According to Sina.com, The9 (NCTY) has secretly signed an agreement with Shanghai Alliance Investment to take over 50% of the stake of MSN China held by the latter.
As MSN China's market value is estimated to be more than US$200 million, it is said that the9 will spend $100 million on the transaction.
Local media predicts this transaction may involve a deeper cooperation on the capital level between Microsoft and the9 in the future. The two parties may choose a cooperation pattern that is similar with that of Yahoo and Alibaba. However, none of the parties involved have made any comment.
In May 2005, Microsoft and Shanghai Alliance Investment jointly set up Shanghai MSN Network Communications Technology Co., Ltd with each of the parties holding 50% of the stake of the company. Through this Shanghai company, Microsoft brought MSN and other value-added services to China. However, in the past two years, the company has been operated with an unclear business pattern, which is believed to be the main reason that Shanghai Alliance Investment wants to withdraw from the deal.
The9 is currently running a number of online games in China, including World of Warcraft which contributed to 90% of its total revenue in the second quarter of this year. However, compared with other Chinese entertainment service providers like Shanda and Netease, The9's business pattern is not diversified and currently lacks flexibility. This may be a reason the company wants to explore other fields.