(Update Nov 20) Grus had a good post on trader818 explaining the online games and its competitive nature. So I can shut up.
(Original) I have traded the three old horsemen among Chinese online game companies 2 years ago(unfortunately, lost money on all three): Shanda (SNDA), NetEase (NTES) and the9 (NCTY). I paid attention to them from time to time, and I think recent developments in those 3 companies are interesting, especially from business point of view.
First, the good news from Shanda. Two years ago SNDA stock is in a downward trend, because its main revenue source: lineage II was getting old. Since then SNDA did a few things: it sold Sina stock and took a big gain; it changed its business model from making money from subscription to making money from selling stuffs used in game; it also acted more like a VC, I mean it bought some popular game in its early stage, then leverage its distribution network to make money.
NetEase, the old game (westward series) are really getting old, the new in-house games are not taking the slack from westward. Other effects such as web search is too little too late. In my mind, Mr. Ding Lei was very lucky in the past, in terms get into the right field in the right time (email service, mobile value added service, and online game). Will he be lucky all the time?