China, land of gaming opportunity

TAGs: Daniel H. Vlad, JLM Pacific Epoch, World of Warcraft

China: I've not been but they reckon it's quite big

China: I've not been but they reckon it's quite big

While the industry lies in wait for the United States to wake up and legalize online gambling, developments on the other side of the world suggest that online gaming companies should be switching their attention to the East.

China is no longer the sleeping giant of old and is fast becoming the all-powerful global superpower. While America battles recession, near double-digit employment figures and predictions that it will not recover from its current crisis for another ten years, China’s economy is thriving.

Indeed, the fact that it has lain dormant for so long is now working to its advantage because while the rest of the western world struggles to dig itself out of a desperate financial black hole, China –which has not been caught up in the global banking crisis – have no such concerns. In fact, bizarrely, if the most populated country in the world has an economic problem it is that it cannot find enough workers for all the labour there is to go around.

In terms of gaming, the market is growing rapidly. In 2009, the industry earned 26 billion yuan, or about £2.5 billion, which was an increase of 39.5 percent over the previous year. The online games sector is charging ahead thanks to the exponential growth of China’s web community, now the largest in the world and there is no question that this is a market overseas developers should be looking to exploit as a high priority investment.

There is no telling how long it will take for the American legislators to wake up and smell the coffee. The legalization and regulation of the US market could take anything between five and ten years to take place, and in the meantime, operators should be aware of developments elsewhere.

In terms of online gaming within the Great Wall, the general consensus is that Chinese companies are at present providing a better product to their overseas competitors. “Foreign game developers are having a tough time competing in China,” said Daniel H. Vlad, a senior analyst at JLM Pacific Epoch. “So far only one Western game, World of Warcraft, has really succeeded in China. Chinese users spend significantly more time playing games than their Western counterparts. Foreign games typically fail to deliver enough content… Chinese gamers eventually lose interest and move on.”

Clearly more far-reaching research needs to be undertaken by those foreign operators looking to make a difference in online gaming in China, where analysts predict that by 2012, the market will triple from its 2009 haul to about £7 billion, with an estimated 270 million players in the country.

This is a staggering opportunity for foreign speculators, although online gambling companies may find that while China may be a land of opportunity, it is not the land of the free and operators looking to capitalize on China’s centuries-old tradition of gambling, may have a problem or two with the authorities – who have begun a crackdown in recent weeks.

The best approach, then, might be the one Virgin Games are taking. They plan to expand their brand overseas and become a ‘total gaming’ destination, via a deal with technology company Game Domain International, to offer more than 200 game titles for download.

If a company were to take a similar approach in China, it could then be ready to offer gambling if and when the authorities wake up to the vast sums of money they could generate from taxation.


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