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Home >> Business
UPDATED: 10:40, March 26, 2006
New Analysis: On-line game operators seek for new way of profit making
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As the fierce battle rages on the computer screen, few of the overly engrossed on-line gamers are aware of the corporate battles being fought for their attention and an end game worth billions of yuan a year.

Internet gaming in China has become a huge business in an extremely short period of time with the industry expanding seven folds in the past five years.

While industry leaders sink more and more resources in their games and services they're now seeing the number of people playing on-line games is beginning to level out.

This scenario of heavy investment and a consolidating market, has led to some audacious moves over the past year.

China's on-line game front-runner, Shanda, stopped charging gamers for time spent playing. The risky maneuver has yet to pay off and instead of capturing the market Shanda ended up reporting a huge loss in its fourth quarter last year.

Meanwhile upstart game provider T2CN is working on another strategy to win more eyeballs to its games. It has teamed up with corporate sponsors to score points at its bank by embedding advertising in its games.

T2CN won't say much Coca-cola paid to have its logo plastered all over its on-line basketball game but admits on-line advertising brings in several million yuan a month. T2CN expects income from in-game advertising to rise 20 percent a month by the end of the year.

For players the competition between game providers has just about put them in a win-win-win position but many are realizing that the freebies come with a cost.

"I don't really mind all the logos and brand names of Coca-cola when I'm playing," said Mao Kaijun, a young guy in his 20s who spends around 100 yuan playing on-line games every month.

The young players also know that not being charged for time playing the game doesn't mean its free. The game providers let their subscribers stay on-line as long as they like, but if they want to be competitive they have to pay for weapons or special articles that will let them more easily advance through various levels.

"The balance of the game has been broken as you can pay to get powerful weapons from the operator and so skill is no longer important,"said Mao.

"Players feel the games have become quite dull as you can pay to get everything," he said.

Mao has been an on-line game player for seven years and has witnessed the growth of the booming industry in China. He and hundreds of thousands of young people around the country have switched from spending hours lounging in front of boob tube to evenings fixated on the flat screen. All over the country they can be found jammed into their local 'wang ba' or 'internet cave', some of which are fancy night clubs resembling discos with hundreds of computer stations.

Yet official statistics show that in the past two years China's growth in on-line game subscribers may be peaking. The number of gamers is only growing by about 10 percent a year.

There are several reasons for this and on-line game providers had better be paying attention if they want to reach the next level and find a pay off for their investment.

For Mao and his young buddies the novelty of it all just might we wearing off. "We are tired of the games which are always about killing monsters," said Mao.

Older people are also starting to take notice of the young people's near addiction to killing monsters. Parents, teachers and psychologists are worried about the wasted time, wasted money and the possible bad influence of the seemingly ludicrous phenomena that has totally absorbed so many youth.

Yet game providers are forging ahead into new markets. While they have just about penetrated most urban centers the next challenge are small towns and rural areas.

Despite industry leader Shanda's reported 539 million yuan loss in the fourth quarter ending last December smaller companies are still streaming into the business.

The China Center for Information Industry Development predicts that the country's on-line gaming industry will grow by 41 percent to 22.7 billion yuan by 2010.

"With more and more on-line games and operators, China's on-line gaming market will see more heated competition this year," said Zheng Ling, senior analyst with International Data Corporation.(1 dollar= 8.02 yuan)

Source: Xinhua


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