Report Predicts $1.3 Billion Games Market In China

Representatives from consulting firm Pearl Research have released details of the company’s new report, which suggests that the games market in Chain will exceed $1.3 billion in 2008, also looking at Chinese outsourcing opportunities for Western firms. The 120 page study, named “Games Market in China” analyzes both the domestic games market and the market for game development and outsourcing in China. According to this research, online casual games will account for 30 percent of the online games market by next year, as the business continues to grow with home users as well as in Internet cafes. However, massively multiplayer online games will still constitute the largest proportion of online revenue, with the biggest titles generating up to $80 million a year in China. Compelling and diverse game content, the low cost of playing games (at an average of $0.05 per hour) and a lack of entertainment alternatives are listed as reasons for continuing high grown in the Chinese games market. The predictions tally with a recent report by Sina, which showed online game revenues (not including home consoles) increased by 73.5 percent from 2005 to 2006, for a total of $0.84 billion. Market research firm IDC has separately estimated that the Chinese online games market could be worth $3.2 billion by 2011. The Pearl report also notes that China is likely to see increasing numbers of Western developers using Chinese companies for game development and outsourcing due to low costs, a large labor force and robust infrastructure. Savings are estimated at between 20 and 40 percent for activities such as art creation. However, the study notes that costs such as travel, training and project management can erode many costs savings overall. Product quality, intellectual property protection, cultural differences and the competition for skilled employees are also cited as potential problems when outsourcing. The study suggests that as Chinese companies gain experience and develop best practices these problems will improve in the long term.