Online Gaming: Real Growth from the Virtual World

By staff reporter DAI YUCHEN

Visitors to the Ninth China International Digital Content Expo, held in Beijing in October 2011, delight in a new computer game.

2011 marks the beginning of the second decade in the story of China's online gaming culture. According to the 2010 China Online Games Market Report published by the Ministry of Culture, the Chinese market for online games reached RMB 32.3 billion in 2010, an increase of 25.2 percent over the previous year. This strong growth points to good times ahead for the domestic gaming industry.

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Online gaming refers to games played by multiple players simultaneously via a computer network. Popular genres include strategy, sports, fighting, music, racing, and role-playing. Very few games offer a single-player mode; interaction is encouraged.

Online games are the driving force of China's burgeoning games market. According to data from the ZOL Data Center (ZDC), in 2010 85.6 percent of Chinese gamers played online games, significantly more than those who played offline computer games (69.8 percent) and those who played consoles (30.4 percent).

Framed in historical terms, 1992-1996 was a "prehistoric" time for gaming in China. One online game that became popular at that time was An Ode to Gallantry (Xiake Xing). Games such as this employed letters but no images, and gamers had to enter complicated computer instructions just to play.

In June 1998, GlobalLink Beijing Computer Technology Co., Ltd. was established, providing five free online games such as the strategy game "Go" and Chinese chess. After three years of rapid growth, GlobalLink had some 18 million registered users with 170,000 online players at any one time, and had become the largest online gaming website worldwide.

In November 2001, the portal Netease.com launched its game A Westward Journey Online (Dahua Xiyou), thereby announcing its entry into the field of online gaming. This move gave online gaming a bigger potential market and a new platform for profits and expansion. Also in November 2001, Shanda Interactive Entertainment Ltd. introduced Legend of Mir II from South Korea, a famous multiplayer online role-play game. Shanda became extremely successful with the launch of this game. One user so described the enormous popularity of Legend: "At that time, there were only two types of netizen in Internet cafes: those who were chatting via QQ (an instant messaging software), and those who were playing Legend of Mir II."

During this first, heady decade, scores of other online games were popular in China. In addition to A Westward Journey Online and Legend of Mir II, a number of other foreign and local games, such as World of Warcraft and Red Cliff (Chinese: Chibi) had their time as game of choice of internet cafe enthusiasts across the country. Ding Lei, CEO of Netease.com, compared growth in the first decade of China's online gaming market from that of a toddler to a teenager.

Profits Galore

Online gaming is an industry gathering speed in China. After 10 years of rapid development, the market increased from RMB 310 million in 2001 to RMB 32.37 billion in 2010. Currently, China has nearly 80 million online players.

"The online gaming industry is the most successful and commercially profitable of all industries that operate on the internet in China," Shi Yuzhu, president and CEO of Giant Interactive Group Inc., was quoted as saying as early as 2007.

This is no exaggeration. Thanks to online games, Shi's company was more profitable in 2007 than both Chinese internet heavyweights Baidu.com and Alibaba.com.

According to annual financial reports from the first half of 2007, Baidu.com's net profit was RMB 163.2 million; Alibaba.com's was RMB 290 million, while Giant Interactive Group Inc. pulled in a staggering RMB 512 million.

In May 2010, Zhu Jun, chairman of the software developer Ninetowns Internet Technology Group Co., Ltd., admitted in an interview that the core of his company's business was still online games, "because it is the most profitable gig on the Internet. Tencent earns the company a lot of money in this way, and 36 percent of Facebook's revenues comes from online games."