NOV. 19, 2009 • The Government of Singapore Investment Corp. (GIC) sovereign wealth fund took a 5.4% stake in China’s Shanda Games, the online game spin-off of Shanda Interactive Ent. GIC’s investment totaled $47 million. A month later, Shanda Games formed a joint venture with Kingsoft Corporation to develop online games together.

Impact: In practice, we see these developments as Shanda moving to bolster its catalog of content. Shanda really wants to be an international player, but they don’t have enough of their own titles at the moment. The acquisition of Goldcool directly secures strong titles for international distribution, and the joint venture is primarily for distribution of Kingsoft’s games through Shanda in global markets. To bring more titles along with a JV means they don’t have to license games, just execute the sales and marketing for Kingsoft’s games. Kingsoft is known for good development and Shanda is known for sound business sense in partnerships and licensing. This JV should be a complementary relationship that leaves most of the core business lines of both partners out of the reach of each other. On the whole, a positive partnership that won’t result in any damage to the rest of the market.