Lord of the CDC Corp – Part 2
CDC Corp (NASDAQ: CHINA) stock rose 13.5% today without any news and on heavy volume (closing at $2.77 on 2.5x average vol and up another 2.9% after hours). The stock was up 5% in the prior trading session, also on higher than average volume. It makes you wonder what’s really going on. The only thing I can think of which might be driving up CDC Corp stock the last 2 trading sessions is the impending launch of Lord of the Rings Game in China. As I mentioned in my prior post, I own a bunch of CDC Corp stock — stock that I bought a long time ago at a much higher price than now. So please bear that in mind as you read my analysis.
I really can’t tell you much more than what I wrote in my last post on Friday. CDC Corp is in a pretty good position to take advantage of the enormous MMORPG market in China with the LOTRO game. Initial response has been good and the stress testing has gone well according to their own press releases. Also, I stumbled on this interesting thread today on the US Lord of the Rings online forums. One of the posters wrote:
“CDC apparently thinks it has a hit on its hands – they were planning on up to 1/2 a million people trying it out in open beta, and have scaled their datacenters to handle a theoretical limit of 300K concurrent users once the game goes live (!). Even if they only run at 50% of their capacity, that could still mean a couple of million players (since they won’t all be playing at once). Article here. It’s from last month, but I just ran across it this morning.
They also talk about the infrastructure they’re using. Since it’s likely that Turbine has given them reference server specs to use when setting up the game, these specs may also apply to the datacenters in the US and EU:
World server clusters consist of 20 servers per world.
There are (on average) 2 high-volume storage devices to hold the databases for each world.
They were able to handle over 3000 players per world without performance issues.
They’ve leased enough servers (2000!) for 100 worlds total in 10 different Chinese cities.
The game is being installed on 4 million computers in internet cafes across China.
Wowza. I hope they hit their goals. The ARPU (Avg Revenue Per User) per month in China sucks compared to here, but their customer service costs are a lot lower and they have a lot of gamers.
(By the way, that 3000+ number lines up nicely with the stress tests they’ve done here – in AC2, they hit ~3500 players, and in LOTRO they hit over 3000).”
You can see the full thread here: http://forums.lotro.com/showthread.php?t=291027
One last tidbit: The CDC Corp options look like an interesting play. In particular, the January 2010 $2.50 calls look cheap at $0.70. I picked some up today for that exact reason.
As always, do your own due diligence!
