Veteran Chinese Causal Game Developer OURGAME to Go IPO in Hong Kong

Ourgame was one of the first online game developers in China that was founded in 1998. Starting from self-developed casual games, the company introduced other categories, mobile games and third-party titles along the way.

But the company’s core business has been card, board and Mahjong games, making revenues from virtual item sales. As of March 2014, the accumulated registered users were 396 million, with 51 million on mobile. There are more than 200 games on its platform.

Outgame International Holdings Ltd. filed for IPO in Hong Kong this week. The financials and other metrics show that the company seems to have regained traction after several years of dismay.

The total revenues generated in the first quarter of 2014 is 215.5 million yuan (US$35mn), a 1240% year-over-year increase. The total revenue in 2013 increased 15% to 236 million yuan (US$53mn), netting 35 million yuan (US$6mn) in profit.

As of March 2014, monthly paying users of self-developed games were 309,000, a 49.6% increase. Monthly paying users on mobile was 259,400, up from zero one year ago.

The monthly average revenue per user (ARPU) was 71.7 yuan ($12) in the first quarter this year; ARPU on mobile was way lower that is 15.7 yuan (less than $3).

Back in 2010 Bao Yueqiao, co-founder of Ourgame, told the story how Ourgame was surpassed fast by Tencent’s QQ Games in an interview. (in Chinese) Before the launch of Tencent’s first self-developed game in 2004, Ourgame had been profitable.

It is reported that Ourgame had more than 85% of then China’s casual game market. Tencent’s first game was a copycat of a Ourgame game. Ourgame immediately sensed that the Tencent one would gain traction fast by leveraging its already-large user base. Being angry though, Ourgame decided to cooperate with Tencent.

But Tencent rejected Ourgame and QQ Games would soon become one of the largest casual game platforms and eventually the largest online gaming player in terms of revenue in China with copycats and licensed games.

There are, of course, other reasons that Ourgame didn’t become a big gaming company; for instance, casual games are not designed for users to spend a lot of money.

It seems a lot of Chinese gaming companies wanted a turnaround when some mobile games began making money. It is estimated users may spend more money on small mobile games thanks to the convenience of payment services and that they have more time to play casual games on mobile phones than on PC.

What’s interesting is Tencent launched its first mobile card game on Mobile QQ and WeChat yesterday. And unlike 2004, the mobile messaging app by Tencent is way more powerful than its previous flagship product QQ.