Chen Tianqiao wants more. In the past few months he has put into motion a plan to parlay his gaming network’s success into China’s first all-in-one online media supermarket. In February Chen bought 19.5% of Sina, China’s online news leader and biggest Internet portal, for $230 million in cash. In April Shanda announced a partnership with Universal Music Group, the world’s largest music company, that will allow Shanda users to stream tunes to their PCs. It is Universal’s first online sales foray into China and Chen’s first foray into music. The service begins in June. “We want to be something like an interactive Disney or an interactive Viacom,” Chen says.
But to do so he needs mass distribution into the Chinese home–and there the PC is a poor pipeline. Only 94 million of China’s 1.3 billion people were Internet users at the end of last year, but 330 million have TV sets. A huge chunk of Shanda users are nomads, logging in from Internet cafes.
Later this year Chen will unveil a new interactive entertainment box, dubbed the Shanda Station, that will allow TV viewers to go online, play Shanda’s games and buy music and, eventually, films. Developed in part with Intel, the product uses Microsoft software and connects to the Internet over high-speed DSLphone lines. Shanda is considering putting voice and video calling features inside the Shanda Station, which will be sold through electronics chain stores, plus Shanda’s own sales channels. The manufacturing will be outsourced. “The most important thing for us right now is the expansion from the PC to the TV,” Chen says. “We sell fun games, but this is a serious business.”
A home audience will also give Shanda a better claim on China’s torrid advertising market…Says Safa Rashtchy, senior research analyst at Piper Jaffray in Menlo Park, Calif.: “Shanda has the potential to be one of three or four really big media companies in China.”