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ChangYou's MMORPG business began operations as a business unit within the Sohu Group in 2003. In June 2003, the Sohu Group launched its first MMORPG, Knight Online, or KO, which was licensed from a Korean developer. KO's operation was discontinued in November 2006 when the licence expired. In October 2004, the Sohu Group launched Blade Online, or BO, its second MMORPG, which was licensed from a local independent game studio. In May 2007, the Sohu Group launched TLBB, its first in-house developed MMORPG.

Since its launch, TLBB has won many awards in China and overseas, including being ranked among the "World's Most Profitable Online Game Franchises" in 2009 by Forbes magazine. To this date, ChangYou has released over 24 expansion packs that have helped the game grow into the valuable franchise it is today. The game was first licensed to game operators overseas in 2008 and is now being operated in various countries outside of China, including the United States, Vietnam, Taiwan, Hong Kong, Malaysia, Singapore, Thailand and E.U.

In December 2007, ChangYou was carved out as stand-alone company and completed its initial public offering on the NASDAQ Global Select Market on April 2, 2009.