Pearl Research CHINA Report 2010

1,187 views

Published on

Published in: Business, News & Politics
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,187
On SlideShare
0
From Embeds
0
Number of Embeds
26
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Pearl Research CHINA Report 2010

  1. 1. Sample  ‐ Table of contents enclosed.        Games Market in China  www.pearlresearch.com Email: research@pearlresearch.com PH: 415-738-7660
  2. 2. About Pearl Research Pearl Research, a business intelligence and consulting firm, specializes in the interactive entertainment, Internet and technology industry with a focus on emerging markets and platforms. Based in San Francisco and China, Pearl Research provides our clients access to a vast knowledge base of market research information. The company publishes in-depth market research reports in addition to providing customized research and consulting services. Please contact us at research (at) pearlresearch.com, or call 415-738-7660 for a no-obligation complimentary briefing or for further samples of the work. To sign up for our complimentary mailing list, visit www.pearlresearch.com. Available Reports A sample of Pearl Research studies: • Casual Games Market • Games Market in China, Korea, Taiwan, India and Vietnam • Game Development and Outsourcing • Social Networking in China Customized Research Services Contact us for more information about our customized work. Typical engagements include: • Market opportunity assessment • Survey design and implementation • Competitive analysis • Benchmarking and best practices • Market entry or market expansion plans • Identification and tie-ups with potential local partners • Focus groups design and implementation • Business matchmaking
  3. 3. Other Reports Available: Phoenix Generation series of reports covering Chinese youth 300 million strong and with $135 billion in disposable spending income, China’s consumer youth markets represent an untapped opportunity. Defining the Phoenix Generation Pearl Research has coined the term  - Pearl Research’s Phoenix Generation reports are an “Phoenix Generation” to describe  in-depth lifestyle study on Chinese youths ages 16 to 30. The qualitative and China’s dynamic youth.  This  quantitative study identifies emerging trends, generation grew up during booming  attitudinal shifts and “what’s hot” in games, economic times and most do not  Internet, entertainment, technology, fashion, have any siblings as the result of the  and consumer products. one‐child policy.   - We focus on trends that have a business impact,   providing insights into the origins and implications of these trends. The study helps Pearl Research believes this  companies understand this important generation will be the core driver of  demographic and what drives their lifestyle consumer spending in China.  The  choices and spending habits. Phoenix Generation reports are  exclusive, primary‐research reports  dedicated to understanding this  important demographic. 
  4. 4. Terms and Conditions This Licensed Materials is exclusively for the Licensee that has purchased this study through Pearl Research. If you or your company has not purchased this report, please discontinue the use of this document. The materials that are the subject of this Agreement shall consist of reports and electronic information, hereinafter referred to as the “Licensed Materials” published or otherwise made available by Pearl Research. - Licensee shall not permit anyone other than Authorized Users to use the Licensed Materials. "Authorized Users" are full and part time employees of Licensee. Unauthorized reproduction and distribution of the Licensed Materials shall constitute grounds for legal prosecution and damages. - Licensee shall not reproduce, modify or create a derivative work or create a database in electronic or structured manual form by systematically downloading and storing any of the content from the Licensed Materials without the prior written permission of Pearl Research. - Licensee may not remove, obscure or modify any copyright or other notices included in the Licensed Materials. - Other than as specifically permitted in this Agreement, Licensee may not use the Licensed Materials for commercial purposes, including but not limited to the sale, resell, sub-license, rent, lease, transfer or attempt to assign the rights of the Licensed Materials or bulk reproduction or distribution of the Licensed Materials in any form. - Licensee may not allow any person who is not an employee to use and/or gain access to the Licensed Materials or make the Licensed Materials available on a computer network except in circumstances such that access to the Licensed Materials is strictly controlled and limited in to the employees of the firm. - Licensee may not use the Licensed Materials in any manner other than in compliance with applicable laws. Except for the express warranties stated herein, the Licensed Materials are provided on an "as is" basis, and Pearl Research disclaims any and all other warranties, conditions, or representations (express, implied, oral or written), relating to the Licensed Materials or any part thereof, including, without limitation, any and all implied warranties of quality, performance, merchantability or fitness for a particular purpose. Pearl Research further expressly disclaims any warranty or representation to Authorized Users, or to any third party.
  5. 5. Table of Contents   Methodology ..........................................................................................................1  Glossary of Terms and Abbreviations.....................................................................3  Defining Online Games...........................................................................................4    Executive Summary ......................................................................................... 6  PC Hardware.................................................................................................... 8  Internet and Broadband ................................................................................ 10  Speed and Price of Broadband .............................................................................14  “The Great Firewall of China”...............................................................................14  Chinese Attitudes Towards the Internet ..............................................................15    Internet Cafes ................................................................................................ 17  Demographic Profile.............................................................................................18  Government Regulations......................................................................................19    Unique Characteristics of Online Games ........................................................ 22  Online Games Marketing......................................................................................24    Games Market Top Trends............................................................................. 26  Company Updates ................................................................................................26  Seeking Content Worldwide.................................................................................28  New Market Entrants and Emerging Companies .................................................30  Lack of IPOs...........................................................................................................31  Rising ARPU ..........................................................................................................31  Sichuan Earthquake on China’s Online Game Market .........................................33    Games Market Forecasts ............................................................................... 34  MMORPG..............................................................................................................36  Casual Games .......................................................................................................36  Casual Games Revenue Models ...........................................................................37  In‐Game Advertising.............................................................................................37    Drivers to Growth ................................................................................................38  Inhibitors to Growth ............................................................................................41  Top Online Games................................................................................................43                                           Games Market in China –   Contact us for more information  i
