Chapter 66: You Think You're Worthy of Being My Rival?

As the Lunar New Year approached, Hujiang, this metropolis on the East China Sea, was shrouded in the damp chill of the season’s first snow. In Pudong’s Zhangjiang Hi-Tech Park, silence reigned. Most internet companies had already closed for the holiday, some as early as two weeks in advance—the cost being the forfeiture of year-end bonuses.

The severity of the “internet winter” was in no way less than the bitter cold itself.

Only a handful of internet companies, those bold enough to venture into the entertainment industry, still pressed on with overtime.

In the President’s Office of Shengda Network, Chen Tianqiao sat with furrowed brows, gazing uneasily at the snowy landscape outside. He was deeply anxious about the future of “Dragon Clan,” the online game he had championed. Though the year-end report was yet to be released, daily data snippets already told him the game’s performance was falling short of his expectations.

Especially when compared to “Legend,” a rival that had launched barely a month earlier—hardly enough time, one would think, for such a pronounced first-mover advantage.

“President Chen, here is the report you requested.” His female secretary placed the document on his desk, then withdrew timidly. No one wanted to cross Chen Tianqiao when he was in a foul mood.

Chen flipped open the report, scanning the crucial figures.

“Still only fifty thousand paying users? We hit forty thousand on the first day of winter break, and the numbers barely budged since.” He did some quick calculations. To catch up with “Legend,” “Dragon Clan” had introduced a thirty-five yuan monthly subscription, which should have been more appealing to hardcore players with ample free time.

During open beta, they’d barely managed to peak at one hundred thousand concurrent users. Registration numbers had, like “Legend,” surpassed a million. But the hard revenue data now spelled the truth: the conversion rate was dismal. At least ninety percent of players who tried the game during the open beta abandoned it once payments began.

It was only 2001; free-to-play online games didn’t exist yet in China. Every game charged for access after the beta, so there were no “migratory locust players” hopping from one free game to the next. If players quit once fees kicked in, it could only mean there was something wrong with “Dragon Clan” itself.

Just a few months ago, he had spent far more to acquire the famed “Dragon Clan” than Gu Cheng had paid for “Legend”—three million in cash, plus forty percent of net profits to the software developer in Dongyi, and a forty percent stake in Shengda Network offered to Macro-Game Valley of Taiwan as an equity partner.

In other words, even if “Dragon Clan” became wildly profitable, Chen Tianqiao and his original team could only ever claim thirty-six percent of the profits.

Even with such a humiliating “concession,” they were still far from great success.

Over fifty thousand paying users, in the first ten days of the winter break, brought in only about two million yuan in revenue. And since the game sold monthly passes, the revenue for the remaining twenty days would likely be even less.

Chen calculated that if he did nothing, even with word of mouth and the growing popularity of online games, the most he could hope for was steady monthly revenue of five million, or sixty million a year.

After deducting one-third for hard costs and twenty percent for marketing, net monthly profit would be less than two million. With forty percent to Dongyi, and another forty percent to the major shareholder from Taiwan, he and his partners would end up with maybe seven hundred thousand in net profit each month. It would take a year just to recoup the initial investment.

Who could say how long the golden years of an online game would last?

Watching the neighboring city’s “Legend Entertainment” rake in three or four million in net profit in its very first month, Chen Tianqiao could not help but feel resentful.

“This won’t do. Absolutely not.” His eyes bloodshot, Chen pored over the report three times, finally pinpointing one problem. “Why is the conversion rate so low among beta users in third- and fourth-tier cities? Is it because the prepaid card channels haven’t reached those areas? I’ve heard Gu Cheng is working on this ‘Internet Café Owner Proxy Recharge System’—should we copy that too?”

Chen’s mind was still sharp and he wasn’t afraid to gamble. He picked up his internal phone and summoned his wife, Luo Qianqian, for a discussion.

Shengda Network’s management was a typical husband-and-wife partnership: Chen Tianqiao as CEO, overseeing strategy and direction; Luo Qianqian as COO, handling the details. Much like the Zuckerberg–Sheryl Sandberg duo years later.

“What’s wrong? You look so troubled. Isn’t the game turning a profit?” Luo Qianqian entered, and seeing her husband’s frustrated expression, tried to comfort him.

Chen laid out his thoughts: “I’m thinking of copying ‘Legend Entertainment’s’ strategy and developing our own Internet café owner recharge system. What do you think? Our conversion rate in third- and fourth-tier cities is far too low! In Beijing, Shanghai, Guangzhou, and Shenzhen we’re on par with ‘Legend,’ but we’re losing big in the secondary markets!”

