A new report on China’s game industry in first quarter by IDC showed that, as client games were shrinking in both revenue and market, web games are enjoying a rise in users (205 million) by 27.7% and in revenues (RMB 3.82 billion) by 46.7% year on year. A statistics by Beijing-based Internet think tank Analysys International showed that web game market hit RMB 2.32 billiion and RMB 2.24 billion in the first and second quarter of this year respectively, totaling RMB 4.56 billion in the first half, signaling a market of tens of million for this year.

Game Companies Find a New Blue Sea 

Zou Tao, CEO of Xishanju, a game studio, said confidently that, “Browser game is the blue sea, its monetization model is much stronger than that of client games.” But he also pointed out that to make this market a blue sea, you need innovation.

A lot of people in the industry resonated to Zou’s view. Since last year we’ve seen more and more game companies adjusted their strategy to put more focus on web games. LineKong, a Beijing-based game maker is gradually increasing the significance of web games within the company. And according to its CEO Wang Feng, revenues generated from web game would grow to between 50% to 70% of total revenue this year. Apart from LineKong, other players including Perfect World, Shanda and ZTGame all increased their input into this gold mine.

VeryCD, a Chinese emule community which was on the verge of out of business was saved by a web game titled Shengxiandao. Now the game has become one of the most popular web games in China and generated between RMB 60 to 70 million for VeryCD monthly.

Bubble in the Sea?

 It is true that when everyone sees opportunity in the same area, then the competition can be bloody. Over the past two years the marketing costs of web games have boomed by 10 times. If the trend goes on, the so-called blue sea will end up becoming a red one just like group-buying market last year.

Actually web games also have their own shortages. Firstly, their life cycle is shorter; usually less then 2 years with some could be as short as several months. Secondly, the low entry barrier certainly attracts flocks of copycats or poor products, disrupting the market. Another problem is that the churn rate of players of web games is as high as over 95%, which is very risky cause game makers always have to come up with new titles to attract users.

Photo credit: BigStockPhoto

动点科技驻湾区记者. Charlie is an entrepreneur based in San Francisco and Hong Kong who calls herself the undefeated caffeine champion. You can reach her at charlie.sheng (at) technode.com

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