Chapter 133: Acquiring Lianzhong

Compared to a fuming and blood-spitting AsiaLink, LianZhong appeared much more calm and collected.

In fact, LianZhong had panicked at the very beginning as well. After all, OO’s reputation within the industry was somewhat terrible at the moment, with everyone labeling the company as completely wild, an absolute barbarian that refused to reason with anyone. Of course, while people said such things out loud, they didn't really care deep down; as long as the misfortune befell QQ and not them, it didn't matter.

However, when the storm finally reached their own doorstep, panic inevitably set in. Yet, after waiting for a few days, LianZhong discovered that the situation did not seem quite as catastrophic. Although their number of active users had indeed decreased, the drop was minimal—not even amounting to ten percent of their total user base. If rounded up or down, it was practically equivalent to zero loss.

At first, they were baffled by this, having heard that AsiaLink’s condition was tragic to the extreme. Eventually, their management realized this was because LianZhong’s customer base was entirely different from OO’s.

OO’s clientele consisted of youngsters, predominantly young people under the age of thirty. LianZhong, however, was quite different; their users were primarily middle-aged and elderly individuals over thirty.

These middle-aged and elderly folks actually had a very low acceptance level for the internet, and most of them were office workers in government agencies or public institutions. Their proficiency with computers was strictly limited to typing, turning the machine on, and shutting it down. Mastering the use of a computer to play cards or mahjong was considered their greatest triumph.

Coupled with a heavy air of conservatism, they looked down their noses at stand-alone video games and online games, dismissing them as toxic opium that corrupted the youth and as the most wicked things in the world. They refused to touch them even with a ten-foot pole.

Conversely, playing card games and mahjong represented traditional Chinese arts and cultural heritage. Playing them online was, therefore, completely acceptable.

In short, children playing games after school was a crime punishable by death, but when they themselves got off work—no, some people even played cards during work hours and ended up losing money—that was classified as reasonable leisure and entertainment.

They were top-tier hypocrites.

LianZhong’s core target demographic happened to be precisely this group of middle-aged and elderly people. Consequently, when faced with the onslaught of the OO Game Center, LianZhong suffered minimal losses because their core user base was entirely different and could not be poached.

Of course, as a result, LianZhong’s small minority of young users would completely vanish. A dozen or so years later, when these young people matured into middle-aged adults and mobile phones replaced computers for playing card games, LianZhong’s doom would likely arrive.

Still, it didn't matter. Who cares about what happens ten years from now?

Thus, LianZhong’s days grew leisurely and carefree once again—until one day, LianZhong’s Chairman, Bao Yueqiao, received a report from his secretary stating that a man named Liu Xiangjiang, claiming to be the Vice President of Jiangnan Group, had come to visit.

"What are people from Jiangnan Group doing here? Coming to throw their weight around?" Bao Yueqiao could not fathom their motive, but he still instructed his secretary to invite the guest inside.

After a brief exchange of polite pleasantries, Liu Xiangjiang cut straight to the chase. "Chairman Bao, as you know, the Jiangnan Computer Technology Service Company under our Jiangnan Group has established the OO gaming platform. Our group is firmly determined to break into the gaming platform sector while simultaneously integrating leisure gaming and large-scale stand-alone game resources."

"To avoid unnecessary and pointless competition between us in the future, I am representing our company to speak with Chairman Bao. We hope to acquire a major stake in LianZhong World, transforming our two companies into one so we can share resources. Wouldn't that be wonderful!"

"Acquire our company!" Bao Yueqiao muttered in contemplation, his mind racing as he thought it over.

Regarding an acquisition, Bao Yueqiao did not hold strong feelings of rejection or approval. Although he served as the chairman of the company, the primary equity was no longer in his hands. Just a few months prior, LianHua Holdings had acquired a 66.7 percent stake in LianZhong World, leaving the three founding members, including Bao Yueqiao, with a mere 33.3 percent.

However, LianHua Holdings had also clearly stated that they had no interest in meddling with operations and would fully support Bao Yueqiao, ensuring his position within the company remained exceptionally stable.

Whether LianZhong World was acquired now made little practical difference to Bao Yueqiao. It would merely mean a change in the controlling shareholder, and his personal interests would suffer no losses. Moreover, to secure his support for the buyout, OO would undoubtedly offer him generous private perks. Under such an acquisition, Bao Yueqiao stood to gain even greater benefits.

Analyzed from the depths of his heart, Bao Yueqiao actually favored being acquired. As long as OO offered enough money, he would vote in favor of it with both hands and feet.

Therefore, the crux of the issue remained money.

"I am already aware of your company's intentions. Obtaining the assistance of your vast resources would be immensely beneficial to LianZhong World, and I personally am very supportive of this acquisition plan."

"However, as you know, I am only the nominal chairman of LianZhong World, and the true controlling stake does not rest in my hands. You will need to negotiate with LianHua Holdings."

