The9 Establishes Joint Venture to Focus on Mobile Game Operation and Distribution in China's Sinking Market

Core Viewpoint - The9 Limited has entered into a Joint Venture with Chengdu Qing Cheng Network Science and Technology Co., Ltd. to operate and distribute mobile games in China's sinking market, with a commitment to achieve an annual profit of over RMB 80 million in 2025 and a growth rate of at least 50% annually for the following two years [1][3][5]. Company Overview - The9 Limited is an established Internet company listed on Nasdaq since 2004, focusing on online game operations and Bitcoin mining [9]. - Chengdu Qing Cheng Network Science and Technology Co., Ltd. specializes in mobile game operation and distribution, particularly targeting lower-tier markets in China, with a cumulative registered user base of 88.7 million and a cumulative user payment of RMB 4.4 billion since its establishment in 2020 [10]. Joint Venture Details - The9 will hold a 51% stake while Qing Cheng will hold 49% in the Joint Venture, which will serve as The9's flagship subsidiary for mobile game operations in the sinking market [2]. - Qing Cheng has committed to leveraging its unique distribution channels and strategic game development partnerships to ensure a steady supply of high-quality games for the Joint Venture [3]. Financial Commitments - Qing Cheng has guaranteed that the Joint Venture will achieve an annual profit exceeding RMB 80 million (approximately US$11 million) in 2025, with profits expected to increase by at least 50% in both 2026 and 2027 [3]. - All after-tax profits from the Joint Venture will be distributed quarterly as dividends according to the shareholding ratio [3]. Market Insights - The number of mobile Internet users in lower-tier markets in China has reached 647 million, accounting for 52.6% of the entire mobile Internet market, indicating significant growth potential in this segment [5]. - The Joint Venture aims to enhance gamer participation and loyalty through innovative marketing strategies, including in-game discounts and rewards, positioning itself as a competitive player in the mobile gaming industry [6].