Game Development

We believe that rapid and high-quality game development is critical

to our success. Our game development team mainly consists of our
programming department, design department and graphics department. In
March 2008 we opened a research and development center in Shanghai to
take advantage of the skilled workforce in the game development
industry. In October 2008 we acquired a license to use InterServ’s cross-
platform game development engine, and in February 2009 we acquired
InterServ Caymans and its two PRC subsidiaries in Shanghai and
Chengdu, both of which have further strengthened our research and
development capability. We are working to integrate the newly acquired
InterServ Shanghai and InterServ Chengdu, with the existing game
development team. As of March 31, 2009, we had 1,132 game
development personnel. Several core members of our development team
have worked together for nearly a decade.
Unlike many of our competitors that operate MMORPGs licensed
from foreign game developers, we have in-house capabilities that allow
us to develop games rapidly and in response to constantly changing
market demands and trends. Our game development cycle from initial
design concept to launch has been approximately 6 to 24 months for some
of our 3D games.
Our systematic game development process includes the following
key steps:
 
•   Concept generation. Our design department takes the lead in
generating game development ideas based on the latest trends in
player preferences. We recruit game players into our design team to
 
closely track the hot topics among our players and on the Internet.
We also encourage all of our employees to provide creative ideas
and concepts for game development.
 
•   Detailed proposal. Upon management’s approval of the new game
concept, the design department will prepare a detailed proposal that
 
sets preliminary storylines and game characters, estimates of costs
and target markets.
 
 •   Development plan. After the completion of the technical review of
the proposal, a project team consisting of our programming staff,
  design staff and graphics artists work together to set the technical
criteria for the game development, and then formulate a game
development plan with development milestones.
 
•   Design, style and story concepts. Based on the game development
plan, our graphics artists will determine the style of the new game
and design game characters, our game designers will develop the
 
game story and define game environments, and our program
developers will develop both the server-end software and the user-
end software modules.
 
•   Internal reviews. Mid-term management reviews will take place
upon the completion of each milestone of the development plan.
Concurrently, our testing department tests the accuracy and
 
completeness of the development, and our marketing department
initiates marketing campaigns according to the development
milestones.
 
•   Closed beta testing and open beta testing. We conduct closed beta
testing to work out technical issues and eliminate technical
  problems. Thereafter, we conduct open beta testing to test the
operation of new games under open market conditions and
introduce new games to players.
 
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Our games are realized through coordination among teams of

program developers, game designers and graphic artists. Our in-house
development team also supports our frequent game upgrades and updates
to accommodate the latest user tastes and preferences and evolving
market trends. We also try to design each of our games to cater to distinct
market segments to grow our overall player base rather than merely
shifting players from one game to another. Furthermore, our games are
developed with built-in multiple-language capability to support our
timely expansion into international markets through a convenient
localization process.