Explosive growth in China's MMO market
New information about the Chinese gaming market has surfaced through the work of Niko Partners, an Asia-focused research firm with a team spread throughout 35 cities in Mainland China. A recent Gamecyte interview with Niko Partners founder Lisa Cosmas Hanson shed some light on the surge in MMO popularity in China.
2007 proved to be a record year for MMO's in China, as a nation with more than 46 million gamers shelled out a respectable USD 1.7 billion for their online game time, a 71 percent increase over the previous year. Pre-paid game time cards are the dominant revenue model in the country's online gaming industry. Boxed MMO game sales are practically non-existent in Mainland China, largely due to rampant and normative piracy issues. This is compounded by the fact that the Chinese online gaming market caters to the tendency of gamers to sample multiple titles.
While this 2007 figure is still dwarfed by U.S. gaming revenues, the growth potential for the industry in China is not being taken lightly by Western game developers and publishers.
Hanson said, "You can see that in the fact that several online game operators have gone public recently on Western exchanges or in Hong Kong; and the international financial community is now paying much closer attention to China's game market." Publishers and investors would be wise to pay attention to who really drives the Chinese MMO market. Hardcore gamers rack up an average of 22 hours of game time in a given week. But this largely male demographic belies the equally significant (and less gender-imbalanced) group of casual gamers.
Hanson stated that although male gamers account for 60 to 70 percent of the market, female gamers are more attracted to casual online titles which garnered 21 percent of the total online revenues for China in 2007. As in Western markets, casual games introduce younger, or simply newer, people to the world of online gaming. "In 2007, there were nearly 7 million new online gamers, but those people don't just hop into the market and instantly start playing World of Warcraft; they begin through casual gaming for the most part. Casual gaming is something that's easily transferred, word-of-mouth, between people of all gaming abilities," Hanson stated.
It's clear that word-of-mouth has played a big part in the popularity of online gaming among Chinese youth. The first online game in China was launched in 2001, but the market was invigorated when World of Warcraft made its successful eastern debut in 2005. WoW gained 1.5 million paying customers in its first month alone, accompanied by a tremendous amount of buzz. Since that time, WoW's China popularity has soared to meteoric heights. Characters from the Blizzard IP have even adorned Coke cans and were shown in prime time TV ads, long before Shatner and Mr. T made their rounds.
Indeed, Blizzard's China success story is the standard by which all other western MMO's are gauged. Most competitors, unfortunately, don't quite measure up. So the question on the minds of many hoping to break into the market is how much further potential exists in online gaming in China, and is it worth the risk? Market saturation, Hanson asserts, is not much of an issue. At least not yet. "In our forecast period, there will not be market saturation. In 2012, we're hoping there will be legitimately sold consoles, the online game market will expand beyond the few genres popular in the past to a much wider array of choices for gamers..."
This is good news for western developers and publishers aiming to be 'big in China'. But for most, the challenges to entry posed by the China gaming market are daunting and the rewards equally uncertain.
