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China Game Market: $2.1 Billion in 2010

According to a new report from research and consultancy firm Niko Partners the Chinese video game market experienced considerable growth in 2005 and is expected to grow even more in the next several years.

Niko's fourth annual report on the Chinese gaming market (which not surprisingly is comprised of 84 percent online games) indicates that the market currently stands at $683 million, with 27 million gamers. 29 percent of those gamers played games more than 60 hours per month, which contributed to a 23.6 percent growth rate in China's video game market from 2004 to 2005. Niko predicts that the Chinese gaming market will experience a compound annual growth rate of 24 percent during 2005-2010, so that by 2010 it will have hit $2.1 billion.

While much of this growth has been and will continue to be fueled by the popularity of MMORPGs, Niko points to another trend: the rise of casual games. Niko believes that premium casual games will reach MMORPG-like popularity over the next few years and will achieve 40 percent of all online revenue by 2010.

"Chinese gamers' passion for massively multiplayer online role-playing games (MMORPGs) has extended to the casual and premium casual segments," said Lisa Cosmas Hanson, managing partner of Niko Partners. "Premium casual games provide new gamers greater access to the online game market and open up an alternate source of entertainment for hardcore gamers."

The continued spread of broadband Internet in China has also contributed to the online games boom. And gamers that don't have broadband or any Internet access at home can spend time playing in Internet cafes. Niko found that gamers go online to play an average of 4 hours per day through an estimated 20 million PCs in China's 265,000 officially licensed and unlicensed Internet cafes.

Niko also stressed the social and cultural differences/preferences in the Chinese gaming market. For example, many gamers enjoy softer graphics and brighter colors. Also, socializing and competing with friends is a very important part of the gaming experience, especially with the popularity of Internet cafes. Although piracy is a concern in the Chinese market, the next-generation consoles are expected to launch there within 1-2 years. With the new consoles putting an emphasis on online functionality, Niko believes Chinese gamers will find themselves more attracted to the new platforms because of their social and competitive aspects.

"Not only is it imperative for a foreign videogame company to understand the preferences and demands of Chinese gamers, they must also strive to develop games that fit the restrictive regulations of the Chinese government," explained Hanson. "The Chinese market is different than other global markets, and it will take perseverance as well as innovation in business models for foreign companies to succeed there."

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