China's booming online games industry may reach sales of RMB 18.21 billion ($2.67 billion) in 2010, says a report from business news organization and research group Interfax China.
Current online game operators are generating increasing revenues, the study says, and new entrants are joining the market every year. The new report, titled "China Online and Mobile Gaming 2008-2010," found online game operators saw revenues totaling to RMB 10.57 billion ($1.5 billion) in 2007, and are expected to have brought in RMB 12.67 billion ($1.86 billion) in 2008.
Interfax says that there are currently some 120 gaming operators running approximately 200 online games in China. Among these, the four biggest companies in terms of revenues are Shanda, Giant Interactive, NetEase, and The9, the last of which manages World of Warcraft
's operations in the country.
While most of China's online game revenues is generated by massively multiplayer online games, the group says that casual and web games are becoming increasing popular and "are considered to offer great potential for in-game advertising due to the strong purchasing power of its user group." Local web game companies have been attracting venture capital investments as a result.
"In-game advertising is a hot spot for generating revenue, which is especially true for the free-to-play online gaming model that has gained popularity among many Chinese gamers," says Interfax China in its release on the report.
The group continues, "Leading game operators such as Shanda are paying increasing attention to the in-game advertising market. Mergers and acquisitions are commonplace among in-game advertising companies while Focus Media and Bihu Technology are gearing to dominate the market. However, technology still poses a key problem in China's in-game advertising industry."
The report overview also talks about new demographic trends in China, explaining: "Not only has the market seen a huge transformation, but the profile of the country's gamers has also evolved since the sector was in its initial stages of growth. The proportion of female gamers is on the rise, and online gaming is now not just the preserve of urban residents. New games are being launched at a fast pace, while the loyalty of gamers to particular titles is a rare commodity."
Finally, Chinese government policy is discussed, with the authors noting: "The government is concerned over the content of the games enjoyed by large numbers of China's youth, which may contain violence, gambling and pornography, and policy making decisions will likely focus around these issues."
They conclude: "It is also possible that China will put a cap on the number of overseas games released in the country where around 70 percent of new online games are from overseas. The positive news for Hong Kong online game developers is that the government will likely relax restrictions on Hong Kong-developed games entering the mainland as economic ties between the two regions strengthen."