  6. 6. Leading Game Publishers and Operators............................................................48    Giant Interactive Group.......................................................................................52  Key Highlights .......................................................................................................52  Strategy.................................................................................................................53  Games...................................................................................................................55  Zhengtu Online .....................................................................................................55  Financial Information ...........................................................................................61  Future Outlook .....................................................................................................61    NetEase ......................................................................................................... 62  Key Highlights .......................................................................................................62  Strategy.................................................................................................................63  Games...................................................................................................................65  Financial Information ...........................................................................................67  Marketing Developments.....................................................................................69  Future Outlook .....................................................................................................69    NetDragon ..................................................................................................... 70  Key Highlights .......................................................................................................70  Games...................................................................................................................71  Financial Information ...........................................................................................73  Marketing Developments.....................................................................................74  History ..................................................................................................................74  Future Outlook .....................................................................................................75    Shanda........................................................................................................... 76  Games...................................................................................................................77  Financial Information ...........................................................................................79  Marketing Developments.....................................................................................81  History ..................................................................................................................81  Future Outlook .....................................................................................................82    Sohu.com....................................................................................................... 83  Changyou..............................................................................................................83  Key Highlights .......................................................................................................84  Games Division .....................................................................................................84  Tianlong Babu .......................................................................................................85  Blade Online .........................................................................................................86  Upcoming Titles....................................................................................................87  Financial Analysis..................................................................................................87  Future Outlook .....................................................................................................88                                 Games Market in China –   Contact us for more information  ii
  7. 7. Tencent.......................................................................................................... 89  Key Highlights .......................................................................................................89  Products................................................................................................................89  Financial Information ...........................................................................................93  Marketing News ...................................................................................................94  Future Outlook .....................................................................................................95    The9 Limited.................................................................................................. 96   Key Highlights ......................................................................................................96  Strategy.................................................................................................................97  World of Warcraft ................................................................................................99  Games.................................................................................................................100  Financial Information .........................................................................................101  Marketing Developments...................................................................................103  Future Outlook ...................................................................................................103    Perfect World .....................................................................................................104  Key Findings........................................................................................................104  Strategy...............................................................................................................104  Games.................................................................................................................105  Financial Information .........................................................................................107    Guangyu Huaxia .................................................................................................110    9you .............................................................................................................111  Games.................................................................................................................111  Audition ..............................................................................................................112  Future Outlook ...................................................................................................113    Kingsoft ........................................................................................................114  Games.................................................................................................................114  Financial Analysis................................................................................................116  Marketing Developments...................................................................................117  Conclusion ..........................................................................................................117                               Games Market in China –   Contact us for more information  iii
  8. 8. Appendix: Socio‐Economic Overview, Software Piracy and Government  Regulations.........................................................................................................118    Socio‐Economic Overview.............................................................................119  Economy .............................................................................................................119  Development in the Western Regions ...............................................................120  Population ..........................................................................................................121  Per Capita Income ..............................................................................................121  Regional Differences...........................................................................................122  One‐Child Policy..................................................................................................124  Gaming Centers ..................................................................................................124  Unique Characteristics of Chinese Society .........................................................126  Guanxi.................................................................................................................127  Transparency and Corruption.............................................................................127      Software Piracy.............................................................................................128  Internet Download and Peer to Peer File Sharing..............................................128  Physical Piracy ....................................................................................................129  Pirate Servers......................................................................................................130  Lack of government enforcement......................................................................131  Low per capita income and consumer habits ....................................................132    Government Regulations ..............................................................................133  Government Agencies Involved in Regulating Games .......................................134  Fatigue System ...................................................................................................135                               Games Market in China –   Contact us for more information  iv
