The9

Prospectus Summary

The9 Limited

Our Business

We are an online game operator and developer in China. Through 9Webzen Limited, a joint venture in which we own 51%, we have become one of the three largest online game operators in China, as measured by estimated 2003 online game revenues in China according to International Data Corporation, or IDC, a leading market research firm. We began to offer our self-developed online virtual community game “the9 City” in 2000 and commercialized the9 City in December 2000. Currently, our business is primarily focused on operating “MU” in China through 9Webzen in which Webzen Inc., a leading online game developer and operator in Korea, owns 49%. 9Webzen has obtained an exclusive license from Webzen to operate MU in China. MU is a three-dimensional, or 3D, massively multiplayer online role playing game, or MMORPG, which allows thousands of players to concurrently log on to network servers to “role-play” characters in a virtual world. Because MMORPGs require a significant amount of time to master, they tend to have a high degree of user attraction, which means that users tend to spend greater amounts of time playing these games than using other Internet applications. In the three months ended September 30, 2004, we recorded over 189,000 MU peak concurrent players and over 134,000 MU average concurrent players, which measure the highest and daily average numbers, respectively, of game players simultaneously logged on to our game servers. During the same period, we also recorded over 1,527,000 average monthly active paying MU players, which measures the monthly average of the total number of game players who have used their prepaid game playing time during each month of the quarterly period. According to a December 2003 report issued by IDC, MU was ranked among the three most popular online games in China.

To broaden our product and service offerings, we have obtained exclusive licenses to localize and operate additional MMORPGs in China, including “World of Warcraft,” or WoW, “Mystina Online” and “Granado Espada.” WoW is an MMORPG developed by Blizzard Entertainment, the game development studio of Vivendi Universal Games Inc., which has developed award-winning PC games including the Warcraft, Diablo and StarCraft series. We intend to launch a test version of WoW in China in the first half of 2005 followed by the commercial launch in 2005. In addition, we have recently obtained an exclusive license to operate “Mystina Online” in China. Mystina Online is a new MMORPG developed by an online game developer in China. We are currently operating an open test version of Mystina Online and expect to commercially launch the game in early 2005. We have also recently obtained an exclusive license from Hanbitsoft, Inc. to localize and operate Granado Espada in China. Granado Espada is an MMORPG that is currently being developed by Korean game developer IMC Games, Co., Ltd., which is partly owned by Hanbitsoft. We are aggressively expanding our own product development capabilities to develop a suite of proprietary online games, including MMORPGs. We currently expect to launch the test version of our first proprietary game, “Joyful Journey West,” a side scrolling MMORPG based on cartoon characters, in early 2005, followed by the commercial launch in 2005. In addition, in April 2004, we invested US$4.0 million for a 20% stake in Object Software, an established game developer based in China which has developed a number of PC games and online games including several award-winning games. Concurrently with our equity investment, we have obtained a right of first refusal to acquire licenses to operate in China all the online games developed by Object Software during the first two-year period after our investment. Furthermore, we have begun to offer game-related short messaging services, or SMS, including player accounts password protection service.

We charge customers for the time they spend playing our online games. Our customers typically access our online games through PCs at home or in Internet cafés. They obtain our game playing time primarily through purchasing our prepaid cards at various retail outlets or purchasing online points at one of the more than 115,000 Internet cafés throughout China which have subscribed to our Pass9 system. Pass9 is our proprietary, fully integrated online membership management and payment system, which offers one-stop account management and payment services to our customers and facilitates our payment arrangements with distributors and Internet cafés. To ensure quality customer service and seamless operations, we maintain a powerful technology platform consisting of over 2,400 servers and over 290 network devices.

We have been actively managing the daily operations of 9Webzen since its inception in October 2002. We account for our interest in 9Webzen using the equity method as Webzen has the right to participate in certain decisions to be made in the ordinary course of business of 9Webzen. We currently derive our revenues primarily from provision of game operating support services to 9Webzen in connection with operating MU in China. 9Webzen derives substantially all of its revenues through the sales of prepaid cards and prepaid online points for MU playing time to distributors, who in turn sell them to end customers. In 2003 and the six months ended June 30, 2004, we generated net income of RMB48.5 million (US$5.9 million) and RMB13.6 million (US$1.6 million), respectively, and 9Webzen generated net income of RMB97.8 million (US$11.8 million) and RMB21.9 million (US$2.6 million), respectively. In the nine months ended September 30, 2004, we and 9Webzen generated net income of RMB16.7 million (US$2.0 million) and net income of RMB32.9 million (US$4.0 million), respectively.

Industry Background

The evolution of the Internet into an accessible, easy-to-use, platform-independent global network capable of supporting multimedia applications has led to the development and growth of the online game industry. According to Datamonitor, a leading market research firm, approximately 36 million consumers in the Asia-Pacific region played online games over the Internet in 2003, generating over 70% of the global online game revenue in 2003. In the Asia-Pacific region, we believe China currently is one of the key markets with substantial growth potential.

According to an April 2004 report issued by IDC, China is a newly developing market that was expected to generate total online game revenue of US$238 million in 2004, representing an increase of 48.9% over revenues of US$160 million in 2003. The following table sets forth IDC’s estimate of the online game market in China for the period from 2003 to 2008.

China Internet and Online Game Industry Forecast