On September 9th, 2009, KongZhong Corporation announced a strategic relationship with CCTV.com, the exclusive Internet platform for China Central Television (CCTV), to develop and launch the site’s mobile platform: wap.CCTV.com. Mr. Wang Wen Bin, General Manager of CCTV.com elaborates on the project’s potential: “wap.CCTV.com is a key project to leverage the synergies between new media (mobile Internet) and traditional media (TV) to become the primary platform for future large events which require mobile Internet interactivity. From today onwards, CCTV users will not only be able to access our programming via the TV and the Internet, but now via their mobile phones, anytime and anywhere.” CCTV, China’s official State TV broadcaster, has an audience of roughly 1.2 billion people. Such a partnership represents a major growth opportunity for the company and could directly lead to other mobile news or television initiatives.

Another significant growth area for the company lies in the mobile games segment. Q2 mobile games revenues of $6.8 million (20% of Q2 gross revenue) represented a 38% increase from Q1 and a 368% increase from the same period in 2008. Management expects the percentage of revenue from mobile games to increase through 2010. A subset of the mobile game segment in which KongZhong is becoming increasingly involved is the massively multiplayer online (MMO) game segment. In Q2, 26% of mobile game revenues were from MMO games, up from 16% in Q1. The company’s flagship MMO game, Tian Jie, and the recently introduced Feng Shen have a combined 600,000 active monthly users.

Commentary prepared by Henry Sandberg