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Chinese Gaming Market to Reach $2.1B In 2010

Zonk posted more than 8 years ago | from the that-is-a-lot-of-wow-gold dept.

26

GameDailyBiz is reporting on a study indicating the Chinese gaming market is likely to hit $2.1 Billion in 2010. From the article: "While much of this growth has been and will continue to be fueled by the popularity of MMORPGs, Niko points to another trend: the rise of casual games. Niko believes that premium casual games will reach MMORPG-like popularity over the next few years and will achieve 40 percent of all online revenue by 2010. 'Chinese gamers' passion for massively multiplayer online role-playing games (MMORPGs) has extended to the casual and premium casual segments,' said Lisa Cosmas Hanson, managing partner of Niko Partners. 'Premium casual games provide new gamers greater access to the online game market and open up an alternate source of entertainment for hardcore gamers.'"

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Joke (0, Offtopic)

ShaneThePain (929627) | more than 8 years ago | (#15208124)

Me chinese, me play joke, me go pee-pee in your coke!

Cultural change in game (0)

foundme (897346) | more than 8 years ago | (#15208144)

Right now most games are developed by western countries, so the cultural value, moral, ethics and whatnot are based on the western civilization.

I wonder with increasing eastern participation in global gaming, will all these traits change too?

For example, a Japanese-oriented game might require/force a player to stop playing altogether if he betrayed his clan, and no other clans will accept him again. But in WoW, players will just keep on trolling and nobody really cares.

Re:Cultural change in game (1)

vertinox (846076) | more than 8 years ago | (#15208367)

But in WoW, players will just keep on trolling and nobody really cares.

Well... Most of the players don't care because you can't really betray anyone because the only thing you can do to each other is call each other names, ninja loot, or maybe scam trade.

Now if you made WoW more like the original UO in which you could steal, murder, and house loot... There was some betrayals and retributions.

Re:Cultural change in game (2, Insightful)

ClamIAm (926466) | more than 8 years ago | (#15208413)

Right now most games are developed by western countries

Um, you can't be serious. Japan and Korea produce tons of games.

A better example. (0)

Anonymous Coward | more than 8 years ago | (#15208803)

For example, a Japanese-oriented game might require/force a player to stop playing altogether if he betrayed his clan, and no other clans will accept him again. But in WoW, players will just keep on trolling and nobody really cares.

We actually already have a Japanese-oriented Japanese-created MMO currently popular in Japan (Final Fantasy XI). It does not work the way you describe.

A better example which does not fall back on cultural stereotypes might be:
For example, a Chinese-oriented game might conform to the strict censorship and regulation of acceptable values imposed by law by China's fascist [wikipedia.org] government.

Let me get this straight... (1)

Chabil Ha' (875116) | more than 8 years ago | (#15208156)

Are we talking 2.1 Billion Dollars or 2.1 Billion pirated copies???

Re:Let me get this straight... (1)

TheJediGeek (903350) | more than 8 years ago | (#15208214)

I think it's dollars.
My question is, is that revenue just from sale and subscriptions of games or does that include gold farming businesses in China?

2.1 Billion Dollars? (3, Insightful)

AKAImBatman (238306) | more than 8 years ago | (#15208254)

Really? That's not very much. When you consider that China has a mainland population of 1.3 billion (compared to the US's 300 million), $2.1 billion dollars pales in comparison to the $6 billion dollar industry that the US has become. Or to put that into ratios:
China - 63:39
States - 780:39
I'd say that China still has a long way to go when it comes to developing a game industry. Sure, the hard cash number of $2.1 billion does sound impressive, but that does have to be balanaced against the amount of money that must be spent to reach that level of market penetration. If the gaming public is spread across China (and not centered in a specific area like Shanghai), the costs of reaching that market could well whittle away those profits. Greater market penetration might result in much higher returns.

Re:2.1 Billion Dollars? (1)

kongjie (639414) | more than 8 years ago | (#15208285)

Good points. This number is not tied directly into total population but rather the rise of a middle class in China that has the time and money to play these games. Another factor of course is the availability of machines...as access to them rises, so will the number of game addicts.

