Video game industry players call for better R&D

More development needed so that China maintains high score in market

Industry experts are calling on video games developers to invest more in research and development to avert copyright risks.

China's video games industry is embracing a golden era of growth, said Perfect World CEO Xiao Hong at digital entertainment expo 2018 China Joy, held in Shanghai earlier this month.

"Chinese games will become a major force in the global market in the next five to 10 years," he forecast.

As the largest video games market worldwide, China generated 105 billion yuan ($15 billion) in the sector in the first half of this year, accounting for more than 26 percent of the world's total, according to market consultancy CNG.

Xiao called on Chinese industrial players to tap into the latest opportunities, improve their R&D capacities and explore the overseas market. "Quality content is always at the heart of what content producers are committed to. Focusing on research and development as well as products has always been fundamental to our development," he said.

Data from CNG show that mobile games have played a prominent role in boosting growth, as they netted sales worth 63.41 billion yuan in China during the period, contributing 60.4 percent of the total sales in the Chinese gaming market.

Behind the boom in mobile games is the widespread use of smartphones, as well as the segmented markets' expansion, CNG analysts said.

Wang Xu, chief analyst and a joint founder at CNG, cited internet giant Tencent as an exemplary case of the power of mobile games in the video games market.

Tencent's games division reaped 97.88 billion yuan in business revenue last year, an increase of 38.2 percent from a year earlier, primarily driven by its mobile games business.

King of Glory, an online game launched by the company, remained a Tencent blockbuster in the first half of this year, raking in tens of billions of yuan.

The company's heavy spending on R&D allowed for a marked improvement in the proportion of its proprietary mobile games by both number and proceeds, Wang said.

Another major video games producer, NetEase, generated 36.28 billion yuan in net income from its online games business last year.

The growth momentum has continued this year, Wang added.

Quick responsiveness to market demand and strong R&D capacities have enabled the company to outperform most of its competitors in product quality and quantity, Wang said.

China's top three industrial players occupied positions of the world's top 25 games companies by revenues in 2017.

A report on the competitiveness of listed games companies in China, released by CNG at the 2018 China Joy, showed that 191 Chinese games companies had been listed publicly by the end of July, with an additional 20 preparing for initial public offering.

The majority of the publicly traded companies tend to focus on expanding in market segments such as esports, mini games, games adapted from popular copyrighted works, and products tailored to female users, Wang said.

As a growing number of Chinese games companies are expanding abroad, they need to remain vigilant against piracy, he noted.

For some of the listed companies, the shortage of proprietary products is a big concern, the senior analyst added.

Enhanced R&D is crucial for a company to control the origin of its products and increase its profit margin, Wang said, adding that without core IP assets, companies will depend on the authorization of copyright owners and cannot ensure their own supply of products in the long run.

(China Daily 08/16/2018 page17)