Changyou's Fourth Quarter Revenue Reports Show Decline In Their Online Games

Changyou's fiscal year may have shown an overall increase, rising from $755 million last year to $762 million this year, but their fourth quarter results, released today, show a decline in their online gaming revenues. Changyou's US branch was less well-known, having previously offered Sword Girls, Zentia, Renaissance Heroes, and Dragon Oath, the last of which is the only one that is still running. Steel Ocean has made it to the West, but Changyou's overall presence in the West is quite low. On the contrary, in China, Changyou publishes Warframe and multiple versions of their ever-popular Tian Long Ba Bu, the game that came to be known in the West as Dragon Oath.

The fourth quarter represented a staggering 48% decrease year-over-year in "average active monthly accounts" in Changyou's PC games and a 12% decrease quarter-over-quarter, currently resting at 3.6 million users. The amount of "active paying accounts" in their PC games is now 1.2 million, an 8% decrease both year-over-year and quarter-over-quarter. The company attributes these losses to "the natural declining life cycle of older games." The year-over-year decrease in paying accounts was considered to be offset by the release of Steel Ocean and Warframe, the latter of which saw an increase in revenues in the fourth quarter.

Changyou's mobile games saw a 47% decrease in average active monthly accounts year-over-year and a 54% increase quarter-over-quarter, currently resting at 3.7 million users. Active paying accounts saw a 40% year-over-year decrease and a 50% quarter-over-quarter increase. The decrease is considered to be "a result of the natural life cycle of TLBB 3D" while the sudden increases at the end of the year are attributed to the release of new mobile games.

In total, the quarter landed at $162 million in revenues, a 25% year-over-year decrease and a 14% quarter-over-quarter decrease. Revenue from online games accounted for $127 million of their revenues, a 31% decrease year-over-year and a 17% decrease quarter-over-quarter. This is once again attributed to "the natural decline in revenues of older games" and the sale of 7Road, ultimately leading to less web game income.

Despite these results, the company is optimistic. "2015 has been a year of re-focus for Changyou," said Changyou's Co-CEO Mr. Dewen Chen, "We rationalized our operations, drove up efficiencies and realigned our R&D efforts, which yielded a 2015 record revenue of US$762 million and a non-GAAP net income of US$228 million. The strategy we set forward is 'Big IP, Top Games and Mass Marketing', meaning we will only bring to market the top-level games that meet all of our new testing criteria and we will support these top-level games with our best IP and marketing resources to ensure their success."