2014-03-25 03:31:03 - Video Games in China - a new market research report on companiesandmarkets.com
Tencent Inc remained the top video games company in China in 2011 with a value share of 33%. It was the clear leader in online games, the dominant category, thanks to the popularity of the CrossFire and Dungeon Fighter Online brands. Tencent is the owner and operator of QQ, the biggest online social network in China with over 550 million active users. As a result, it is a very attractive partner for foreign online game developers seeking to break into the Chinese market. NetEase.com ranked second overall in 2011 with a value share of 20% thanks to the success of the online games World of Warcraft and Fantasy Westward Journey.
Shanda Interactive Entertainment, which operates the online game Dragon Nest, rounded
out the top three with a value share of 11%. Other prominent competitors in video games included Changyou.com Inc, Perfect World Co, Giant Interactive Group Inc, Rovio Entertainment Ltd, Sohu.com Inc, PopCap Game Inc and Halfbrick Studios Pty Ltd. All of these companies focused their activities on the online games category.
Tencent gained the most ground of any company within video games in 2011, increasing its overall value share by three percentage points. This gain was underpinned by improvements in broadband access, rising PC ownership and the growing willingness of Chinese consumers to pay for virtual products and services than could enhance their online gaming experience.
Growth in total video games current value sales in 2011 was up substantially on 2010. This improvement was mainly due to very strong performances by PC and console game downloads, games for PCs/Macs and mobile games. In addition to high profile new launches, these categories also benefited as rising disposable incomes made PCs, tablets, smartphones and similar devices increasingly affordable to Chinese consumers. However, growth in total video games current value sales was still slower than the CAGR for the entire review period. This was partly due to increasing maturity in the dominant category of online games, but also attributable to restrictions on the sale of consoles and the widespread availability of smuggled and pirated products in video games hardware and software.
PC and console game downloads was the most dynamic category in 2011, showing growth of 200% in current value sales. Aside from new launches and marketing activities, this impressive performance was due to the success of new measures designed to prevent software piracy. Most notably, BaiYou100.com and Gamebar pioneered new anti-piracy systems for their respective Chinese Paladin and Gujian brands, which together accounted for 80% of PC and console game downloads current value sales. Under these systems, PC/Mac and console games can be downloaded for free from an official website, but only accessed after the user pays for a unique activation code. The success of these systems provided a major boost to PC and console game downloads, which had experienced current value sales declines in the previous three years due to rampant piracy.
While video games is expected to show a positive performance over the forecast period, a number of factors will continue to hamper its development. Most notably, government restrictions on consoles will continue to limit the size of the video games hardware category, while rampant piracy will continue to inhibit demand for video games software. At the same time, the development of online games, the dominant category, will be constrained by increasing maturity and the fact that busy lifestyles are leaving teens and young adults in China with less time to play MMORPGs and similarly complicated games. In a related trend, rising health awareness is encouraging many consumers to reduce the amount of time they spend playing video games and take more exercise. The combination of these factors means that growth in total video games constant value sales over 2011-2016 is expected to be weaker than that recorded during the review period.
Mobile games looks set to show the fastest development over the forecast period, with constant value sales expected to grow at a CAGR of 37%. While constant value growth will be bolstered as sales continue to emerge from a relatively low base, the category will also benefit from the increasing use of smartphones and tablets by Chinese consumers, as well as from the growing preference for simple or casual video games that can be played for short periods of time. New launches will also drive the development of mobile games. In particular, the category is expected to witness the launch of several titles that have already proven very popular as PC/Mac or console games. Shanda and The 9 Inc both launched successful mobile game versions of titles that were originally made famous as PC/Mac games in 2011, and more companies are expected to follow these examples towards 2016.
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