Online Gaming in China: More than Fun and Games

SUMMARY

Abstract

Online gaming in China is a big deal. Chinese gamers are motivated by the opportunity to interact and communicate with a variety of other people, particularly those of the opposite sex. There are countless stories of relationships, and even marriages, initiated and fostered in the confines of a virtual game world. Many online gamers in China are also motivated by financial gains that may be derived from their hobby. E-Sporting has gradually become popular among gamers, and official professional players even receive salaries from both official supporting and business sponsors.

That being said, in 2005, there were more than 300 online gaming companies in China chasing after 25.5 million gamers and US$ 0.697 billion in revenue. Less than 15% of these online gaming companies are profitable. Key first-tier players such as ShanDa, NetEase, The9, and KingSoft, account for a combined 80% of the market.

This report is an in-depth analysis of this dynamic market opportunity and includes discussions on user demand, business models, regulatory issues, specific opportunities, market forecasts, and player profiles. Presented are forecasts for subscribers and revenue as well as for lucrative peripheral markets.

TABLE OF CONTENTS

• Executive Summary
• Methodology
• Definitions
• Introduction or Overview
• Regulation & Policy
  • Official Administrative Structure
  • Official Administrative Evolution
• Technology & Infrastructure
  • Hardware Network
  • Software Piracy
  • Payment System
• User Demand
  • User Demography
  • User Behavior
• Value Chain Analysis
  • Value Chain Structure
  • Industry Core Elements
    • Device Producing
    • Software Development
    • Marketing & Operating
    • Channel Distributing
    • Internet Bar
  • Peripheral Industries
    • EC
    • ICP
    • Media Service
    • Culture Publication
    • Peripheral Product
    • VIT Industry
    • Telecom Industry and IT Industry
• Business Models
  • Terminal Devices
    • Consoles
    • PCs
    • Handset
    • TV
  • Software Product
    • MMOG
    • Casual Game
    • Mobile Game
    • E-Sporting
  • Revenue vs. Expense
    • Revenue Streams
      • Flat-Fees
      • Packaged Sets
      • Subscriptions
      • Hourly Utilization
      • Virtual Equipment Upgrades
      • ISP Revenue Share
      • Sale of Licensed or Branded Products
      • Advertising Sponsorship
    • Expense Allocation
      • Software License Fee
      • Marketing Expenses
    • Revenue vs. Expense = Profit
      • Average Concurrent Users
      • Player Consumption Duration
• Market Trends
  • Market Drivers
    • New Consumers
      • Netizen is Still Increasing at a Considerable Speed
      • Gaming is One of the Most Widely Used Online Services
      • Paid-for-Play Has Gradually Become Widely Accepted
    • New Access
      • Handset VAS Focus is Passing Through 2G to 3G.
      • Console Vendors Have Released Product for Competition
      • TV is Supposed to Provide a Better Experience for New Entertainment
    • New Value
      • The Industry Value Link of Peripheral Products is Forming
      • VIT Creates Wealth Beyond the Real Online Game Industry
      • Demand on Interactive Wireless Broadband Entertainment
  • Market Barriers
    • Regulatory Limitations
    • Cultural Resistance
    • International Expansion
    • Device Producers
      • Power
      • Bandwidth
    • Software Developers
      • Professional Engineer
      • Diversification
    • Game Publishers
      • Localization
      • Piracy
    • Channel Distributor
      • E-Commerce
      • VAS
    • Internet Bar
      • License
      • Standardization
• Industry Opportunities
  • All Kinds of Services for New Consumers
  • All Kinds of Business Surrounding the New Online Gaming Access
  • The Designing, Producing, Marketing, Distributing, and Selling of Peripheral Products
• Market Forecast
  • Subscribers
    • China Online Game Subscriber Forecast (2004--2010)
    • China Online Paid Game Subscriber Forecast (2004--2010)
  • Revenue
    • China Online Game Market Size Forecast (2004--2010)
    • China Online Game Peripheral Market Size Forecast (2004--2010)
  • Segment
    • China Online Game Market Size Segment (2004--2010)
    • China Online Game Market Publisher Segment (2004--2010)
• Profiles
  • Developer and Operator
    • ShanDa
    • NetEase
    • The9
  • Device Producer: LangChao
  • Software Developer: KingSoft
  • Channel Distributor: Federal
• List of Tables
  • Table 1. Top Ten China Online Games in 2005 (Based on ACUs, PCDs, PCUs, Subscriber and Revenue Rankings)
  • Table 2. Official Departments and Associations Related to China Online Gaming Industry
  • Table 3. Policy, Publication, Filing, Conference, Association and Certificate of Core Official Departments in Charge of China Online Gaming Industry
  • Table 4. Non-Standard Business Licenses and Permits Required to Be an Online Game Publisher in China
  • Table 5. 11 Games Used for Large-Scale Trials of the Fatigue System
  • Table 6. The Four Classes of Rating System for the China Online Gaming Industry
  • Table 7. Licenses Required to Legally Run an Internet Bar in China
  • Table 8. ShanDa Revenue 2003--2005 (US$ in Millions)
  • Table 9. NetEase Revenue 2003--2005 (US$ in Millions)
  • Table 10. The9 Revenue 2003--2005 (US$ in Millions)
• List of Figures
  • Figure 1. China Online Game Subscribers (in Millions) 2004--2010
  • Figure 2. China Online Paid Game Subscribers (in Millions) 2004--2010
  • Figure 3. Official China Administrative System for the Online Gaming Industry
  • Figure 4. Value Chain Structure of China Online Gaming
  • Figure 5. China Online Game Subscriber Forecast 2004--2010 (in Millions)
  • Figure 6. China Online Paid Game Subscriber Forecast 2004--2010 (in Millions)
  • Figure 7. China Online Game Market Size Forecast 2004--2010 (US$ in Billions)
  • Figure 8. China Online Game Peripheral Market Size 2004--2010 (US$ in Billions)
  • Figure 9. China Online Game Market Size Segment 2004--2010
  • Figure 10. China Online Game Market Publisher Segment 2004--2010