Chapter 51: No One Can Take All the Profits Alone

"A-Cheng, per your instructions, those two deals have been successfully negotiated. For three million US dollars, we have completely bought out the entire source code, development materials, and assets of *Angel Online*. Our company's team will refine them further before launching the game into the market.

Additionally, we managed to increase the one-time upfront agency fee to two million US dollars, which successfully extended the exclusive agency period for *Ragnarok Online* to three years. We also reduced the technical service fee to ten percent of revenue, and the developer, GRAVITY, agreed to allow our technical personnel to participate in the upgrade and development of various versions, as well as share a portion of their R&D materials.

If you find everything in order, I will proceed with the handover and return to my own duties. As for *MU Online*, we are merely keeping tabs on it as you ordered, without making any major moves, awaiting your personal handling."

Cheryl neatly placed several legal documents on Gu Cheng's desk, and Gu Cheng was quite satisfied after reviewing them.

Strictly speaking, these matters were long past the point where Cheryl should have had to get involved.

However, since she had certain connections within those East Asian gaming companies, it was convenient for her to step forward. Since Gu Cheng could not yet completely shake off his cooperation with the East Asians at present, he had no choice but to wrong Cheryl by having her occasionally pull off these demanding side tasks.

"Sister Cheryl, thank you for your hard work. I've thought about it; at the end of the year, I will grant you an additional two percent personal dividend option in Legend Entertainment. Just for the various measures you've taken over the past year to recover losses for the company, you are well worth this price."

Gu Cheng closed the documents and calmly stated his terms. What he was offering were merely dividend options, not equity—meaning Cheryl could draw dividends from the company's operations, but could not directly sell equity to cash out.

Cheryl's breathing hitched slightly, and though she wanted to offer some words of refusal, she ultimately said nothing.

Gu Cheng was using this method to express his appreciation and apology while simultaneously keeping a distance from her.

"Thank you. If there is nothing else, I will head down now."

"Go ahead. By the way, please help me notify the administrative department to arrange a car to Shanghai today. I will personally negotiate with Zhu Jun."

"Understood."

***

After discussing it with his cousin the day before, Gu Cheng ultimately decided that when it came to finding a shell company to take over, it was better to keep things consolidated and avoid unnecessary trouble.

Since Zhu Jun had also set his sights on WEBZEN's project *MU Online*, it was better for everyone to lay their cards on the table and talk it out.

Gu Cheng had online payment channels covering nearly fifty thousand internet cafes across all of China. When it came to distributing game point cards and promoting online games, no one in the country could match him as an opponent. He believed that as long as Zhu Jun was not an idiot, once he extended an olive branch and shared a small slice of the pie, Zhu Jun would know what to do.

Furthermore, Gu Cheng cared about the fact that while Zhu Jun might become somewhat arrogant and unruly later in history, he was, after all, quite a talent in the early days. Gu Cheng currently lacked top-tier talent to properly run a gaming company, and he himself was increasingly lacking the energy to personally operate online games. Absorbing a capable team was certainly no bad thing.

That very day, Gu Cheng had his driver take him to Shanghai to meet with Zhu Jun of The9.

***

In 2002, The9 was merely a community where gamers gathered, with a market value of perhaps a little over two million US dollars. However, considering that this was the tail end of the internet winter, everyone was reluctant to cash out and preferred to hold onto their assets, so its actual value might have been slightly underestimated.

The9's website and forums were somewhat of a hodgepodge. When it came to online game guides, information, and discussions, it fell short of 17173, which was then at the zenith of its popularity. When it came to gathering single-player gamers, it lagged behind veteran single-player sites like 3DM and Gamersky. It was essentially a messy stew.

Zhu Jun was a middle-aged man around thirty-five years old, with quite a decent appearance. This time, having raised a large sum of money with the intention of ambushing *MU Online*, he harbored the mindset of "monetizing the popularity gathered within his existing gaming community into online game revenue." He could be considered a pioneer in the domestic attempt to channel the "from community to game" monetization route, possessing a certain degree of vision.

Given Gu Cheng's current standing in the industry, it was effortless for him to secure a meeting with Zhu Jun. With just a phone call made a day in advance for an appointment, Zhu Jun waited at the company for him the entire day.

"President Gu, a pleasure to meet you. It is our honor that you could come to The9 to inspect and discuss cooperation."

As soon as Gu Cheng arrived in Zhu Jun's private office, Zhu Jun very politely brewed tea himself and even called a pretty female assistant to help Gu Cheng hang up his coat—it was already late autumn, and while Gu Cheng wore a heavy trench coat outside, the indoor space was heated and equipped with a humidifier.

Gu Cheng sat down on the sofa and graciously took a small sip. "Keemun black tea? President Zhu is fond of this blend?"

Zhu Jun sat back down in his swivel chair, leaning forward slightly, his attitude visibly humble. "I am a local, and my palate tends to be rather Westernized; I've grown accustomed to black tea. If President Gu is not used to Keemun, I also have Lapsang Souchong here."

"Don't bother, I'm a vulgar person and don't fuss over tea," Gu Cheng said, cutting short the other man's affectations. Up to this point, Zhu Jun's performance had been quite cooperative, which made it easier for Gu Cheng to state his purpose.

"You probably understand the purpose of my visit this time—I've also had people inquiring about *MU Online*. I am somewhat optimistic about this game, but its current development progress is hardly suitable for direct commercial operation; it needs to be made more refined."

