FIRST quarter net profit at Shanda Interactive Entertainment Ltd soared 40 times from a year ago when it started the "free-to-play" model under which players were not charged for playing, the Shanghai-based game firm said yesterday.

The strong growth helped Nasdaq-listed Shanda regain the No. 1 position in the market from NetEase.com in the first quarter, according to Beijing-based research firm Analysys International.

Shanda's net profit was 448.82 million yuan (US$58.03 million) in the period against 11.79 million yuan in the same period last year. Its revenue was 532.33 million yuan in the first quarter from 341.43 million yuan a year ago.

"We managed to leverage our new model and operating platform to launch new expansion packs for our main game titles and hold special theme promotions over the holiday period to achieve growth in ARPU (average revenue per user) and APA (active paying accounts)," Chen Tianqiao, Shanda's chairman and chief executive, said in a statement.

Shanda's APA for MMORPGs (massively multiplayer online role playing game) increased 2.3 percent quarter over quarter to 2.34 million users and the ARPU of MMORPGs jumped 7.1 percent to 59.0 yuan.

Shanda stopped charging MMORPG players, who still contribute more than 70 percent to the whole revenue, at the end of 2005. There is no charge for game time, but the company profits from the sale of virtual weapons and advertising.

"The new model has proved positive and it will bring Shanda more income," Analysys said in a note yesterday.

In the first quarter, revenue in China's online game market was 2.56 billion yuan, 26 percent growth year on year. Shanda's market share was 18.96 percent against NetEase's 18.60 percent, according to Analysys.

It also signed a deal with South Korea's Nowcom yesterday for the exclusive license to operate Talesrunner, an online sports-theme game in the Chinese mainland.