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February 2016
Main Activities
The primary activities of this industry are:
Developing and updating online games in several types and consoles
Maintaining the regular operation of game platforms, and providing a fair gaming environment
Similar Industries
6012 - Mobile Telecommunications in China
Businesses in this industry provide mobile communication services.
Additional Resources
www.miit.gov.cn
Ministry of Industry and Information Technology
www.cgia.org.cn
Game Software Industry Association of China
www.cnnic.net.cn
China Internet Network Information Center
www.isc.org.cn
Internet Society of China
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Industry Performance
Executive Summary
Enterprises within the Online Game industry in China are involved in the production (i.e. design and
development of online games) and the operation of online games. Most online game companies combine
game development and operations; however, some online game producers sell licenses to agencies, which
are then solely responsible for the operation of the games.
The first graphic online game in China, King of Kings, was launched in 1999. Along with the boom of the
Internet Services industry (IBISWorld industry report 6020), the Online Game industry has been growing
strongly since then. Between 2004 and 2009, revenue for the industry grew at an annualized rate of 51%.
In the five years through 2016, industry revenue increased at an annualized rate of 26.0% to $26.3 billion.
The number of online game players has been growing rapidly over the period. About 56.9% of internet
users are also online game players.
Although the first online game was designed by a domestic studio, the Chinese online game market was
dominated by foreign games in the early years of the industry's development. Domestic firms only took a
leading share of the market (64.8%) in 2006. Over the past five years, Chinese-made online games have
been increasingly well accepted by the global market. Exports have been growing faster than total revenue
– 54.6% annually to $4.1 billion in 2016.
In the five years to 2021, ACMR-IBISWorld forecasts that the industry will grow at an annualized rate of
12.8% to $47.9 billion. Growth is projected to slow as growth in the industry's main market – the 15-to-34
age group – slows due to China's birth control policies (now lifted). The future of the industry rests on
deeper penetration into this market.
Current Performance
In the five years to 2016, the Online Game industry in China experienced rapid growth, with revenue
increasing at an annualized rate of 26.0% to $26.3 billion. Such rapid growth was driven by the
development of internet services in China and support from the government.
The number of online game users is 408 million, which means over a quarter of Chinese residents play
online games. According to the China Internet Network Information Center (CNNIC), the number of
internet users was 668.0 million in mid-2015. Online game players account for 56.9% of internet users.
Compared to other internet services such as online video and electronic commerce, online games are more
profitable. In 2016, industry profitability is estimated at a whopping 41.5% of revenue. Most of the publicly
listed online game companies make over 50.0% profit. In terms of price/ earnings (PE) ratio, three of the
top ten most profitable Chinese companies listed on the NASDAQ are online game companies.
Industry performance
In 2012, industry revenue growth slowed to 28.9%, and growth in Chinese internet users fell to 10.5% over
the year, Another reason for the falling revenue growth rate was saturation in the large massive multiplayer
online Game (MMOG) product segment.
In 2014, mobile online games developed rapidly, with revenue for this segment surging by over 100.0%
from 2013, accounting for 25.3% of the total online game market.
In the first half of 2015, the number of mobile online games players increased to 267.0 million, accounting
for 44.9% of total mobile netizens. Mobile game players are now the key driver for growth for the industry.
Exports
The Online Game industry in China's first export was the game Voyage Century to South Korea in 2004.
Over the past five years, Chinese-made online games have been increasingly well accepted by the global
market. Exports have been growing faster than total revenue – 54.6% annually to $4.1 billion in 2016
(15.4% of total industry revenue).
Chinese online games have price advantages. Online game agencies are keen on introducing Chinese games
into the markets in their countries, since the low prices make them lower risk. However, most Chinese
online games are about Chinese Wuxia and Kongfu cultures, which limits their global spread. Furthermore,
compared to mainstream US and South Korean online games, domestic games are less technologically
advanced.
Competing imports
Over the past five years, industry imports have been growing at an annualized rate of 12.5%. The Chinese
online game market was dominated by foreign games in the early years of the industry's development.
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Domestic firms only took a leading share of the market (64.8%) in 2006. The mainstream games in the
market are from South Korea and the United States, with the most profitable games coming from South
Korea.
The industry employs approximately 252,500 people, many of whom are game designers, programmers,
and marketers. The total payroll is estimated at $4.2 billion, 16.2% of industry revenue.