Luo Qianqian frowned, worried. “Isn’t that too risky? We have no technical expertise in that area. Development would take months, and the promotional costs would be significant—I’ve heard ‘Legend Entertainment’ spends over a million yuan each month just on marketing for their recharge system.”

“What’s your suggestion, then?” Chen replied irritably, lighting a cigar in front of his wife and taking a deep drag.

Looking at his young and beautiful wife always calmed him. Luo Qianqian’s words often reminded him of their hardest days: two years ago, when he was twenty-six and she, a twenty-four-year-old fresh graduate, met and married after only two months, then launched Shengda together. Back then, he was so poor he couldn’t afford a wedding banquet or her dress.

Could things ever be worse than they were then?

Softly, Luo Qianqian advised, “Tianqiao, don’t forget your original intention, or be greedy for too much. A year ago, you’d have been content with two million. Now, another year and we’ll have recouped our investment, and in two, we’ll be millionaires. Isn’t that enough? If luck favors us and ‘Dragon Clan’ stays popular for three years, we’ll be billionaires.”

Chen swallowed his bitterness, wrestling with himself before slapping his thigh. “If it weren’t for ‘Legend Entertainment’—that ‘child from someone else’s family’—I’d be satisfied with a million a year. But with that comparison, how can I not feel resentful?”

After considering for a moment, Luo Qianqian offered an alternative: “How about this? Even if you want to try, we could pilot it on a small scale—pick a few third- or fourth-tier cities where distribution for prepaid cards lags, roll it out in a few hundred cafes, and see how conversion goes. If it works, we follow ‘Legend’ and spend a million a month on marketing; if not, and it doesn’t help sales, we drop it.”

Chen exhaled a cloud of smoke in irritation. “You women—hair long, courage short! By the time you trial it for two or three months, others will have seized the market!”

“What do you want, then? You’re always dreaming up grand strategies—do you even know how much cash the company has on hand for your schemes? Do you know how many bank loan officers have pointed at my nose, asking, ‘Didn’t I hear Shengda is profitable? Why do you keep borrowing more and more?’”

Her voice broke as she spoke, tears streaming down her cheeks, exasperated by her husband’s lack of financial sense.

At last, Chen Tianqiao was left without a retort.

After crying, Luo Qianqian wiped her eyes and sighed. “All right, your idea isn’t without merit. I’ve come up with another solution. You want to quickly test whether a proxy recharge system can boost profits, but we don’t have time to develop or promote our own. So why not borrow one? We’ll pay to trial ‘Legend Entertainment’s’ system in Internet cafés. If it works, we’ll develop our own or sign a long-term contract with them. Is that good enough?”

Chen Tianqiao was stunned by her proposal. “You’d even think of something like that? ‘Legend Entertainment’ is our sworn enemy! They’d laugh at us, not help us. You’d be humiliating yourself!”

“How do you know until you try? Maybe they don’t even care and don’t see us as rivals. And if there’s humiliation, it’s mine to bear, not yours! I’ll take the risk!” With that, Luo Qianqian walked out, not letting her husband object.

Chen felt a wave of humiliation surge from the soles of his feet to the crown of his head, but he couldn’t bring himself to stop her.

...

Three days later, on the second day of the New Year, Luo Qianqian, tired from travel, took a coach to Qiantang, following a map to the offices of “Legend Entertainment.”

She’d called ahead, confirming there would be staff on duty during the holiday, so she wasn’t worried about being left in the cold.

Looking at the mixed-use building by the lakeside, she wondered, “This whole company, working out of a place like this? Yet their game is so much bigger than ours?”

She quickly set aside her condescension and carefully made her way up. A receptionist greeted her warmly, confirmed her identity and purpose, and led her to a small office next door.

Partitioned off with glass, the office was less than ten square meters, without even a water dispenser—if you wanted a drink, you had to fetch it from the meeting room next door.

But what shocked her most was the girl sitting behind the desk.

Luo Qianqian considered herself quite attractive—maybe not a superstar, but in the internet industry, where most women weren’t considered beautiful, she’d always prided herself on being “the prettiest woman in tech.” At twenty-six, she was also proud to have reached the position of COO at such a young age.

But the girl before her couldn’t be more than twenty. How were the rest of them supposed to keep up?

The girl smiled and nodded. “President Luo from Shengda Network, right? Pleased to meet you. I’m Pan Jieying, the person in charge here. What sort of partnership would you like to discuss?”