Online Gaming Sweeps China

To make China one of the industry's top markets, at one of Beijing's many Internet cafes near-silence reigns: headphones on, eyes glued to the screen, web users play games online en masse.

Young men crowd around terminals for role-playing adventure games while women gamers tap away to keep troupes of dancers in line -- and international companies want part of the action.

In 2009 the industry raked in nearly 26 billion yuan (3.8 billion dollars), up 39.5 percent over the previous year, according to government data.

But experts say the booming market will mostly benefit homegrown firms, whose products are more closely tailored to the tastes and preferences of the more than 380 million people using the Internet in China.

"Foreign game developers are having a tough time competing in China," said Daniel H. Vlad, a senior analyst specialising in the online games and e-commerce sectors for research house JLM Pacific Epoch in New York.

"So far only one Western game, World of Warcraft, has really succeeded in China," he said.

"Chinese users spend significantly more time playing games than their Western counterparts. Foreign games typically fail to deliver enough content... Chinese gamers eventually lose interest and move on."

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Lisa Cosmas Hanson, the founder of Niko Partners which provides market intelligence on China's video game industry, explains that gamers here like a variety of challenges, from cultural and mythical history adventures to sports.

She said that beyond the cultural differences keeping foreign developers from breaking through to Chinese gamers, opaque government regulations in a sector tightly controlled by the ruling Communist party are the "biggest hurdle".

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"Games created in China account for more than 60 percent of the market," says Yu Yi, an analyst for IT research firm Analysys International.

Three firms, all listed in New York on the Nasdaq, are leading the way: Tencent, Shanda and NetEase -- which has the operating licence for World of Warcraft in China.

According to Analysys International, the firms held about 24, 20 and 16.5 percent of the market, respectively, in the fourth quarter of 2009.

The online games sector is charging ahead thanks to the exponential growth of China's web community, now the largest in the world. Cheap computer products and relatively inexpensive Internet access have also fuelled the trend.

Vlad said the key driving factor behind the success of online gaming in China has been "the increase in quality, innovation, and the variety of game choices targeting all demographics".

The online market research firm iResearch says the sector will remain "at the heart of the Internet economy" for years to come, with annual growth of about 20 percent.

Analysys International predicts that by 2012, the market will nearly triple from 2009 levels to about 73 billion yuan, with more than 270 million players.

The government has expressed some concern about the trend, with a survey showing that 24 million young people -- half of them gamers -- were addicted to the web.

But at the cybercafe in central Beijing -- where an hour's play costs three yuan, or less than 50 US cents -- business is booming.

"People spend four or five hours here at a time," said one of the managers, who would only give his surname Zhao.

Attempts to speak to the players were met with silence -- they were too engrossed in their games.

Only one young woman broke away long enough to tell AFP: "All the girls are playing Jing Wu Tuan" -- a dance game developed by Shanghai-based 9you.

"Online gaming in China is a very affordable form of entertainment and an important medium of socialisation," Vlad said, calling it a "recession-proof industry".

Source-AFP
TRI