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Industry Outlook
In the five years to 2021, ACMR-IBISWorld forecasts that the Online Game industry in China will grow at
an annualized rate of 12.8% to $47.9 billion. Growth is projected to slow as growth in the industry's main
market – the 15-to-34 age group – slows due to China's birth control policies (now lifted). However, this
population is also becoming increasing wealthy, which leads to increased consumption of industry
products.
As the industry matures and comes under more regulations, and as the size of the potential market shrinks,
competition will become more intense and profitability is expected to fall somewhat. Game companies will
invest more into research and development to design better and fancier games. Further, they will spend
more on advertising and marketing.
Industry enterprises will focus on further penetrating the 15-to-34 age group, offering more and better
games to sub-groups within that population segment. For example, many people within the target age
group are office workers who only have fragmented time to play games. Therefore, companies will focus on
developing social, mobile and browser games to cater to this sub-market. In particular, mobile online
games are expected to be a new growth point for the industry.
Growth in the number of establishments and employees will be higher than for enterprises. As many
domestic game companies expand into foreign markets and mobile gaming, employees specialized in those
areas will need to be hired. As a result, wages are forecast to grow much faster than employees, at 10.7%
annually. By 2021, total industry wages are forecast to reach $7.1 billion and account for 14.7% of revenue.
Value-added for the Online Game industry in China is expected to grow at an annualized rate of 20.2%
over the ten years to 2021. Compared to GDP growth of 6.5% annually over the same period, industry
value-added is increasing rapidly.
The basic market structure of the industry is in place and online game companies can provide
comprehensive services. In particular, the massively multiplayer online game (MMOG) product segment is
so well-developed that there is little space to grow. For other segments such as mobile and browser games,
the development potential is huge. The growth of this industry will be driven by these emerging segments.
Average revenue per user (ARPU) is a measure of the revenue a company can earn from an individual
player. A high ARPU raises a game company's revenue, but it can also indicate that the company is losing
users for a particular game. ARPU of this industry has been increasing steadily in the past five years, and is
expected to experience stable growth over the next five years.
In recent years, many Chinese online game companies completed their initial public offerings (IPOs) on
the NASDAQ, and had outstanding performance. As a result, more overseas markets began considering
importing online games from China. Demand from overseas markets is projected to be another growth
point for the industry in the future.
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Massive multiplayer online game (MMOG) offer virtual environments for millions of players to play in.
Common types of MMOGs include online role-play games (MMORPG), fighting games (MMOFTG), and
first-person shooting games (MMOFPS). MMORPGs tend to have the largest number of players, as they
offer comprehensive virtual worlds for players to live, fight, and interact in.
Among all types of online games, players of MMOGs have the highest user stickiness, and MMOGs have
the longest life cycle. Normally, game producers need to spend years of time and a large amount of capital
on developing an MMOG, but once launched, they can offer steady revenue streams.
Relatively long development periods and large capital investments bring higher risks game companies. As a
result, many companies buy the operating licenses of existing games from other producers, rather than
develop games themselves. This kind of agent business has brought remarkable success to some
companies.
MMOGs are a pillar segment in the Online Game industry in China. In 2016, MMOGs are estimated to
account for 52.0% of industry revenue. However, the market is almost saturated and future growth is
forecast to be slow.
Web games refer to online games that can be directly played on internet browsers. Users tend to spend
significant amounts on web games in very short periods. Thus, the average revenue per user (ARPU) for
web games tends to be higher than for other types of games. However, the churn rate of this segment is
high. Most players tend to drop a web game in three months due to their superficial content. Short life
spans means companies need to continually develop new games to attract new users. Therefore, game
development costs are high.
In 2016, web games are expected to make up 20.0% of industry revenue. In the next five years, this
industry segment is expected to experience rapid growth. Improving user stickiness will be the primary
goal for web game companies.
Mobile games
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The popularization of smart phones and tablets has provided new consoles for online games other than
personal computers (PCs). Most mobile online games are similar to the casual games on competitive game
platforms. Users can access games for free, but are charged for additional, optional items within the games.
In 2016, mobile online games are estimated to account for 28.0% of total industry revenue. Mobile
terminals have surpassed PCs to become the most popular devices that people use to access the internet.
