates over 500 single player games and 60 social games across web and mobile, of which 50 are published games from thirdparty developers.

A key title during the quarter was social poker game Joyful Zha Jin Hua, which generated around $1.5 million in June from 595,000 players. An iOS version will be released in Q3.

Building up

CMGE also pointed to its ability to make the most of China's fragmented distribution channel.

It has a target to pre-install its Game Center app (or supporting games) on more than 60 million Android smartphones by the end of 2013. This includes mobile OEMs such as Coolpad, K-touch, Eton, Haier, Zopo and Hedy.

In addition, CMGE has an exclusive cooperation agreement with mobile advertising platform KuGuo, and it has been building up its own inhouse customer support and R&D teams, with services including social networking and billing integration, data analysis and product testing.

The company ended the quarter with cash, cash equivalents and short-term investments worth $25 million.

[source: CMGE IR]

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