The gaming market is growing and much of that growth is happening in the newly-emerging market of China. Currently, according to analysis by Niko Partners in San Jose, California, China is about half of the world’s total online games revenue.
“China is home to more than 150 million gamers who collectively generate half of the global PC online games revenue, and several large online game companies that have begun to expand internationally. Our analysis shows that while Chinese gamers start with casual and social games, many evolve into MMOG gamers and then contribute much more revenue than gamers who stick to simpler games,” said Lisa Cosmas Hanson, managing partner of Niko Partners. “The percentage of online games revenue derived from MMORPGs has declined in the past several years, but the combined massively multiplayer online games segment of MMORPGs and advanced casual games will remain critically important throughout our 5-year forecast period.”
And Niko should know, as they’re the most-trusted source for Asian games market intelligence. Their latest report has Chinese gamers being more likely to spend money on MMORPGs than on any other type of game.
Most MMOs on the Chinese market are made specifically for it. But with roughly 60% of China’s online game revenues coming from MMOGs, it’s not surprising that many of the MMOs we know and love here in the U.S. are also available in China.
Perfect World Entertainment is a Chinese company that most Americans are very familiar with. Most other Chinese-based games are titles that many in the West have never heard of, however. Jade Dynasty, Crazy Tao, and Ether Saga Online are not as well-known here, but are very popular in the Asian markets.
American MMO makers are taking notice of the huge profits possible in China, but are loathe to export their trademarks and technology into China for fear of knockoffs. This is a legitimate fear as the Chinese market is well known for knockoffs that are hard to shut down due to the way the Chinese government prosecutes (or fails to prosecute) local companies ripping off western tech and trademarks.
Because of the laws in China, in order for a gaming company to run a game accessible to Chinese players, they have to host it in China. This is a blockade that many publishers are unwilling to go through.
So while the Chinese market is huge, and getting bigger by the minute, it’s not likely that many western gaming companies will break into it. Some have, though.
Trion, makers of the popular RIFT MMO, have penned a deal with one of China’s largest MMO houses, Shanda, to bring RIFT to the Chinese market. With the game pulling $100 million in revenues last year, it’s likely that Trion could double that income by releasing the game in China.
The Transformers franchise has also gone to China, releasing in March and produced by Chinese game maker NetDragon. Interestingly, it launched well ahead of the American and European market version of the game, which is currently under development by Jagex.
So while the market is tough to get into, it is possible and many companies are going – either by doing in-country development in China or by leasing the franchise to a Chinese provider.
And by fast, I mean very fast. In 2006, the online gaming market in China generated about $1.04 billion in U.S. dollars. It went to $1.6 billion in 2007. In 2012 it’s expected to reach a staggering $6.1 billion. That’s a near 4-fold growth rate in only 5 years. At $3 billion in 2010, it means that the Chinese online gaming market doubled in only two years.
About 60% of China’s online gaming revenues are from MMOGs. That is triple what is spent in the United States on MMOs.
Of course, all of this talk of gaming in China cannot ignore the controversy surrounding the purported use of prisoners to farm gold for sale to both Chinese and western players. This story broke last year and has been the subject of numerous investigative reports.
Human rights violations in China are nothing new, of course. Gold farming is an unusual one of these, however, and garnered a lot of headlines. One prisoner recounts how he and 300 of his fellows were forced to work day shifts in coal mines and workshops and then sat down in front of computers at night to farm gold for sale to gamers.
Twelve hours of game play a day might sound fun to gamers, but for those forced to do it and to do it while mostly doing repetitive “grind” tasks to farm gold in-game, it’s definitely not fun. Failing to complete a quota in that 12 hours would mean physical torture and beatings.
In 2008, gold farming was a $2 billion business in China. With the rapid growth of MMOs since then, it’s likely only gotten larger.
All of this aside, we have to speculate on the future of gaming and how China will affect that. Given the size of its market and continued rapid growth, it’s likely that many of the games we see released in the coming years will be made with the Chinese market in mind and the western market as an afterthought.
It’s hard to argue against this logic. With over half the world’s gaming market in one place, publishers and developers would be remiss to ignore the potential. The Chinese market is growing faster than all other markets combined, another fact that those game studios can’t ignore.
The Chinese market virtually created free to play (F2P) gaming and micro-transaction-based financial models. Those are now becoming the norm around the world. That simple fact says that the market in China is going to affect games in other ways too. Hopefully for the better.
What do you think?