Once the size of the middle class rises, this $ number will explode even more.

Re:2.1 Billion Dollars? (1)

Pzychotix (949807) | more than 8 years ago | (#15208461)

Personally, I think there's a little bit of discrepancy between US and China's gaming markets

We're talking about online casual games. This means the equivalent of something like Yahoo! Games (or basically an assortment of minigames), or online RPGS only. In US, I think that's a really tiny market, since more people play traditional buy-up-front no more paying games. In China, or Asia in general, most games are on subscription basis or a micropayment system where people play for free, and pay for extras.

On the whole, these subscriptions or extras are overall cheaper than your average US equivalents. A WoW subscription over in the US costs $15, whereas it costs maybe around $5-10 in China. Western games released over there also have a major price drop, selling for around $10-15 dollars(non-pirated even), when it was $40 over here. And these casual games are on the cheap for maybe a couple bucks giving you several premium items.

Finally, there's the issue of the average income for the middle class. That's a huge difference between here and China. The average gamer in China has a lot less money to spend than in US.

Re:2.1 Billion Dollars? (0)

Anonymous Coward | more than 8 years ago | (#15208412)

windoz costs money.

Re:2.1 Billion Dollars? (1)

ClamIAm (926466) | more than 8 years ago | (#15208427)

You need to adjust that for per-household income.

premium (1)

Nesetril (969734) | more than 8 years ago | (#15208318)

Premium casual gaming is when you play casually for 12 hours and then afterwards look up at the clock and say: "hey, not bad! I am going to treat myself to another 1.2 hours of casual gaming for 'free'".

MMMORG are great for publishers (4, Insightful)

the_humeister (922869) | more than 8 years ago | (#15208402)

Especially for a market as large as China with such rampant piracy. The revenue stream keeps coming as long as the content is interesting and worthwhile. As for pirating a copy, well that doesn't matter because you can't play if you don't pay the monthly fee.

Further reading... (4, Interesting)

The-Bus (138060) | more than 8 years ago | (#15208466)

There's some further reading at U.S. News & World Report's site, which has an issue detailing more about shoppers in China and India [usnews.com] . From the issue:

When they talk about China and India, western business executives can't stop using the word "scale." Take the experience of Blizzard Entertainment, based in Irvine, Calif. It took a year to attract a million paying subscribers in North America for World of Warcraft, its popular online video game; in one month, the company signed up 1.5 million for the Chinese version of the game. How about cellphones? There are 400 million cellphone users in China, and, on average, they replace their phones every three to six months. Consumers in China can choose from something like 900 different models, compared with only 80 or so in the United States. Companies like Samsung offer a new handset model in China as often as once a week.


Those statistics, if correct, boggle my mind.

Much cheaper to play (2, Insightful)

Nazmun (590998) | more than 8 years ago | (#15208640)

Wow subscriptions are closer to $2 usd there versus $15 here.

Re:Much cheaper to play (0)

Anonymous Coward | more than 8 years ago | (#15208796)

They don't even have subscriptions in China last I recall. I'm not sure on the specifics but it's a metered usage thing and it's payed for basically by the state.

So yea a bunch of people signed up to play for free.

The Subscription Model is necessary (2, Interesting)

ObligatoryUserName (126027) | more than 8 years ago | (#15208505)

China is a good example of what happens to media production when piracy is rampant, the only content professionally created is content that the developer is guaranteed to be paid for. In the early 2000's (can't remember the year) I met a representative of a Chinese game company at the GDC. He said that their only hope for staying solvent was to find a US publisher to bring their games to the States because there was no money to be made in China under the traditional game development model. I beleive EA has said publicly that the only reason they release anything in the region (excluding Japan of course) is to "prime the market" for the day when piracy is no longer a problem there - build up the franchises now with subsidies from their successul regions because they were actually losing money with every title they shipped. Casual pirates should look to China to see what the logical end-result of their actions are: no money for new content development.

