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KongZhong: Guild Wars 2 Improvements On The Way?

ArenaNet announced an expansion pack for Guild Wars 2 in late January, a development which definitely should be on KongZhong (NASDAQ:KZ) investors’ radar. When KongZhong launched the game in May 2014, the size and scale of promotion activities clearly telegraphed high hopes for the title; however, results ultimately didn’t live up to expectations in the quarters that followed. Indeed, the relatively lackluster performance of the title was one of the reasons for Q3 revenue missing management’s own projections (it didn’t help that World of Warplanes also met a relatively cool reception).

As discussed in our recap of Q3, both the gameplay in Guild Wars 2 was something of a new approach, as was the licensing model (buy a CD upfront instead of free to play), which seem to have been factors in players’ response to the game. Of these two factors, gameplay may have been a bigger contributor than the licensing model – if a game is popular, hardcore gamers will probably pay for it, irrespective of how.

On the Q3 call, management did reveal that it was aware of the issues with Guild Wars 2, and was actively working with the game’s developer to make adjustments to the game. It seems that with the recent announcement from ArenaNet, much-needed fixes for the game may be one step closer to becoming reality.

The devil is in the details, and without a release date, it’s tough to speculate when the expansion pack might be available to Chinese gamers, but there seem to be some promising changes on the way. Specifically, the new expansion pack will change the way players progress through character development, as well as add some new gameplay styles (world vs. world, guild vs. guild game modes).

Based on cryptic comments from the game’s developers, it sounds like a playable beta version of the expansion pack will be announced in Q1 FY2015, raising the possibility that it could be released in Q2/Q3. But what about players in China (and the impact on KongZhong)? Given the heavy emphasis and promotion of the game prior to launch, we would not be surprised if KongZhong’s engineers have already begun working on the Chinese version. This is purely speculation on our part, but the Chinese market is an important one for the game (as indicated on earlier NCSoft conference calls), and accelerating the expansion pack’s release would send a strong signal to the gamer audience in China.

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