Date 11 March 2010

China has a huge gaming market – in 2008, yearly revenue was an estimated US $3.04 billion, about 27% of the global market. Despite a relative lack of personal computers in comparison to the Western world, the gaming trend has taken a strong hold, especially among the younger generation. Particularly in larger cities, internet cafes have flourished and home PC sales continue to grow. In fact, the presence of gaming in China has even gained some negative press for its “addictive” nature, with instances of users spending an unhealthy amount of time or extreme amount of energy devoted to this diversion. By 2012, research shows that China may have as many as 119 million gamers.

 

In spite of this large and growing potential, it can be difficult for foreign companies to gain a competitive edge in the area of gaming. Domestic giants such as NetEase, Shanda, and Tencent comprise over 50% of the total market, thanks to their knowledge of Chinese consumer preferences and of government regulations. For example, Chinese policies outlaw the overtly violent and sexual themes which are so common in the Western gaming industry. Laws also prohibit the sale of game consoles, causing in part the dominance of online games in China, although consoles can readily be bought and sold illegally. Finally, regulations prohibit foreign gaming enterprises from partnering with or investing in domestic companies.

 

Nonetheless, there is significant opportunity for foreign companies who can provide quality development in this sector, as well as diversity to the rather limited scope of Chinese game content. Currently, the largest portion of games revenue comes from Massively Multiplayer Online Games (MMOGs), although recent studies have shown an increase in “free-to-play” games which are funded largely by ad revenue, as well as games on social networking sites and mobile devices. Because of concerns for “gaming addictions,” China has also seen an increase in demand for more healthy “recreational” games. Companies looking to be involved in this market should take special care in researching and understanding the market.

 Previous  |   Next         View all headlines