Online Gaming Portal, NetDragon, Bets Big on Augmented and Virtual Reality
China’s leading online gaming portal, NetDragon Websoft, the Hong Kong-listed operator of NetDragon, is ramping up investments in augmented reality and virtual reality technologies in order to increase user growth at its core games and online education businesses.
NetDragon, which is based in Fujian province, announced on Monday that it had acquired Cherrypicks Alpha, the AR and VR research arm of its Hong Kong subsidiary Cherrypicks, for US$6 million in cash and shares. It also committed to an injection of additional capital, up to US$12 million, into Cherrypicks to step up the business expansion of this local mobile marketing and e-commerce solutions provider.
Cherrypicks Acquired by NetDragon
Cherrypicks was acquired by NetDragon for nearly $30 million in cash and new shares in 2014.
NetDragon chairman Liu Dejian’s had earlier, in February, stated that the company’s educational product line would be enhanced by VR technology.
Augmented Reality seamlessly integrates digital information in real time with a user’s immediate environment, such as a smartphone application that provides global positioning system data to identify the user’s location.
Virtual Reality, on the other hand, provides the user with a totally artificial environment using computer-generated images. VR has recently started gaining widespread popularity using advanced video game software and hardware.
NetDragon’s vice-chairman, Simon Leung Lim-kin, said on Monday that the VR and AR solutions from cherrypicks Alpha “can directly support all our business units”.
NetDragon Aims for Global Online Education
NetDragon, which was established in 1999, owns and operates popular multiplayer online role-playing games, such as Eudemons Online and Conquer Online, as well as gaming portal 17173.com. The company has a stated aim of carving out a profitable niche in the global online education market after completing its $130 million acquisition of London-listed Promethean World, a provider of interactive learning technologies, in November.
“NetDragon’s recent acquisition of Promethean, a provider of interactive learning technologies with a user base of 1.3 million classrooms globally, also has the potential to deliver cherrypicks alpha AR technology to an enormous audience in the K12 (kindergarten-to-grade 12) space,” Leung said.
NetDragon has, since 2014, been accelerating the development of its online and mobile education business, including social networks, cloud platforms, media tablets and interactive classroom software for children in both primary and secondary schools.
The firm is also developing vocational, non-academic credentials and other educational products, particularly those that use an interactive gaming model.
NetDragon Raised Many Millions
In January 2015, NetDragon raised US$52.5 million from new investors, including IDG Capital Partners, Vertex Venture and Shenzhen-listed animation producer Alpha Animation, to support its online education activities.
Internet consultancy iResearch estimated that mainland China’s online education market posted a total revenue of 119.2 billion Yuan in 2015, up from 99.8 billion Yuan in 2014.
CCB International analyst Eric Qiu said in a report that: “pressure will remain on NetDragon’s short-term profitability as long as its education business remains at the investment stage.”
Whilst NetDragon reported a net loss of 142.98 million Yuan in 2015, compared with a 176.68 million net profit in 2014, its revenue grew 32 percent to 1.27 billion Yuan last year from 962.82 billion Yuan in 2014.
“Despite the mixed results, we remain positive on NetDragon as it shifts its focus to its more promising education business,” Qiu said.