Zhu Jun's expression tightened slightly, as if he wanted to reason with Gu Cheng, but he wisely held his tongue and said nothing.

He knew his own strength and industry standing were far too inferior to Gu Cheng's. Without the certainty to counter the other party, reasoning was useless, so it was better to wait and see.

Seeing that Zhu Jun did not show any violent reaction, Gu Cheng continued, "Presumably, President Zhu also understands the immense distribution channel power held by Alipay in my hands, especially the 'Alipay Professional Edition' or 'Merchant Edition' used by the owners of nearly 50,000 internet cafes nationwide. There are many good games in this world—three parts quality, seven parts operation. Even if *MU Online* is a good game, in your hands versus in mine, the sales volume can easily differ by at least fivefold."

Zhu Jun finally lost his composure slightly, the nasolabial folds on his cheeks twitching. "Is President Gu hoping that I give up and withdraw?"

Gu Cheng gestured for the other man to remain calm. "If I were to compete with you, you certainly wouldn't win against me; I would simply crush you with capital—WEBZEN offered you two million US dollars, right? Let me calculate your cash flow; at most, you've raised a little over three million. From my perspective, throwing out five million is a breeze. But I see that you are somewhat of a talent, and your concept of 'transitioning from a gaming discussion community to game operation and monetization' is both clear and innovative, so I am willing to give you a chance to cooperate."

Zhu Jun swallowed hard. "Let's hear it."

Gu Cheng pulled several drafts of negotiation documents from his bag and pointed to them as he spoke.

"Your forum is currently worth about two million US dollars—back in 1998, you spent five million—no, fifty thousand US dollars to start and build the site, and you've invested some money here and there since then. I'm giving you this valuation precisely because you've put down a substantial amount of capital. Combined with your other various resources that can be used to vie for *MU Online*, I am willing to put up a total of five million US dollars to buy an 80 percent stake in The9. On top of that, I will inject an additional two million US dollars into your company.

Then, you can take this money and personally go negotiate a partnership with WEBZEN. You can tell them that you have secured the strategic cooperation authorization of Legend Entertainment, and that as long as you acquire *MU Online*, all distribution channels of the 'Alipay Professional Edition' will prioritize recommending that game—that way, the East Asians will compromise and offer you terms even more favorable than the current ones."

***

"You want to acquire 80 percent of my company's shares for a total of five million US dollars? That is less than a thirty percent premium over our current valuation! Furthermore, the internet winter is coming to an end soon; why would I sell my company during this trough?" Zhu Jun's mind hadn't fully processed the logic yet, and his tone was filled with reluctance.

"There is one thing you need to understand—once you secure my distribution channels, even if you are left with only 20 percent of the shares in your hands, it will be worth far more than your current 100 percent. Besides, if you refuse, you won't even get *MU Online*." Gu Cheng patiently persuaded him while observing the other man's reaction.

In history, years later, Pony Ma of Tencent invested in and acquired a stake in Richard Liu's JD.com, putting up several times less money than the previous round's Tiger Fund while securing a larger equity stake than them. The most crucial behind-the-scenes condition for this was Pony Ma's promise: as long as you hand over 30 percent of JD's equity to me, I will direct the traffic portal of WeChat's "E-commerce" widget to JD.

The traffic portal of a payment platform with a massive user base was immensely valuable. It was precisely because Richard Liu knew that the traffic diversion behind the "E-commerce" button in WeChat Wallet could make JD grow many times over that he agreed to these humiliating terms.

The logic behind today's negotiation between Gu Cheng and Zhu Jun was largely the same. However, since this type of cooperation model had rarely been seen in the industry before, Zhu Jun needed some time to process and digest it.

Zhu Jun's intelligence was not low; once he figured it out, he grew somewhat tempted.

What followed were some minor rounds of bargaining.

Both parties summoned their lawyers and business negotiation assistants to handle the details, ultimately temporarily finalizing an agreement: Legend Entertainment would invest six million US dollars to acquire The9, leaving Zhu Jun and his management team with a 20 percent equity stake. Meanwhile, the operational funding injected by Legend Entertainment into the new The9 for the *MU Online* project would be increased from the two million US dollars Gu Cheng initially promised to four million.

Considering that 80 percent of the company's equity already belonged to Legend Entertainment by this point, only 400,000 of the newly injected two million would directly benefit Zhu Jun, something Gu Cheng naturally did not care about.

After all, for a game to run well, the early-stage advertising expenses and free-testing-phase expenses were quite substantial. To make the server capacity and bandwidth large enough during the testing period and make the game sufficiently sensational, these funds were entirely indispensable.

Finally, Gu Cheng promised one more condition: after one year, depending on the operational performance of Zhu Jun's team regarding *MU Online*, they would be given the opportunity to use their shares in The9 to exchange for equity in the parent company, Legend Entertainment.

This condition was designed to further incentivize Zhu Jun to put in more effort, squeezing out as much profit from the game as possible so that he could cash out his shares at a good price during the future swap.

Zhu Jun gladly accepted this "favor" and became Gu Cheng's employee.

With all of this settled, Gu Cheng didn't even stay to have dinner with Zhu Jun; he directly drove back to Wuzhou, returning to the Hengdian World Studios.

The remaining legal procedures could safely be left to the professionals.