ACMR-IBISWorld research indicates that the mobile online game product segment has huge potential for
game companies.
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Demand Determinants
Technological advances
Network, hardware and software development will improve the user experience of games. More laptops are
coming equipped with 4G services, which enable players to access to games at anytime and anyplace.
HTML5 technology can also improve the quality of games, especially games on mobile terminals. Future
demand will be driven by technological progress.
Digital age
With the popularization of the internet services, online games may become part of people's daily life.
People like to share experiences through the internet and online games are good platforms for people to
share and compete.
Major Markets
White-collar workers
The first expansion of the online game market in China was in the early 2000s. The majority of current
players were born in 1980s and were students at that time. Now, this generation has started working,
mostly in white-collar jobs.
This market has relatively fixed income and gaming time, thus, they contribute steady revenue to online
game companies. In 2016, white-collar workers are estimated to contribute 22.9% to total industry
revenue.
Self-employed workers
This market includes freelancers, individual business owners, and online store owners. As they have
considerable disposable time and tend to be loyal users, these people comprise the second largest
consumer group, accounting for 19.7% of industry revenue in 2016.
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Students
Students used to be the largest player group in the online game market in China – when the generation
born in the 1980s was still in school. In China, male students usually spend a large amount of time on
games, especially online games. Since students are not independent consumers, they contribute relatively
lower average revenue per user (ARPU) to game companies. Furthermore, the gaming time of students is
sporadic due to their school work. In 2016, students represent 18.4% of total industry revenue.
Blue-collar workers
Blue-collar workers usually have relatively lower levels of education and income. Online games are
characterized as an entertainment with lower expense. In 2016, the blue-collar workers account for 12.2%
of the online game market in China.
Company administrators
Company administrators generally have high personal incomes. The percentage of players with high
incomes been increasing in recent years, which indicates that online games have been accepted by the
public as a daily form of entertainment. Online game companies can create more revenue from company
administrators due to their high incomes. This group of people is expected to contribute 5.9% of industry
revenue in 2016.
The unemployed
As a cheap entertainment activity, online games attract people with low incomes. The unemployed have
plenty of time, thus they spend a lot of time on games. In addition, most online games construct a perfect
virtual world for people to escape from reality. In 2016, the unemployed account for 4.5% of total industry
revenue.
Other
Other players include government employees and specialized employees. These groups make up 16.2% of
industry revenue in 2016.
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International Trade
Exports
The Online Game industry in China's first export was the game Voyage Century to South Korea in 2004.
Over the past five years, Chinese-made online games have been increasingly well accepted by the global
market. Exports have been growing faster than total revenue – 54.6% annually to $4.1 billion in 2016
(15.4% of the total industry revenue).
Chinese online games have price advantages. Online game agencies are keen on introducing Chinese games
into the markets in their countries, since the low prices make them lower risk. However, most Chinese
online games are about Chinese Wuxia and Kongfu cultures, which limits their global spread. Furthermore,
compared to mainstream U.S. and South Korean online games, domestic games are less technologically
advanced.
Chinese online games have been introduced to over 20 countries, including Asian countries, the United
States, and Europe. Exploration of traditional Chinese cultures, such as Kong Fu and Wu Xia, are the
primary selling points for Chinese online games in the overseas markets. Among export destinations, Asian
countries make up the largest portion, since countries, such as South Korea, Japan, and Malaysia identify
culturally with China.
As domestic companies improve the quality of their games, exports are forecast to grow strongly. In 2021,
industry exports are projected to reach $7.2 billion, accounting for 15.1% of total industry revenue.
Competing imports
Over the past five years, industry imports have been growing at an annualized rate of 12.5%. The Chinese
online game market was dominated by foreign games in the early years of the industry's development.
Domestic firms only took a leading share of the market (64.8%) in 2006. The mainstream games in the
market are from South Korea and the United States, with the most profitable games coming from South
Korea. Games from Japan are expected to hold higher market shares in the next five years.
In 2012, imports of online games were estimated to decrease 0.5% to $2.9 billion, and account for 22.7% of
domestic demand. The primary reason was that few outstanding online games were introduced in 2012. In
addition, the number of Chinese players of existing foreign games is declining.
