CDC Games, a business unit of CDC Corporation (NASDAQ: CHINA) and pioneer of the "free-to-play, pay-for-merchandise" model for online games in China, announced today it has completed its previously announced strategic investment in MGame Corporation, a South Korean developer of online games including Yulgang, which is CDC Games licensed free-to-play game in China.

Through this equity investment, CDC Games has expanded its relationship from being a licensee to MGame's largest external shareholder. CDC also has obtained exclusive distribution rights in China for MGame’s next Massive Multiplayer Online Role Playing Game (MMORPG) titled Wind Forest Fire Mountain (WFFM). In addition to acquiring exclusive distribution rights for WFFM in China, CDC Games has extended the license of Yulgang to 2010.

One of China’s leading online game companies, Shanda (NASDAQ:SNDA) today announced its financial results for Q1 2007, in which the company reported $68.8 million in revenue and $58 million in net income. Compared to Q4 2006, the numbers are up by 13% and 87% respectively.

Sichuan based computer maker Sinomanic launched production of a series of low-end computers for the less developed regions in China. Priced as low as 998RMB ($130), these computers will include a Linux operating system, MIPS processor, multimedia and network supports. Internet browsing and document processing software will also be packaged into these systems.

Chip maker Intel (NASDAQ:INTC) today announced its Chinese blog at blogs.intel.com/china, making it one of the few Western technology company to use a blog to communicate with its customers in China. Bloggers on the site will include Intel China’s technology and management executives.

Hong Kong based financial information provider Finet Group Limited (HKG:8317) announced on May 16 that it will acquire Chinese online game developer and operator Tianchang for $26 million in cash, making it the largest acquisition in the China’s rapidly growing MMRPG segment yet. Founded in 2005, Tianchang develops 3D MMORPGs using its own Tianji development engine. The company has now launched 2 MMORPGs in China and is planning on launching up to 5 more in-house developed games and 2 to 3 licensed games in 2007.

In an interview with Pearl Research, Redline China’s parent company, Finet indicated that it is that confident Tianchang’s experienced management team and in-house 3D engine will make the company a strong competitor in the Chinese games market. In addition, Finet’s injection of capital will give Tianchang the resources needed for marketing games in the hyper-competitive Chinese games market.

China’s leading game company Netease (NASDAQ: NTES) announced its unaudited financial results for Q1 2007. During the quarter, Netease generated $71.8 million in revenue, out of which $62.4 million were from its online games. Profit was also up, reaching $39 million and beat Wall Street estimates by more than $2 million. Despite the revenue growth, performance of Netease’s games during the quarter was mixed. While Fantasy Westward Journey had approximately 1.5 million peak concurrent users, the launch of its new game Tianxia II was delayed due to some of the game’s features.

Chinese online advertising firms MeetExpo and Mtad today announced their merger to form Meaton. Redline China believes the merger is in response to recent acquisitions in the online advertising sector including Focus Media’s acquisition of Allyes and Google’s purchase of Doubleclick.

The9 (NASDAQ:NCTY) and EA (NASDAQ: ERTS) today announced a equity investment agreement, according to which EA will invest approximately $167 million in exchange for a 15% stake in the latter company. In addition, The9 acquired exclusive rights to operate EA’s new online sports game FIFA Online in China. Rumors for the agreement have been circulating since early April and the completion of the deal will strengthen EA’s presence in the fast-growing Chinese games market. In addition, the investment will improve The9’s cash position, which will allow the company to expend its online game offerings in China. Seoul-based Neowiz is currently operating FIFA Online in Korea, one of Korea’s most popular online titles. Both The9 and EA believe the large soccer fan base and the upcoming Beijing Olympics will pave the way for FIFA Online to become a top performer in the market.

The9 announced another licensing agreement today with Korean game developer G10 Entertainment to operate music casual game Audition 2. This is yet another key move to diversify the game operator’s portfolio and revenue stream. Operated in China by 9You, Audition 2’s prequel Audition is one of the most popular casual games in China with over 780,000 peak concurrent users. Audition 2 is expected to perform strongly in China as Audition 2 offers more community-oriented functions and enhanced features. The game is set to enter beta testing in Korea in the second half of 2007 and the Chinese version will soon follow.

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Advertising firm Focus Media (NASDAQ: FMCN), which recently acquired Internet advertising agency Allyes, announced its financial results for Q1 2007 on May 17. The company reported $58.1 million in revenues and $16.3 million in net income, up 75% and 77% year-over-year.