Re:The Subscription Model is necessary (1)

tlhIngan (30335) | more than 8 years ago | (#15212220)

China is a good example of what happens to media production when piracy is rampant, the only content professionally created is content that the developer is guaranteed to be paid for. In the early 2000's (can't remember the year) I met a representative of a Chinese game company at the GDC. He said that their only hope for staying solvent was to find a US publisher to bring their games to the States because there was no money to be made in China under the traditional game development model. I beleive EA has said publicly that the only reason they release anything in the region (excluding Japan of course) is to "prime the market" for the day when piracy is no longer a problem there - build up the franchises now with subsidies from their successul regions because they were actually losing money with every title they shipped. Casual pirates should look to China to see what the logical end-result of their actions are: no money for new content development.

On the other hand, I would say content development over here in North America is almost nil as well. Sure there's lots of games, but they're really all rehashes of the same thing. Sure a few things get prettier here, and a few things changed there, but honestly, compared to the entire North American gaming market, unique content is quite hard to find. Or look at other content industries - is there any real new content there produced by those claiming negative losses? Or the movie industry? Same old plot rehashes, same old explosions and special effects...

Could it be that casual piracy is perhaps the result of the lack of interesting content? Could it be that piracy has different causes? Over in Asia, the relatively low wages of the general population means they can't spend $20 so casually on a DVD? And perhaps, you know, if they were to pay $40-60 on a game, that would basically kill their budget for a good few months, only really to find out it wasn't worth it? (Even in more affluent Asian countries, like Singapore, it took the effort of a local *re*publisher to get game costs down. They sought out licenses to republish games so they wouldn't have to be imported...).

Subscription games are huge outside of Asia - the rise in MMORPGs is evidence of that. In addition, the local culture can also have an influence in the types of games - teenagers in a lot of cultures (China, SE Asia) tend to spend a lot of time studying (mostly to get into the required universities...), and really don't have a lot of time sitting at the computer, so mobile games and games suited to more casual play would tend to take off.

Re:The Subscription Model is necessary (1)

LordVader717 (888547) | more than 8 years ago | (#15215873)

If there was a lack of interest or new content, the games industry and the time spent playing wouldn't be growing as rapidly as it is today. Chinese teenagers aren't loosing interest, they're only just getting interested.

Piracy has been around aslong a few people who consider themselves "smart" wanted to save a few bucks, and the easier it is, the more commonly it's practiced.

To make good content, developers rely on the money made from their games, and conterary to you're assumption, alot of good content is created.

teenagers in a lot of cultures (China, SE Asia) tend to spend a lot of time studying (mostly to get into the required universities...), and really don't have a lot of time sitting at the computer, so mobile games and games suited to more casual play would tend to take off.

Then why is WoW so successful? Is it casual? Is it mobile? Do teenagers like it because they need not invest alot of tim? No!

Is it because it can't be pirated and ties players to monthly subscriptions? Probably.

As to you're pricing assumtions, official DVD releases are sold for prices comparable with pirated copies, at about $2 per movie. Games might be a little higher, but I doubt they exceed the $10 mark too much.

Communism II (0, Troll)

sentientbrendan (316150) | more than 8 years ago | (#15208603)

Today Trevor Chan, developer of the acclaimed game Capitalism II where the player manages a corporate empire, today announced that he will be "localizing" the game to the emerging Chinese video game market, and renaming it Communism II.

As the communism referenced in Communism II is chinese communism and not marxist communism, Communism II will be exactly the same as Capitalism II except said Chan, "You don't get to vote, and the military owns a quarter of your stock."

Simple math for all you boozy gamers... (1)

Saint Ego (464379) | more than 8 years ago | (#15209094)

5 million subscribers on Warcraft (number is arguable, but to scale)

So, at $15/month (average MMO subscription, give or take) we have a single product responsible for almost $1 billion in annual revenue.

Granted, there are a lot of expenses that eat into it, but that one product generates enough to pay 20,000 people enough to be comfortable on (roughly $50k, annual).

