Perfect World Company Ltd Q3 2009 Earnings Call Transcript

Perfect World Company Ltd (PWRD)

Q3 2009 Earnings Call

November 16, 2009 7:00 am ET

Executives

Vivien Wang – IR Officer

Michael Chi – Chairman and CEO

Kelvin Lau – CFO

Analysts

Alicia Yap – CitiGroup

Lisa Yang – Morgan Stanley

Eddie Leung – Banc of America

Scott – Oppenheimer

Tian Hou – Pali Capital

Vivian Li – Piper Jaffray

Andrey Glukhov – Brean Murray

Ming Zhao -SIG

Jin Yoon – Nomura

Eric Wen – MainFirst

Hiu Dan – HSBC

Atul Bagga – Thinkequity

Presentation

Operator

Welcome to the Perfect World Q3 2009 earnings conference call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. (Operator instructions). Please be advised that this conference is being recorded, November 16, 2009.

I would now like to hand the conference over to our speaker today Ms. Wang, Investor Relations Officer of Perfect World. Thank you. Please go ahead.

Vivien Wang

Thank you, operator, and thank you, everyone, for joining us today for Perfect World’s third quarter 2009 earnings release conference call. We distributed our unaudited third quarter 2009 earnings release earlier today. You may find a copy of the press release on our official website or through the newswire.

Today, you will hear from Mr. Michael Chi, our Chairman and CEO, who will give us a brief introduction and overview. Mr. Kelvin Lau, our CFO, will then discuss some of our latest developments and operational developments and take us through our financial performance in the third quarter of 2009. Following the prepared marks, Mr. Chi, Mr. Lau and I will be available to answer your questions.

Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Perfect World does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. For more information about the risks involved, please visit our filings with the SEC.

I would now like to turn the call over to Michael.

Michael Chi

Thank you, Vivien, and thanks everyone for joining us today for our third quarter 2009 earnings call.

We are pleased to announce of our third quarter results which exceeded our expectations this quarter. We launched a number of exciting expansion packs for existing games. One example of a successful launch is Zhu Xian 2.0 Special Edition, and we are optimistic about its contribution to the business moving forward.

We will continue to maintain the life cycle of our games by dedicating more resources to creating larger, more innovative expansion packs. At the end of the quarter, we successfully launched our first 2D term based MMORPG Fantasy Zhu Xian on October 22. This game has attracted a lot of interest since its launch and demonstrated our ability to leverage a strong 3D development capabilities and operating platform to effectively penetrate the 2D market.

We believe the games innovative features, content offerings, and the strong branding of our Zhu Xian franchise, we have had successfully pushed this game into lower tier segment. By creating a highly diversified portfolio of truly differentiated games, we continue to strengthen our competitive advantage in the industry.

Our reach headline currency consist of six games that spend 3D, 2.5D, and 2Dmarket segments. We are utilizing our specialized game engines and production studios that are tailored to each of this area to build a variety of franchise that include flagship titles in each of this market segments.

Our overseas development efforts are progressing nicely and we remain leader in the Chinese online across market in terms of the revenues and geographic coverage. During the quarter, we successfully launched our first 2.5D MMORPG, Battle of the Immortals in Taiwan, Hong Kong, and the Macau through our overseas partners.

We also launched some of our other games to various international markets through several operators and signed new licensing agreements with our overseas partners. We are satisfied with our progress in these areas, so far and plan to continue expanding our global network moving forward.

We released our first movie produced by our subsidiary PW Culture during the quarter. The release was a success and more importantly gave us an opportunity to promote our corporate brand and co-promote our games. This was a good start and we expect PW Culture to capture the growth of the broader entertainment industry, while generating valuable synergize with our core business through content generation and co-promotion in the future.

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