  9. 9. Table of Figures     Figure 1: Matrix Comparing Casual and MMORPG Games in China ............................................... 4  Figure 2: Market Forecasts 2006 to 2013 Data Table, $m .............................................................. 6  Figure 3: PC Sales (2005‐2008) ........................................................................................................ 8  Figure 4: Number of Broadband and Dial‐Up Connections in China............................................. 10  Figure 5: Growth in Usage Rate of Gamers ................................................................................... 11  Figure 6: Age of Internet Users ..................................................................................................... 12  Figure 7:  Frequency of Playing Games Among Internet Users..................................................... 13  Figure 8: What Aspects of the Internet Should be Controlled? .................................................... 15  Figure 9: Percentage of Internet café users in each city ............................................................... 17  Figure 10: Location for online gaming (multiple‐choice) .............................................................. 18  Figure 11: Age Difference Among Chinese Internet Cafe Users.................................................... 19  Figure 12: Main Purpose for Going to Internet Cafes ................................................................... 20  Figure 13: CounterStrike Online  Web site.................................................................................... 26  Figure 14: EA’s FIFA 2 gameplay.................................................................................................... 27  Figure 15: Sohu’s in‐house developed TLBB ................................................................................. 28  Figure 16: QWD1.com screenshot................................................................................................. 30  Figure 17: ZT Online advertisements............................................................................................. 31  Figure 18: Character from Fantasy Westward Journey................................................................. 32  Figure 19: Online Games Market Forecast 2006‐2013 Graph, $m         ........................................ 35  Figure 20: Online Games Market Forecast 2006‐2013 Data Table, $m ........................................ 36  Figure 21: Internet Café in Beijing................................................................................................. 39  Figure 22: CrossFire, one of many shooters on the market .......................................................... 42  Figure 23: Top Online Games by Concurrent Users ...................................................................... 43  Figure 24: Top Online Games Operators by Revenue ................................................................... 49                             Games Market in China –   Contact us for more information  v
  10. 10. Figure 25: Game Operator Revenue Market Share 2008.............................................................. 50  Figure 26: Select Operator Licensing Relationships ...................................................................... 51  Figure 27: Screenshots of 51.com ................................................................................................. 54  Figure 28: Screenshots of Giant Online......................................................................................... 57  Figure 29: Screenshots of ZT Online.............................................................................................. 58  Figure 30: Giant User Metrics (in 000s)......................................................................................... 59  Figure 31: Giant Interactive Title Matrix ....................................................................................... 60  Figure 32: Westward Journey II and Fantasy Westward Journey Metrics .................................... 64  Figure 33: NetEase Title Matrix ..................................................................................................... 65  Figure 34: Screenshots of Tianxia II............................................................................................... 67  Figure 35: NetEase’s Corporate Net Income and Revenues ......................................................... 68  Figure 36: Screenshot of Conquer Online...................................................................................... 70  Figure 37: Screenshot of Eudemons Online .................................................................................. 71  Figure 38: NetDragon’s Game Metrics .......................................................................................... 72  Figure 39: Top Three Games by NetDragon .................................................................................. 72  Figure 40: NetDragon’s Corporate Net Income and Revenues Graph .......................................... 73  Figure 41: NetDragon’s Corporate Net Income and Revenues ($m) ............................................ 74  Figure 42: Screenshot of Mir II ...................................................................................................... 77  Figure 43: Top Titles by Shanda..................................................................................................... 78  Figure 44: Shanda’s Corporate Net Income and Revenues (in millions) ....................................... 79  Figure 45: Shanda Casual and MMORPG Metrics 2008 ................................................................ 80  Figure 46: Advertising for Sohu’s Tianlong Babu in Taiwan .......................................................... 84  Figure 47: TianLong BaBu Metrics 2007‐2008............................................................................... 85  Figure 48: Screenshots of TLBB ..................................................................................................... 86  Figure 49: Duke of Mount Deer..................................................................................................... 87                             Games Market in China –   Contact us for more information  vi
  11. 11. Figure 50: Sohu Financial Performance (In $m) ............................................................................ 88  Figure 51: Tencent Penguin Mascot.............................................................................................. 90  Figure 52: Tencent’s Title Matrix................................................................................................... 92  Figure 53: Tencent’s Corporate Net Income and Revenues ($m) ................................................. 93  Figure 54: The Brands of Tencent’s Gaming Business................................................................... 94  Figure 55: Screenshot of the Burning Crusade.............................................................................. 99  Figure 56: Screenshot of Soul of the Ultimate Nation (SUN) ...................................................... 100  Figure 57: The9’s Corporate Net Income and Revenues............................................................. 102  Figure 58:  Screenshots of Zhu Xian ............................................................................................ 105  Figure 59:  Perfect World Select Titles Matrix............................................................................. 106  Figure 60: Perfect World Financial Analysis Q4 2008.................................................................. 107  Figure 61: Perfect World 2008 Fiscal Year Financials.................................................................. 108  Figure 62: Perfect World ARPU, Average Concurrent Users and APA ........................................ 109  Figure 63: Guangyu Huaxia’s games............................................................................................ 110  Figure 64: Screenshot of Audition ............................................................................................... 113  Figure 65: Screenshot of JX Online 2 ........................................................................................... 115  Figure 66: Kingsoft MMORPG Metrics Q3 2008 .......................................................................... 116  Figure 67: Key Country Metrics ................................................................................................... 119  Figure 68: China’s Population by Age Group............................................................................... 121  Figure 69: Map of China’s Provinces ........................................................................................... 123  Figure 70: Major Cities in China (Population in millions) ............................................................ 125  Figure 71: Baidu screenshot ........................................................................................................ 128                             Games Market in China –   Contact us for more information  vii

×