China's online games industry to hit $6B by 2012

New research shows how fast online social games industry is growing in China and the companies benefitting most from its rapid rise.
Written by Kevin Kwang, Contributor

There are more Chinese Internet users joining the growing enthusiasm for online games and helping to drive the industry that is estimated to be valued at US$6 billion by 2012, according to a new study.

Released Friday by business intelligence and consulting firm, Pearl Research, the forecast comes on the back of the industry that grew 35 percent in 2009 to reach US$3.9 billion. In 2008, the market expanded by 63 percent.

The number of Internet users in China reached 384 million as of Dec. 31 last year, with approximately 70 million users under the age of 30. Online games clocked a 29 percent penetration rate, stated the report.

Pearl identified China's under-30 Netizens as most likely to seek out online entertainment including games, music and chat, driving revenues for the online games market.

The report also highlighted several companies that benefited most from the market growth, including top game operators such as Tencent, Shanda Games and NetEase. These companies raked in US$792 million, US$704 million and U$493 million, respectively, in 2009.

It is no surprise, then, that the most popular games were also released by these operators, with Tencent's "Dungeon and Fighter" and "Cross Fire", and NetEase's "Fantasy Westword Journey" among the games that achieved more than 1 million concurrent peak users last year.

A major trend in China that is similar to the United States is the growth of social networking sites, such as QZone, Renren and Kaixin001, all of which host social games, Allison Luong, managing director of Pearl Research, said in the report. "These games are starting to cannibalize some of the advanced casual games on the market," he added.

In an earlier ZDNet Asia report, China Market Research's senior analyst, Ben Cavender, said game developers should tap the Chinese community's openness to multiplayer games.

He noted that while Facebook users are more wary of adding strangers as friends, Chinese users are more open to adding people. This has led to users embracing more multiplayer games involving interaction with people they may not know but have no qualms adding to their Friends lists, Cavender said.

He added that micropayments could turn a good profit for developers, noting that Chinese users show greater willingness to pay for virtual goods, which could be in the form of clothing for their avatars or virtual gifts, through micro-transactions.

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