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Business Locations
Region Percentage
East China 29.5
Region Percentage
East China 34.9
The Online Game industry in China is concentrated in Guangdong, Zhejiang, and Jiangsu provinces, which
account for 12.0%, 7.1%, and 7.0% of industry revenue, respectively. Since population greatly determines
the number of players of online games, provinces with more residents contribute more revenue to the
industry.
Guangdong, Zhejiang, and Jiangsu are considered eastern coastal areas. These areas experienced rapid
development in the last 20 years. The popularization rate of PCs and internet access are higher here than
in other areas in China, especially the western inland areas. Furthermore, since users in these areas have
higher incomes, they are willing to spend more money on online games.
In 2016, revenue generated by players in Shangdong, Henan, and Hebei province is estimated to account
for 9.4%, 8.0%, and 6.0% of total revenue, respectively. The internet access ratio has been increasing
rapidly in these areas.
Compared to second-tier and third-tier cities, first-tier cities have relatively lower demand for online
games. In 2016, industry revenue contributed by players in Beijing is expected to account for 6.2% of total
industry revenue. Shanghai is estimated to make up 3.9% of industry revenue. People in Beijing and
Shanghai have heavier working pressures, thus they can have less time to play online games.
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Competitive Landscape
Market Share Concentration
The level of industry concentration is medium.
In 2016, the top four players in the Online Game industry in China make 61.5% of total industry revenue,
which indicates a medium level of concentration.
The majority of the 5,957 enterprises in this industry are small game studios developing lower-quality
games. Meanwhile, the few large-scale companies are able to raise enough funds to develop high-quality
games, and buy operation licenses from other companies. In addition, they are able to manage many
different games at the same time. Companies operating multiple games are able to attract more players and
generate more revenue.
ACMR-IBISWorld anticipates that the market share concentration will grow as successful small studios
merge with or are acquired by large companies, and other small firms gradually exit the industry.
Purchases 17.7%
Wages 16.2%
Depreciation 6.2%
Taxes 4.5%
Rent 1.5%
Utilities 1.1%
Other 4.7%
Profit 41.5%
Profit
In 2016, profitability in the Online Game industry was estimated to be very high, at 41.5% of revenue.
Some of the leading firms have profit margins as high as 70.0% of the total revenue. Overall, the cost of
operating online games is quite low, which leads to high profitability.
Purchases
Purchase expenses include costs for servers, personal computers (PCs), and internet connections. Network
servers are the largest expense for game companies. However, the more units of servers a game agency
purchases, the lower the average cost will be. The upgrade of PCs for this industry is rapid. Newer games
all require faster central processing units (CPU) and better graphics processing units (GPUs).
Depreciation
Depreciation is estimated to account for 6.2% of industry revenue. Requirements for devices used in this
industry changes rapidly. However, the price of PC devices has been gradually decreasing, so depreciation
is anticipated to decline in the future.
Wages
The industry employs about 252,507 people, many of whom are game designers, programmers, and
marketers. The total payroll is estimated at $4.2 billion, 16.2% of industry revenue.
As many domestic game companies expand into foreign markets and mobile gaming, employees
specialized in those areas will need to be hired. As a result, wages are forecast to grow much faster than
employees. By 2020, total industry wages are forecast to reach $7.1 billion and account for 14.7% of
revenue.
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Research and development into new games absorbs an additional 6.8% of industry revenue. In recent
years, domestic game producers have been investing large amounts in developing products. Compared to
large companies, medium-sized and small firms invest more in R&D.
Online game companies normally use online advertisements and below-line activities to promote their
products. In 2016, this type of expense was estimated to account for 6.6% of the industry revenue.
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Basis of Competition
Competition is high and steady.
Content
Content is the major concern for users. Attractive content attracts more users and keeps users playing for
longer. Content competition within this industry is about creating consumption patterns for users and
establishing customer loyalty.
Innovation
It is very important for game developers to be creative, since consumers' tastes change continuously. The
most efficient way to retain the players is to keep game play fresh. To stay competitive, game companies
update their operating games constantly and introduce games with new concepts.
Barriers to Entry
Barriers to entry are low and increasing.
SOURCE: IBISWORLD
Small game studios have many opportunities to access to this industry, since web games do not require
high pre-investment, and developers can make revenue in a very short time after a game is launched.
