The China Angle: 'End of a Dynasty'

The latest edition of Gamasutra's regular 'The China Angle' column has Pacific Epoch's Shang Koo taking a look at a decline in westward journeys, a rise in in-game insurance sales, and hard time for virtual game card thieves. On A Journey Chinese online game company and Internet portal Netease announced third quarter 2006 earnings last week, surprising many investors when its online game numbers came in under guidance. Netease operates China's most widely played online game in Fantasy Westward Journey and another top five game in Westward Journey 2. Most investors were expecting a decrease in users for Westward Journey 2 and single digit growth for Fantasy Westward Journey. Instead, Netease reported a 5 percent drop in Fantasy Westward Journey's average concurrent users, from 494,000 in the second quarter to 468,000 in the third quarter. Peak concurrent users for the game during the quarter dropped slightly to 1.22 million players. The third quarter marks the end of Netease' dominance in China's online game industry. For more than a year, Netease operated the top two MMORPGs in China, with combined peak concurrent users of nearly 2 million players. Both games were technologically simple, catering mainly to lower tier users in less developed areas of China. However, Netease stuck to a subscription based payment model while similar games started appearing in 2006 using a free to play and charge for value added services model. Are You Protected? In particular, Shanghai based Zhengtu Network has had phenomenal success with its free to play 2D MMORPG Zhengtu, which recorded 685,000 peak concurrent users over the weekend. The game started closed beta testing in November 2005 and began open beta testing in April. While free to play, the game has often been described as the most expensive game in China. Players can choose not to pay for the added services, but they will find it nearly impossible to survive for more than ten minutes unless they pay. Value added services are also available to remove some of the grind from the game, such as an option to resurrect at the place of death instead of at the graveyard. Zhengtu Network has also developed some unique services. Recently, the company started selling in-game "insurance". The insurance works like an annuity, and is available for purchase after a player reaches level 60 in the game. Players will receive repayments on their premium for every 10 levels achieved after level 60. A player can receive up to five times the premium if he purchases the insurance before level 60 and attains the maximum level. An insurance salesman NPC is available in the game to explain and help calculate the policies. Bugs And Consequences Chinese Internet goliath Tencent Holdings Limited recently reset three days worth of player records after discovering a bug in its MMORPG QQ Fantasy. The bug allowed players to copy virtual items during the three days, from November 12 to 14. Tencent will return all prepaid game card points that were spent during the time, but players will not be able to regain the experience or items they accumulated during the three days. Two people each received 13 years in prison for exploiting a bug in Netease' system and stealing 573,000 Yuan ($72,800) worth of virtual game cards. Netease ran a promotion with China Netcom to give free cards to China Netcom broadband users. The two defendants found bugs within the promotion and by switching their IP addresses, were able to receive more free cards. [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. Readers wanting to contact him can e-mail [email protected].]