As game subscriptions and affiliate marketing get more comfortable, there is a very REAL probability that gamers will be able to either partially or fully subsidize their lifestyle simply by evangelizing their MMO du jour (or one of several, most likely).

Imagine if 20% of the subscription paid by players that you refered was paid back to you every month. Imagine if 5% of the subscription paid by players that THEY refered was also paid back to you every month?

Unfortunately, WoW doesn't have an affiliate business model. Sociolotron does, but gameplay and graphics are craptastic and it's not the type of thing you would really want to evangelize...

As is, half the people that play MMO's don't seem to have any problem telling every single person they know how great it is and why they should give it a try.

Look out Amway, here comes teh REAL EverCrack!

Re:Simple math for all you boozy gamers... (1)

Ayaress (662020) | more than 8 years ago | (#15211283)

The problem with an affiliate program for WoW right now is that, despite the ungodly immense revinue it's generating, the profits are a bit weak. Remember this [slashdot.org] article from a while back? This was before the Chinese release and the announcement of Burning Crusade, but also before their last round of network and server upgrades. Blizzard lost $37 million in 2004, and in 2005 had an $8 million profit, out of $460 million in sales and subscriptions to WoW - Also note, this is proof of why the old "n million people*($50 for the game+$15 a month*12 months)" figure is dubious - it yeilds a significantly higher number than Blizzard's total anual revinue. $460 million calculated for 2005 comapred to $189 million in actual revinue. If you've ever talked to an MMO developer, you'd be suprized how little of the $15 a month they actually see. The $50 in raw sales is almost all eaten by the publisher, who figured out back in the UO days that they could squeeze a lot more out of an MMO sale than they could out of a single-sale game, and nearly half of what eventually gets to Blizzard vanishes into taxes - more than that, when you consider that a lot of their business comes from countries outside the US with higher tax rates.

A $1 billion industry doesn't mean anybody's making $1 billion from it. Blizzard is still pretty deep in the hole after years of posting losses. WoW as a whole hasn't even paid for itself yet, let alone allowing 20,000 people to live comfortably. By your numbers, only 140 people lived comfortably on it last year, and probably 300 or 400 this year, since the number of players has nearly trippled.

Re:Simple math for all you boozy gamers... (1)

LordVader717 (888547) | more than 8 years ago | (#15221012)

Far from being weak, the profits are literally sickening.

First off, let's correct a few mistakes. You are confusing Blizzard with Vivendi games. The article was referring to Vivendi, the publisher. Two different companies, so you can't really use the numbers given.

Aswell the numbers given are not for a whole year, but for one quater.

I don't know much Vivendi takes in as the publisher (I think I paid my subscription directly to Blizzard, but I could be wrong), but it doesn't really make a difference. All I know is that somewhere, somebody is making a hell of a lot of money.

5 Million is a huge number for any game to sell. And the fact that all of those customers pay $15 a month for as long as they want to play, generates a cash flow that is bigger than anything the games industry has ever known.

Compare it to San Andreas, which sold 13 million, but all they get is the 50-60 bucks people payed up-front minus the distribution costs (that's assuming the everybody bought it for full price before it went platinum). Let's take say $40 that the publishers and developers receive total (it's probably much lower)
That means that in 7 months they get the same amount of revenue generated from one of the most successful games ever, and hardly have to do anything.

As for the development and maintainence costs, they're nothing compared to the supscription fees. Development costs are probably comparable with many other games, and if it costs Blizzard a fraction of the 50 million+ they get in monthly fees, I'll flush 95 Euros (the amount I gave Blizzard when I tried the game last year) down the toilet.

That's a lot of CD's (1)

Zadaz (950521) | more than 8 years ago | (#15209861)

The pirates must have a hell of an infrastructure to move 20 billion CD's a year to the Chinese population.

Anyone else? (1)

Joel from Sydney (828208) | more than 8 years ago | (#15210404)

For some reason I read the headline as:

Chinese Gold Farming Market to Reach $2.1B In 2010
Bah, who am I kidding? It probably passed that mark long ago...
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