Furthermore, the popularization of mobile games simulates enterprises to enter this industry. By
developing applications for mobile terminals under IOS and Android, producers can gain access to users
from all over the world who are able to buy their products in online stores.
However, operating a large online game such as a massively multiplayer online game (MMOG) requires
significant capital and technical support. For new enterprises in this industry, unless they are capable of
raising funds from investors, they cannot compete with the industry giants in the short term.
Regulation of the Online Game industry is quite low at present, but the Chinese government is expected to
enact more laws related to the industry, which will raise barriers to entry for new firms.
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Industry Globalization
The level of globalization is medium and increasing.
The Online Game industry has a medium level of globalization, and the scale of globalization is expected to
increase in the future. Domestic game companies have expanded their business to overseas markets in the
past five years. The most common ways to export domestic games is to sell the operating licenses to foreign
agencies. Some Chinese game companies also take charge of the operation process.
Chinese online games have been accepted by players in many regions in the world. In addition, the
government encourages game producers to export their products. Thus, the scale of globalization is
anticipated to increase in the next five years.
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Major Companies
Market
Major Player
Share
Tencent Holdings Limited 32.5% (2016)
Founded in 1998, Tencent Holdings Limited is the largest comprehensive internet service company in
China. Its primary business is instant messaging (IM); its IM platform QQ is the most popular in China.
In 2012, online gaming contributed over 52.0% of total company revenue. Tencent has a package of
comprehensive internet services, and they are capable of leading QQ users to online game play. In
addition, Tencent has enough capital to buy operating licenses for successful foreign games. These foreign
online games operated by Tencent account for a large proportion of revenue.
In 2013, besides the traditional personal computer games, Tencent launched series of mobile games
through mobile QQ and WeChat, which contributed strong revenue growth of the company.
The most popular games of Tencent are Cross Fire and Dungeon & Fighter, both South Korean imports.
QQ Game Center also generated a significant portion of Tencent's revenue.
In 2014, Tencent's revenue from its online game business increased to $7.3 billion, up 40% from 2013 and
accounting for 56.7% of the company's total revenue. The expansion and rapid development of mobile
online game sector contributed to the company's growth in revenue.
By the middle of 2015, the monthly active number of QQ users reached 843 million. And the mobile online
game of the company continued to drive revenue growth of the company, totaling an estimated $15.9
billion in the year.
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Netease.com, Inc.
Industry Brand Names: Westward Journey Online , Fantasy Westward Journey, World of Warcraft
Market Share: 13.8%
One of the top four portal sites in China, Netease was founded in June 1997 by Lei Ding. Netease's product
lines have expanded from news and email services to online games, blogs, search engines and online
forums.
In December 2001, Netease developed an online role-player game (RPG) called Westward Journey Online.
In the next two years, Netease brought two other online games to the market: Westward Journey Online II
and Fantasy Westward Journey. All three adapted stories and characters from the well-known Chinese
novel Journey to the West. In the past ten years, these massively multiplayer online role-playing games
(MMORPG) have been growing steadily, and attracted huge audiences. In 2011, the total number of
registered users for Westward Journey Online exceeded 99.0 million. Currently, Westward Journey Online
II registered users were over 150 million.
Netease licensed the extremely popular MMORPG World of Warcraft in 2009, which was developed by US
online game company Blizzard. The partnership between Netease and Blizzard gave Netease a strong
competitive advantage in the Online Game industry in China.
In 2013, online game services contributed 85.5% to total revenue of the company. Mobile devices are
playing an important role in online games, and Netease is developing new games that can be operated on
mobile devices. For example, in 2013, Netease launched an accompanying mobile version of Fantasy
Westward Journey.
In 2014, online game services contributed 83.9% to total revenue of the company. The company continued
to expand its mobile online games in 2014 and 2015.
In the first half of 2015, total revenue of Netease surged by nearly 60% from the same period in 2014, and
company revenue was estimated to increase to $2.4 billion for the whole year.
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Established in 1999 in Shanghai, Shanda Games first gained success in the industry by licensing Korean
company WEMADE Entertainment's online game The Legend of Mir. However, due to a revenue-sharing
disagreement, Shanda and WEMADE Entertainment in 2003.
Next, Shanda was involved in copyright and piracy issues regarding its own online game The Legend. To
retrieve its brand value and to promote its online games, Shanda made several major MMORPGs free to
play in 2006, charging for game props instead of game time. As a consequence, Shanda Games successfully
retained its users and increased its profit.
