Kingsoft Signs Game Co-operation Deal with YY VIE Huaduo
Kingsoft, 12/30/14
Chinese online game developer and operator Kingsoft (3888.HK) has announced that it has signed a 3-year framework agreement covering the joint operation of online games with Guangzhou-based online game operator Huaduo Group (Guangzhou Huaduo Internet Technology Limited and its subsidiaries).
Under the agreement, Kingsoft and Huaduo will jointly operate games developed and owned by Kingsoft or games licensed to be operated by Kingsoft. Kingsoft will provide its game contents, relevant updates and technical support. Huaduo Group will provide operational services, including but not limited to the game distribution and promotion, operation by way of exclusive licensing or joint operation of games, on platforms such as website, software, PC products and mobile platforms.
The two parties have agreed on two types of pricing principals, namely (i) sharing the allocable revenue generated from the operation of the games in an agreed proportion; (ii) sharing the allocable revenue generated from the operation of the games in an agreed proportion plus charging the licensing fees for the games. The agreed proportion and the licensing fees shall be based on the prevailing fair market pricing rules adopted in the same industry.
The agreement covers a 3-year period, from December 30, 2014 to December 29, 2017, and sets out proposed annual caps for fees payable by Huaduo Group to Kingsoft for the three years ending December 29, 2017. The caps for 2015, 2016, and 2017 (in each case, the period from January 1 to December 29) will be RMB 50 mln, RMB 65 mln, and RMB 80 mln, respectively.
Kingsoft believes that the joint operation of games with Huaduo Group will help attract more users of the games provided by Kingsoft, in turn helping generate more revenues for Kingsoft.
Huaduo is an associate of Lei Jun, a Director and substantial shareholder of Kingsoft.
Editor's Note: Huaduo is the PRC operating entity for YY Inc.'s (Nasdaq: YY) browser gaming portal Duowan.com.
Keywords: revenue share Lei Jun Kingsoft Internet 3888.HK Huaduo online gaming Duowan YY
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