Analysts Estimate $1.7 Billion Online Game Market In China

A new report created by market research firm DFC Intelligence is forecasting that the Chinese online game market will grow from a current $580 million in 2005 to $1.7 billion in 2010, not including revenue from home or portable consoles. According to Alexis Madrigal, lead author of the report, "Because of piracy concerns, China has been forced to pioneer new business models for video games. The game market in China is all about online play and charging by usage. There is even a growing market for the items used in games like weapons and characters." The new 350 page report also cites the difficulties Western companies are experiencing attempting to enter the market, with a more sophisticated home-grown industry, piracy, and extensive government regulations all proving considerable problems, though Blizzard’s World Of WarCraft is used as an example of Western content that performs well in China. "Because the top games in China can generate as much as $100 million a year for several years, at first glance the market looks very attractive," says Madrigal. "However, it is clear that margins are headed down as the business matures."