Currently, Shanda Games runs 33 online games, including massively multiplayer online games (MMOGs),
casual games and web games. Among its vast audiences, 9.73 million users pay to play.
In 2011, Shanda Game's revenue increased 20.7% to $769.8 million, accounting for 10.2% of industry
revenue. However, Shanda's revenue growth has been slowing in recent years, and company revenue
decreased to $717.7 million in 2013.
In 2015, Shanda adjusted its operation strategy and strengthened mobile game R&D. The company was
also delisted from the Nasdaq.
Changyou.com Ltd.
Compared to the other top online game companies, Changyou.com has an advantage in terms of licensing
and operating online games, but is less competitive in terms of R&D.
In 2014, Changyou generated $755.3million, with online games accounting for 86.3% of total revenue.
Yufeng Chi, the CEO of a leading education software company in China, founded Perfect World in 2004. It
released its first self-developed 3D adventure MMORPG Perfect World in 2006, exporting it to Japan,
Vietnam, Singapore, Korea and other Asian markets. In 2008, Perfect World established its subsidiary in
Los Angeles, USA.
Perfect World products include 12 MMORPGs and a variety of casual online games, mostly based on
martial arts or adventure stories. Its flagship products include the 3D MMORPG Perfect World 2, Zhu
Xian, Red Cliff. In 2012, Perfect World announced its first license deal for Dota 2.
Perfect World generated $474.0 million in 2011, with profit of $176.7 million. Export products of Perfect
World account for about 40.0% of total industry exports.
Perfect World constantly promoted its research and development of singe-player game. In 2014, revenue of
Perfect World increased to $623.7 million.
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Other Players
Giant Interactive Group Inc.
Giant Interactive Group was founded in 2004 in Shanghai. The primary business of Giant is developing
and operating online games. In 2007, Giant completed its initial public offering on the New York Stock
Exchange. Its market capitalization reached $4.2 billion.
In 2013, Giant's revenue increased 12.7% to $389.1 million, accounting for 3.5% of the industry revenue.
Online games accounted for 98% of revenue.
In 2014, Giant achieved strategy transition, transforming from online games to the whole mobile internet.
It established its wholly owned subsidiary Giant Mobile Technology Co., Ltd, responsible for the mobile
online game business.
Shanghai Everstar Online Entertainment integrates online games, fashion content, blogging, social
networking and other web services into an online interactive community. It's online game products include
music simulation games, sports simulation games, and MMORPGs. Its successful operation of the Korean
dance simulation game Audition Dance Battle Online brought it fame.
Kingsoft Corporation Limited is a comprehensive software company. Their products include antivirus,
office software, and games. In the online game segment, Kingsoft has developed several Wuxia games,
which are very popular among users.
Coslight Technology International Group is a Harbin battery company. In 1999, it was publicly listed in
Hong Kong. Coslight has 21 subsidiaries and 13 overseas offices. In 2008, its total assets exceeded $4.58
billion. Its major businesses include battery manufacturing, mining, and online game development.
Coslight entered the online game market in 2004, opening two subsidiaries concentrated in online game
development. The Shenzhen subsidiary focuses on online game development, while the Beijing subsidiary
is operates four MMOGs and one casual game. In 2007, its revenue exceeded $13.1 million.
Operating Conditions
Capital Intensity
The level of capital intensity is high.
Intensive investment in research and development is required
Short manufacturing equipment replacement cycle
For every dollar spent on wages, management, and research and development in this industry, 38 cents are
invested in capital, indicating high capital intensity.
As a creative industry, game producers invest a large amount of capital in R&D. Compared to the cost of
purchasing operation licenses from foreign producers, the expense of developing games is lower. In
addition, domestic games tend to be more attractive than foreign games, since they are more related to
Chinese culture.
Depreciation is high in this industry due to the regular replacement of devices. The rapid upgrade of PCs
and mobile terminals means that game producers must replace their devices regularly to support their
games.
In the Online Game industry in China, new games are introduced to this market frequently. Over 50 new
games are launched every year. In addition, developers constantly update their games in operation.
With the improved processing ability of PCs, customers' expectations have been increasing as well,
requiring game developers to design games with higher image quality.
