In Gamasutra's latest China Angle column, Pacific Epoch's Shang Koo analyzes the implications of EA's investment in major Chinese firm The9, as the latter launches its latest MMO beta, and elsewhere, a Chinese court rules on whether virtual items have real monetary value.
Soul of The9 Nation
China's three Nasdaq-listed online game companies all announced first quarter earnings last week, but all three announcements were overshadowed by The9's
announcement of an strategic investment from Electronic Arts and two The9 game licensing deals.
Electronic Arts purchased around 15 percent of The9 for US$ 167 million, and gave The9 the license to operate its marquee online sports game
FIFA Online. The9 also announced it has licensed online music game
Audition 2 from Korea.
Although rumors of the EA investment have
been circulating for several months, the investment was still surprising, as it was a departure from EA's recent strategy of investing in content. Nearly all of The9's revenues come from its licensed MMORPG
World of Warcraft, and the company's in-house content development capability is anemic.
The two new games are The9's latest attempts to gain a foothold in China's online casual game market. The9's first attempt at the casual games market was in summer 2005, when it launched its first and only in-house developed simple MMORPG
Joyful Journey West. The game is a simple 2D platformer based on China's literary classic Westward Journey.
However,
Joyful Journey West was unable to compete against first mover
Maple Story, especially when
Maple Story's Chinese operator Shanda Entertainment grabbed "Adventure Island" for the Chinese name to the game.
Both
FIFA Online and
Audition 2 must challenge first movers for market share in China. Soccer is the second most popular sport in China, after basketball. With street basketball game
FreeStyle already the most popular sports casual game in China,
FIFA Online will likely play second fiddle to
FreeStyle as well.
Audition 2 must compete against its predecessor
Audition in China.
Audition is currently operated by 9you in China, with around 800,000 peak concurrent users. Based on
Audition's success, 9you has aggressively marketed its brand. The company has been name sponsor for two TV music talent programs and has hosted numerous concerts in China as well.
In the short term, The9's best hope of expanding its revenue sources beyond
World of Warcraft is through Webzen's MMORPG
Soul of Ultimate Nation (SUN) (pictured). The9 recorded 400,000 peak concurrent players for the game during open beta. Commercial operation of
SUN started on May 24, under a free to play, pay for items model.
Staff of a Thousand Truths
Long ago, when MMORPG
Legend of Mir 2 was created, it was designed for a subscription model. Faced with declining users in 2005, the game's operator Shanda made a drastic decision to make the game free and charge for virtual items. One of the programmers had too much imagination, and a special staff was created, called the 18 Magical Staff.
A year later, a 28 year old gamer obtained the 18 Magical Staff through normal game-play. However, Shanda decided the item was too powerful, and soon deleted the item. The angry gamer took Shanda to court.
In a landmark case, though, the court ordered on May 11th that Shanda to return the staff to the player, ruling that virtual items have monetary value.
[Shang Koo is an editor at Shanghai-based Pacific Epoch, and oversees research and daily news content on China's new media industries, with a concentration in online games. Pacific Epoch itself provides investment and trade news and publishes a number of subscription products regarding the Chinese technology market. Readers wanting to contact him can e-mail [email protected].]
