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BIZCHINA> Top Biz News
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The lure of virtual world
By Li Xiang (China Daily)
Updated: 2009-05-25 07:59 The report predicted that the Chinese online market would be worth more than $10 billion by 2012, which would account for almost half of the global market by then. While the home market is growing at a fast pace, some Chinese gaming companies are expanding into foreign markets. Perfect World, a Beijing-based online gaming operator, and one of the largest game exporters, set up a subsidiary in North America last April to better understand the local market and further intensify its overseas expansion. The company's exports for the first three quarters of 2008 amounted to $19 million, nearly doubling export revenue compared with the same period the previous year. Last year, a total of 33 online games, developed by 15 Chinese companies, were exported to 40 overseas markets, generating an income of $70.74 million, a 30 percent increase from the previous year. The export volume of China's original online gaming programs is likely to exceed $100 million this year. But one problem that faces the industry is polarization among domestic game operators. On the one hand, led by a few leading game companies, the industry as a whole maintains a high-speed growth of 50 percent year-on-year. On the other hand, 70 percent of companies are losing money. "The negative impact of the financial crisis on venture capital investment and bank loans has resulted in great financial difficulties for many small and medium-sized companies," said Qiu Bojun, CEO of Kingsoft. "The online game industry will undergo a revolution soon." The fact that the online gaming industry is technology intensive with high added-value products and relatively low energy consumption has attracted many companies into the business in recent years. But a lack of innovation and research and development is problematic and holding it back, analysts said. "Some companies entered the industry just to make a quick buck," said Xie Wen, an Internet analyst in Beijing. "Therefore you see a lot of cloning and repetition in the theme and content of games." Chinese gaming companies also need to reduce their reliance on the licensing of foreign online games as their main source of income and focus on producing their own high quality games, experts said. "They have to learn to walk on two legs - licensing and research and development - in order to maintain the current high-speed growth," said Wu Jun, vice-president of 9you, a leading game developer in China.
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