HTML5 is growing in popularity among game design companies. This technology is able to increase the
efficiency of programs, and improve the image quality of games. Another advantage of this technology is
that the products can be operated on many different platforms.
Revenue Volatility
The level of volatility is low.
The number of online game users in China has been increasing steadily in recent years. The Online Game
industry is less affected by the macro-economy. Even in recessionary years, the industry continued to
develop strongly. Since online games cost customers relatively less money than other entertainment
activities, more people chose online games over other more expensive activities.
The level of volatility is expected to remain low in the next five years as the industry matures.
At present, regulation from the government is light. When the Online Game industry first emerged in
China, the government did not realize the importance of supervision. In the past few years, however, many
problems were exposed. Financial conflicts occurred between players and between players and game
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companies. Some teenagers were addicted to online games. The government began to realize that it is
important to regulate this industry to protect consumers.
In the early 2000s, many students became addicted to online games. In 2005, the General Administration
of Press and Publication of China required online game companies to include anti-addiction systems to
games, which restricted the gaming time of juveniles.
In 2010, the Ministry of Culture of China enacted the first regulation for the Online Game industry. The
law raises the definition of online virtual currency and standardizes online trading based on virtual
currency. Illegal trading is prohibited. Furthermore, producers are not allowed to launch gambling games.
Other hidden ways of charging are also prohibited.
Another important function of this regulation is to protect the legitimate rights and interests of online
game players. Game companies are not allowed to raise unequal treaties. In addition, to protect teenager
players, the content of online games is heavily regulated. Pornographic and violent content is strictly
prohibited.
Industry Assistance
The level of industry assistance is medium and the trend of industry assistance is steady.
Most of the enterprises in the Online Game industry in China are private companies with revenue coming
primarily from individual customers. In the domestic market, government policies do not affect online
games companies very much. In the overseas market, the government encourages game producers to
export their products.
WWW.IBISWORLD.COM.CN Online Games in China February 2016 32
Key Statistics
Industry Data
No. of
Online
Game
Establish- Employ- Players
Revenue IVA ments Enterprises ment Exports Imports Wages (Million
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) Units)
Annual Change
No. of
Online
Establish- Employ- Game
Revenue IVA ments Enterprises ment Exports Imports Wages Players
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2008 61.8 73.7 65.6 69.5 51.8 21.5 87.1 62.7 93.2
2009 43.3 47.7 54.5 55.5 59.9 48.1 63.0 83.1 47.6
2010 17.1 17.9 78.8 77.6 78.8 102.6 16.9 91.5 40.1
2011 30.6 32.3 26.9 26.6 29.7 63.2 20.5 39.3 6.6
2012 28.9 29.2 20.4 20.1 17.7 43.1 -0.5 36.1 3.5
2013 36.5 38.1 23.0 22.2 22.9 50.7 26.8 34.9 0.7
2014 25.3 25.6 34.4 34.0 34.7 186.5 18.7 44.1 8.3
2015 21.5 22.1 16.8 15.4 18.3 22.5 9.9 19.4 6.6
2016 18.3 19.5 11.9 10.8 15.6 16.6 9.2 16.3 4.6
2017 16.0 18.2 11.2 9.5 12.7 16.0 8.6 13.5 3.4
2018 14.8 15.9 8.4 7.7 9.3 15.1 6.8 12.3 3.1
2019 12.8 13.7 7.7 7.0 8.1 12.9 6.5 11.0 3.0
2020 10.6 12.0 7.0 6.3 7.3 9.2 6.3 8.8 2.7
2021 9.6 10.7 7.4 5.6 6.8 8.3 6.1 8.0 2.4
Key Ratios
Imports/ Exports/ Revenue per Wages/ Average
IVA/revenue demand revenue employee revenue Employees wage
(%) (%) (%) ($'000) (%) per est. ($)
Jargon
AVERAGE REVENUE PER USER (ARPU) A revenue measure calculated as total revenue divided by the
total number of users/ subscribers.
HTML 5 The latest mark-up programming language, it is mostly used in website design and game design.
MASSIVELY MULTIPLAYER ONLINE GAME (MMOG) Online game capable of supporting hundreds or
thousands of players simultaneously.
WWW.IBISWORLD.COM.CN Online Games in China February 2016 35
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