 Future play
By ZHOU YAN (China Daily)
Updated: 2008-07-21 07:42 After suffering for over half a decade of lean time beginning early 2000s, the Web-based gaming industry seemed poised for a robust take-off in late 2007 when an influx of bored office workers turned to casual game sites for the likes of virtual card, adventure and puzzle games. Originally, Multiple User Domain games (MUD) such as Ultima Online were popular with a segment of China's hardcore gaming community in the late 90s. Later, the rise of Massive Multiplayer Online Games (MMOG) such as Legends of Mir saw MUD fall, and casual games also began to gain steam in 2007, That year, Liu Yang and 15 founding members started eying the long-overlooked Webgames market. After noting a climbing number of casual game players. Liu founded the country's first solely dedicated webpage gaming platform 51wan.com in August, 2007. It's a combination gaming site and virtual community where players can play games without downloading them, peruse the latest game news and ads and chat and compare notes with one another. "When we started our business last year, few investors thought that we had made the right choice because the market scale of web-based games was far less smaller than other online games," says Liu. However, with her long experience in online game marketing and operations, Liu showed confidence in her start-up company, underscoring her belief that web-based games will experience an "explosive growth" in 2008 and the year after. Also, according to China WebGame Research Report 2007-2008 compiled by iResearch, a Shanghai-based Internet market research company, the web-based gaming industry is predicted to reach a 1.26 billion yuan market scale by 2010, and the number of webgame players will hit 9 million in 2008, a sharp 260 percent rise from 2007. Web-based gaming needs no downloads and servers and often relies on an IE browser or a common plug-in, that are "lighter" than MMOG and other mainstream online games, says Zhou Xinyu, a senior Internet industry columnist. "It's a green online game, and suitable for office workers who have no obsession with playing online games, but do it just for fun," Zhou says. He adds that state of the art website gaming creates a new dynamic for online games, with a diverse gaming format including role-playing, strategy, adventure, as well as puzzle games. Venture capitalists have also taken notice. This April, eight months after its birth, 51wan caught the fancy of the venture capital fund Sequoia Capital China, which made its first investment in a webgame project, though both parties refuse to reveal the amount. 51wan now operates an exclusive and fresh lineup of over 10 webgames at its platform, eight of which are in-house developed by 51wan's own R&D team. "We own 2.8 million active users, and there are almost 90,000 players staying online at 51wan every day on average as of this July," Liu notes, adding that the industry is expected grow tenfold and hit 500 million yuan by the end of 2008 from last year's 50 million yuan. But competition among webgame operators has also become increasingly intense with more players hoping to share the huge market pie. On top of 51wan, China's online gaming tycoon Shanda Interactive Entertainment debuted its first web-based MMORPG (Massively Multiplayer Online Role-playing Game) World Hegemony last November, underlining its high-key entry into website gaming. Industry insiders estimate that Shanda's webgame might have already achieved a positive cash flow. In addition, Oak Pacific Interactive (OPI) ,which runs an array of hotspot web 2.0 communities, announced what it called the "biggest browser based MMORPG" last April. Unofficial statistics show there are more than 100 web-based games in China so far and the volume is expected to grow rapidly. The low entry level of the industry is part the reason why flourishing webgame operators are emerging suddenly, says Tan Bin from CCID Consulting, a Beijing-based IT market research company. "Compared to mainstream online games, a web-based game has lower demands on graphics and sound effects, which largely trim costs of research and development, as well as operation," Tan says. But web-based gaming still faces several obstacles before becoming a mature industry. Realizing a profit is the first hurdle. Few webgames are profitable and cash flow is a related obstacle. Item billing (IB), the major profit measure for mainstream online games, remains the most prevalent resort for web-based games, but industry insiders have questioned the IB approach because webgames lack the basis for IB: continuity. And casual game players' desire and need for buying tokens and credits is not as high as those who are indulge in MMORPG, analysts say. "We need patience to find the right profit models for webgames," Tan notes, but suggests that banner and in-game ad formats could become an effective recourse. According to American Internet marketing research firm eMarketer, most of the increase of in-game advertising spending in the United States will be derived from the Web-based game category, in which ad spending is predicted to $478 million by 2012 from $205 million in 2007. iResearch estimates that the ad revenue in China's web-based gaming industry will reach 550 million yuan in 2011 from the anticipated 40 million yuan in 2008. "We intend to adopt an in-game ads format when more webgame players are on our platform," Liu says, adding that IB is still the main profit model for 51wan. Poor R&D capabilities and lack of innovation could also come to a head for webgame operators. "Innovation is the key for webgames, and the dearth of people with right skills hampers the industry's progression," Tan says. As a web-based gaming platform, 51wan has been working diligently on getting new products to the market. Still, innovation is stifled due to the rampant copycats and shortage of innovative brains. Seventy out of 100 games are almost the same in format, Liu complains. "It becomes webgames' major stumbling block, which discourages confidence of the market and game players." The web-based gaming industry is likely to reshuffle when a distinct profit model comes out, Tan speculates, "and web-based game mammoths probably will emerge from the incumbent online gaming operators." (China Daily 07/21/2008 page3) |
