Nation's entertainment industry is enjoying 'golden age' of expansion
SHANGHAI - An increasing number of Chinese online games are expected to gain an overseas presence in the next few years, supported by government policies.
The General Administration of Press and Publication (GAPP), the country's publishing regulator, will encourage 100 domestic online games to go beyond the country's borders each year, while supporting 10 Chinese game developers to invest overseas.
Sun Shoushan, deputy director of GAPP, said at the Ninth Digital Entertainment Expo and Conference (also known as China Joy) that the policy is intended to support the young but booming industry, which generated record high revenues of 32.37 billion yuan ($5 billion) last year.
Chinese gaming vendors independently developed 356 products in 2010, 35 more than in the previous year.
Of the total, 82 new online games were launched abroad by 34 domestic manufacturers, or 10 times the number of such games five years earlier, Sun said.
"It is a prime time for domestic products to expand their footprint abroad."
China's entertainment and media industry is experiencing a golden age of growth. The sector will expand 12 percent annually in the next few years, far above the global average of 5 percent, to hit $133 billion in revenue in 2014, according to a report by accountancy firm PwC.
A separate study by McKinsey & Co found that 80 percent of China's Internet users play online games. The consultancy forecast that gaming industry revenue will top $8 billion by 2014, with room for growth among China's 485 million netizens.
Some leading domestic gaming firms have had remarkable success overseas.
Shanda Games Ltd, a subsidiary of the Nasdaq-listed Shanda Interactive Entertainment Ltd, has completed a buyout of Eyedentity Games, a South Korean developer famed for its hit product Dragon Valley.
According to Chief Executive Officer Tan Qunzhao, the purchase is positive for Shanda in most Asian markets, and Dragon Valley kicked off test runs on Wednesday in North American markets.
Perfect World Co Ltd, another leverage player in the sector, is riding the industry boom. It agreed in May to purchase Cryptic Studios, producer of Star Trek Online, from mega-game developer Atari Inc.
The company made its entry into the US in 2008 with the founding of Perfect World Entertainment, and now "the primary goal is to coordinate global resources to serve global players", said CEO Chi Yufeng.
The lucrative Chinese market is attracting foreign investors. One recent example is the partnership between the Media Development Authority (MDA) of Singapore and China Information Broadcast Network, through which Singaporean vendors introduce their games to Chinese users.
Recognizing the importance of reciprocity, Thomas Lim, director of the MDA, said his government will support Chinese companies' expansion into Singapore with incentives including tax breaks, financing and sites for development.
William Ding, CEO of NetEase.com Inc, said the competitive edge of Chinese games over foreign rivals consists of incorporating unique Chinese elements.
The popularity of Xiyouji (Journey to the West), a game that draws on a classical Chinese novel, is an example of the huge potential to be derived from Chinese culture.
A barrier to Chinese gaming companies' development consists of challenges to intellectual property rights. Despite government efforts, piracy remains widespread, Chi said.
Another challenge stems from human resources constraints. Because the industry is relatively new, insiders say skilled and experienced staff are in short supply.
"It is difficult (here) to find someone who has been in the business for 10 years and knows and lives the gaming market," said James Gwertzman, vice-president of PopCap Games Inc's Asia-Pacific branch.
