China to become #1 online gaming market?
by Kit

Wednesday, October 6 2004

Potentially, but their are problems yet to be addressed.

A group knowns as the Game Trust, and The Diffusion group has published a comprehensive study about internet usage in China. “The China Online Gaming Report,” reveals that the world’s most populous nation may become the #1 online gaming market by 2007. Currently, China has more than 80 million Internet users and approximately 15 million broadband subscribers.

Among the study’s findings:

· Chinese Internet users spend an average of 12.3 hours/week online

· Netgames and entertainment are the second most popular online activity

· 84.3% of Internet users email; 15.9% play online games

· 37.8% of wired households have made an online purchase

CEO Adeo Ressi of Game Trust had this to say, "Based on everything that we have learned through this unprecedented research, we believe that 80% of the Internet’s content will be in Chinese in ten years. Presently, China is the largest online gaming market on a per capita basis but not by dollar volume. As the China gaming marketplace rapidly matures, we expect that economic growth will rise in accordance with Western models. Network gaming comprises one of the largest opportunities in the Chinese Internet services market.”

“More and more competitors are entering this burgeoning market,” said Michael Greeson, president of The Diffusion Group. “As this happens, business models will morph and new value-chain entities will emerge. In turn, this will provide new sources of game content and services and ultimately threaten the existing Korean monopoly of the Chinese online gaming market.”

Other important findings of this study include the following:

· Network games have become especially popular in China because, until recently, the likes of Nintendo and Sony have been reluctant to release their consoles into China due to fear of piracy.

· More than two-thirds (67.8%) of online gamers play traditional chess and card, while 43.6% of gamers play RPG games (role playing games) on a regular basis. In Internet cafés, 27.6% of the users play SLG (strategy) and STG (shooting) types of games.

· The most popular and influential games continue to be imported from Korea. However, Taiwan-based companies are expected to aggressively challenge Korean market share.

· As game content and services become more diversified, the most successful products and services will tune into specific local cultures.

· 2D games will continue to be successful for several years, but new 3D products will soon become the dominant form of online games.

· The primary audience for online games will expand beyond young Chinese males, as older consumers turn to gaming for entertainment. Female users will also play an increasingly important segment in the online gaming community, especially as new niche content is developed and marketed specifically to women.

· Since public cyber cafés will be a battlefield for network game operators, traditional stand-alone PC games will be in danger of losing the attention of hard-core gamers.

In this reporter's opinion however, the report still hinges on the ever important topic of IP in China, which unless resolved, will stymie any software development boom in the country.

For further information about The China Online Gaming Report, please visit http://www.tdgresearch.com.

--- Jolex Del Pilar