China online games market to grow 39 percent

Summary:Country's online games revenue to exceed US$9.2 billion by 2014 amid increase in casual gamers across Asia-Pacific, and with microclient games emerging trend, presenting business opportunities for telcos.

China's online games market is expected to exceed US$9.2 billion by 2014 from US$6.6 billion last year, with microclient version of games emerging as a trend and the number of casual gamers growing across the region, research firms say.

In a study released Wednesday, Pearl Research noted that the growth in online games which include MMORPG (massively multiplayer online role-playing game), casual, social and Web games, grew 32 percent last year. It pointed to strong revenue showing by Chinese game operators, where the top 5 companies made a combined US$5.3 billion in revenues. The list was led by Tencent at US$2.5 billion, Netease at US$1 billion, Shanda Games at US$838 million, Changyou at US$485 million, and Perfect World at US$474 million.

Pearl Research noted that microclient versions of games were growing in popularity. "Microclient files are generally smaller, less than 50MB, compared to more than 1GB for a typical client-based game. This significantly cuts down a user's download time of the game to under 15 minutes with a broadband connection. The small size of microclient software is convenient and appealing to users, especially those users on game portals and social networking platforms," it said.

The research firm also pointed out that a key growth market for China would be Web games, which were accessible and user-friendly. This segment was expected to hit over US$1 billion in 2013, from US$800 million last year.

Digital games to double in region
In a separate research note released Thursday, Ovum forecasts revealed that the wider digital games market for Asia-Pacific would more than double over the next four years to reach US$30.3 billion in 2016. With a compound annual growth rate (CAGR) of 18 percent, the region's expansion rate was a healthy 2 percent ahead of the global average and it contributed over half of global retails sales in 2011.

Neha Dharia, Ovum's consumer telecoms analyst, said Asia-Pacific was already vital in terms of digital games retail sales and would grow in importance in future.

"The region will drive the digital games market globally," Dharia commented. "The most significant retail sales contribution will come from the massive multiplayer online game (MMOG) sector, while the highest amount of growth in the Asia-Pacific market will come from mobile gaming."

Dharia added that with more and more casual players entering the market, gamer numbers will grow faster than retail sales, resulting in the erosion of average revenue per user (ARPU). Casual and social games will be vital to growing the number of gamers and bringing digital games into the mainstream.

"There is a considerable split between Asia-Pacific's developed and emerging regions," the analyst said. "This results in a higher level of ARPU in South Korea and Japan than in China, for example, which has lower ARPU due to a large gamer base and the relatively low cost of games."

Ovum's forecast for the Asia-Pacific market put the number of online unique gamers at over 1 billion in 2016, while there will be slightly fewer than 900 million mobile gamers in 2016.

Dharia concluded: "The growth of digital gaming in Asia-Pacific will give service providers an opportunity to grow their revenues in the region. Telcos, in particular, could harness this growth by offering gaming-specific connections, or bundling mobile games with data access packs. In addition, shifting the distribution of payments offline could encourage the number of in-app game purchases."

Topics: Software, Apps, China, Mobility

About

Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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