"Of course, if your company is not very familiar with LianHua Holdings, I can act as an intermediary to help establish contact. However, LianHua Holdings is a very traditional enterprise; they fail to see how your products could provide any vital assistance to LianZhong World—they are only interested in the sheer amount of money!"

"So, could your company tell me exactly how much money you intend to spend to acquire LianZhong World? That way, it will be easier for me to talk to LianHua Holdings and help everyone reach a cooperation agreement sooner!" Bao Yueqiao phrased it very nicely, but in reality, he simply wanted to figure out Jiangnan's bottom line on pricing to decide whether to help sell out LianZhong World—and by the way, sell out himself as well.

"Well, I understand. As for the exact amount the company is willing to pay, I cannot say with absolute certainty either, as nobody knows what the bottom line in our Chairman Huang's mind truly is. For now, I can only tell Mr. Bao that we are prepared to offer up to 30 million RMB to acquire a total of 60 percent of your company's shares!"

"30 million!" Bao Yueqiao’s expression darkened slightly in an instant. He was not satisfied with this price.

In truth, this price was not particularly low. When they sold out to LianHua Holdings a few months ago, a 66.7 percent stake had only fetched 20 million RMB. Now, Jiangnan Group was willing to shell out 30 million RMB for just 60 percent of the shares, representing a 50 percent increase. It was a fairly respectable offer.

Yet Bao Yueqiao felt it was too low because these past few months had also been a period of explosive user growth for LianZhong Game World. In just a few months, registered users had surged by nearly 10 million, pushing LianZhong World’s total registered user count to 40 million. Among them, paid members reached 500,000, and concurrent online users hit a level of 200,000.

Paid members were LianZhong World's proudest achievement because these were genuine, hard-earned users willing to pay out of pocket. These members were required to pay a monthly membership fee of 30 RMB to enjoy various value-added services provided by LianZhong World.

Such an accomplishment was something only LianZhong World could achieve within the entire industry. Other companies attempting to launch membership services would only end up bruised and battered by reality. For instance, AsiaLink currently had experienced a loss of over half its user base after launching paid services.

The primary reason LianZhong World achieved such stellar performance still boiled down to their customer demographic.

As mentioned earlier, their customer base consisted of middle-aged individuals over thirty. These people were generally middle-class or higher-ranking members of society sitting comfortably in office chairs, and they had the disposable income to spend on the internet.

Secondly, unlike other internet companies that collected fees by selling prepaid point cards, LianZhong World’s primary toll-collection method relied on telephone billing.

Many people belonging to the post-2000 generation reading this might not understand at all: how on earth do you bill through a telephone?

In an era before online banking was ubiquitous, the payment methods available to internet companies, aside from point cards, were limited to telephone billing.

The common method involved dialing a special phone number displayed on the recharge page. Once connected, the other end of the line would ask for the recharge amount. You would use the telephone’s numeric keypad to enter the amount, then press the pound key to confirm, thereby completing the top-up.

Alternatively, you would leave your recharge amount and phone number on the recharge page, and within dozens of seconds, a phone call would come through, automatically broadcasting the recharge information to you. If you approved of the details, you would press the pound key to confirm and finalize the recharge. Both methods followed a remarkably similar routine.

A few years down the line, phone card recharges would also emerge—meaning you would purchase public telephone cards or mobile phone top-up cards issued by various telecommunications companies, and then input the account numbers and passwords from those cards onto a webpage to directly credit the card balances into the games.

Ultimately, these methods all utilized telecommunications companies as intermediaries. Players handed their money over to the telecom companies first, and then the internet companies collected the money from the telecom companies, thereby achieving a relatively convenient recharge method.

However, utilizing these methods for top-ups often meant suffering a price cut skimmed by the intermediary.

For example, if you spent 30 RMB on your phone bill, the amount actually credited to your account might only be 20 RMB, while the remaining 10 RMB was pocketed by the telecom company acting as the middleman.

In that era, the appetite of the telecom companies as middlemen was monstrously huge. The most ruthless telecom companies even engaged in a 1-to-1 skimming ratio—meaning out of a 30 RMB top-up, only 15 RMB actually arrived in your account, while the other 15 RMB was seized by the telecom company. It was dark to the extreme.

This was precisely why products like Alipay and WeChat Pay were able to rise rapidly later on; the telecom companies were simply too predatory. Compared to them, products like Alipay appeared as pure as angels.

Nevertheless, it was precisely through these methods that LianZhong World successfully secured a handsome income. Just last month, LianZhong World achieved profitability for the first time in its history. The membership fees collected surpassed the costs of maintaining servers and network infrastructure for the very first time—a stark contrast to a few months prior, when LianZhong World was still operating at a loss.

Anyone in the know understood that whether an internet company could achieve profitability represented two entirely different valuations for its stock price. The valuation for the former could multiply several times over. Consequently, the current Bao Yueqiao simply turned his nose up at 30 million RMB.