Chinese MMO operator The9 Ltd. has acquired a majority stake in Irvine, California-based massively multiplayer online game developer Red 5 Studios with an investment of approximately $20 million.
The announcement echoes reports circulated in early February that The9 stepped in
to assist the ailing studio with its financial troubles. Red 5, which maintains two studios in Irvine and Shanghai, laid off an undisclosed amount of workers three months ago as it underwent a reorganization and focused its team on "a new direction".
The developer has worked on an unannounced MMO project since Red 5 was founded in 2005 by former members of Blizzard's World of Warcraft
team. Neither Red 5 or The9 clarified if the company's "new direction" constitutes a new project in place of its original game in production, which was rumored to be a massively multiplayer online first-person shooter.
"We are very excited to welcome The9 as our key investor and to announce that they are making a commitment to us with the equity infusion," says Red 5 CEO Mark Kern. "The investment recognizes the hard work of the Red 5 team and the strong potential of the game we are working on, as well as our ability, in the future, to become a multi-game studio."
He adds, "By leveraging The9's outstanding expertise in the operation of online games, we will have a great advantage in bringing our games to millions of online gamers around the world. We look forward to a long and fruitful partnership with The9."
The9 says the investment is a sign of its global strategy taking shape; the Shanghai-based firm believes the deal will enhance its game development capabilities and diversify its portfolio/pipeline. "I believe our collaboration will create new and exciting entertainment content for people around the world," says CEO and chairman Jun Zhu.
With the funding announcement, The9 announced Zhu will take over current president Xiaowei Chen's role in two months. The operator announced it will let Chen's employment contract expire on May 16th, according to a report from local news site Sina translated by
China-focused research firm JLM Pacific Epoch.