China's Booming Online Gaming Industry Fails to Spark Shares of Giant Interactive and Changyou

   With 457 million online at the end of 2010, China already claims the largest number of Internet users in the world and studies show that the number of users continues to grow at a rapid pace. With roughly two-thirds of these users engaging in online gaming, major online gaming companies have posted surging revenues in recent quarters. The Bedford Report examines the outlook for companies in China's Technology sector and provides stock research on Giant Interactive Group, Inc. (NYSE: GA) and Changyou.com Limited (NASDAQ: CYOU). Access to the full company reports can be found at:

www.bedfordreport.com/GA

www.bedfordreport.com/CYOU

A Pearl study from earlier this year said that Asia's 350,000 internet cafes play a critical role in giving online gamers access to their favorite games. The government is pushing expansion of internet cafes in China by requiring internet cafe chains to operate at least 30 locations across three or more provinces.

Giant Interactive is a leading online game developer and operator in China in terms of market share, and focuses on massively multiplayer online role playing games. Currently, Giant operates multiple games, including ZT Online, ZT Online Green Edition, ZT Online 2, Giant Online, XT Online, and The Golden Land. Earlier this week the company said that third quarter net revenue was RMB457.9 million (US$71.8 million), an increase of 5.0% from the second quarter 2011 and an increase of 35.2% from the third quarter 2010.

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Changyou.com Limited is a leading developer and operator of online games in China. It began operations as a business unit within Sohu.com Inc. in 2003 primarily focused on the development and operation of massively multi-player online role-playing games. Changyou and its subsidiaries currently operate over 10 online games, including in-house developed MMORPGs such as Tian Long Ba Bu, one of the most popular online games in China, and Duke of Mount Deer, as well as Web-based games such as DDTank.

Changyou launched its much anticipated "Duke of Mount Deer" game near the end of Q2. Chang-you developed the game in order to attract a bigger audience of both casual and advanced game players. Changyou met profit views with EPS of 99 cents a share, up 16%. Revenue rose 39% to $119 million vs. views for $118 million.

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