Column: 'The China Angle: EA's Bumpy Road To China'

The latest edition of Gamasutra's regular 'The China Angle' column sees a shake-up at the top of Electronic Arts' campaign to establish a casual foothold in the Chinese market, and the9 eyeing expansion beyond its WoW-based monopoly. Electronic Arts senior vice president of online publishing Erick Hachenburg has resigned, according to a report from 21st Century Business Herald. Hachenburg was the CEO at casual game platform Pogo before it was acquired by EA in 2001. As part of EA's push into China, Hachenburg moved to China in 2004 to take a dual role as EA's managing director of EA China. Newly named EA Asia president Hubert Larenaudie will replace Hachkenburg. Larenaudie was the president of Vivendi Universal Games Asia prior to joining EA. Despite its well recognized name in China, EA has never made any serious in-roads into the China market. The game industry in China is overwhelmingly PC based, but with pirated software for around 5 Yuan per CD (8 Yuan = US$1), software box sales are a lost cause. In recent years, even pirated single player PC games have lost ground to the rapidly expanding online game market, leaving older LAN games like Counterstrike and Starcraft as the last bastion of the offline game industry in China. With his experience in Pogo, Hackenburg's mission was to develop an online business for EA in China. Outwardly, EA remained inactive in China during most of Hackenburg's tenure, but finally introduced two products for China on the eve of Hackenburg's departure. In early July 2006, EA announced that it will work with Guangdong Tian Yue to bring Pogo to China. A few days later, EA announced that it has licensed Korean online racing game Tales Runner for China, also to be operated by Guangdong Tian Yue. Both Pogo and Tales Runner will compete in heavily commoditized markets. Every Internet "portal" in China, from Nasdaq listed Sina and Sohu, to dozens of local city gateways, have some form of casual game platform. The most notable is instant messaging service provider Tencent's QQ Games, which has dominated the casual games space using QQ's 220 million active instant messaging users. Tales Runner is the first running racing game to appear in China, but it will compete against a half dozen kart racing clones based on Nexon's Kart Rider, as well as music rollerblading game R2Beat. EA has two other games suitable for the China market - FIFA Soccer and Warhammer Online, from recently acquired Mythic Entertainment. The race is still open for the Warhammer Online license in China, but FIFA Soccer might already have a favorite. According to 21st Century Business Herald, China's World of Warcraft operator The9 is the front-runner for the FIFA Soccer license, due to Larenaudie's extensive dealings with The9 during his time at Vivendi. The9 is also desperate to expand beyond WoW, which is responsible for 99 percent of its revenues. WoW has been operating commercially in China for over a year, and continues to show strong growth. The9 upgraded the game to patch 1.12 on September 19, and opened the seventh server farm for the game on September 23. Even with 20 new server groups, The9 underestimated the demand, and the queue for entering the server groups ran as high as 4000 over the weekend. The9 had to temporarily shut down part of the new server farm on September 24 to increase capacity. The 7th server farm is now back in service with 30 server groups, but the queue was still over 1000 in late Monday afternoon. [Shang Koo is an editor at Shanghai-based Pacific Epoch, and oversees research and daily news content on China's new media industries, with a concentration in online games. Pacific Epoch itself provides investment and trade news and publishes a number of subscription products regarding the Chinese technology market.]