China to Claim Half of Online Game Market

Videogames are serious business in China. The country’s online game market will reach 41 billion yuan ($6 billion) by 2010, accounting for half the global market, according to newly released data from Cnzz.com, a Beijing-based data analysis firm.

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The Cnzz.com report says that almost two-thirds of China’s 338 million Web users are now online gamers. The online-game industry, which currently accounts for more than half of the total Internet economy, will see strong annual growth at a rate of 20% future years, the report says.

The mainstream remains the awkwardly named sector of Massively Multiplayer Online Role Playing Games (MMORPGs). In October, six out of the 10 most popular online games in China are MMORPG games, according to the report. World of Warcraft by Activision Blizzard still tops the list with the most registered players and peak simultaneous online users. But the current government regulatory fighting over its Chinese license, held by Netease, may yet have a negative impact on the game, according to the report.

Casual games — simple games such as card games — take second place with three ranked among the top 10 game list, while Web games such as Tencents’ QQ games are emerging as a new growth area. According to the report, by the end of Octover, there were 1.54 million users playing the top five Web games, with each user playing for an average of 30 minutes a day.

The Cnzz.com report also discusses the problem of the “free-to-play” business model that’s prevalent in China’s online-game sector. While many games companies in the U.S., for example, charge subscription fees, most Chinese games use the free-to-play (F2P) model, which allows players to try out a game without paying. The longer players stay in the game, the more likely they will be to pay for in-game items to move up into higher levels of play. But that also means that people who spend the most money are the best performers.

The report notes that China’s game developers have been considering subscription models since earlier this year. Among the top 10 game list, four are subscription-based titles and two were commercially launched this year, including Shanda’s major new title, AION. Cnzz.com says that a shift to the subscription model would be more likely to create a sense of equity and fairness in the games, because the top players would be those who spend the most time playing, instead of those who spend the most.

China’s online game revenue in 2008 was 20.8 billion yuan, accounting for about 27% global share, ahead of South Korea at 21% and slightly behind the U.S. at 29%, according to an earlier report by Shanghai-based market research firm iResearch. The firm also predicted that China is likely to surpass the U.S. to become the world’s largest by the end of 2009.