Game firms tap new markets
Mainland developers see overseas sales increase fivefold
Mainland online game companies are enjoying increasing success overseas, especially in smaller countries that cannot support their own game industries.
Fuzhou-based NetDragon was earning more than US$1 million per month from overseas sales, or about 20 per cent of its total revenue, said company chairman Liu Dejian.
More than 500,000 overseas users now play three of NetDragon's games. Its first game, the English version of Conquer Online, a massive multiplayer online role playing game set in a mythical Chinese background, was launched in 2003.
Mr Liu said the company's users now included almost every nationality. About 30 per cent came from North America and 20 per cent from Europe. Another 30 per cent, surprisingly, were from Egypt, even though most of them did not pay. The rest of the customers were from Asia.
NetDragon's games are free-to-play, but users are charged when they want better costumes or weapons.
'All of this is done with very low overheads,' said Mr Liu.
The company has set up computer servers in San Francisco, where it has two employees. It also has 40 Fuzhou-based customer services staff and four to five programmers, who modify the company's self-developed Chinese-language games into English, French, Japanese and Spanish.
On average, NetDragon's overseas users pay more than their Chinese counterparts; about US$25, or 200 yuan (HK$222.29) per person per month, compared with 100 to 200 yuan for mainland game players.
Overseas sales at mainland online game companies soared more than fivefold last year to US$55 million, according to International Data Corp. Twelve companies exported a total of 28 games worldwide. Still, mainland companies' overseas exposure is still small in comparison with Korea, where overseas game sales reach US$200 million annually.
Beijing-based Kingsoft's JX online, another multiplayer online role playing game about Chinese martial arts, has been Vietnam's top game since Kingsoft licensed it to a local operator, Vinagame, in 2005. JX online has on average more than 200,000 users playing at any one time. Kingsoft has more than 50 per cent of the Vietnamese market, according to IDC.
Kingsoft also licenses its games to Taiwan, Malaysia and Singapore. It had over 50 million yuan in overseas sales in the first nine months of last year, up 60 per cent from a year earlier, said company chief financial officer Kevin Wang.
'In the long run, China can be a supplier of online games in nearby countries and regions,' said Mr Wang, 'Many of these countries are too small to support their own game-developing companies.'
Another Beijing-based company, Perfect World, has its games licensed in 13 countries and regions, including Japan, Korea, and Russian-speaking countries. It had 73.3 million yuan in overseas sales last year, up from one million in 2006.
Shanda, the largest mainland online game firm, is also starting to boost overseas sales and has put a vice-president in charge of international licensing. Last year, it collected US$10 million in upfront licence fees and from four games in seven countries and regions.
But the problem facing mainland companies in certain markets, such as the US and Japan, is that game players are accustomed to playing console games - which are usually more advanced, with better graphics and smoother animation.
'Online games are about community - a concept that is absent in console games,' said Zhuge Hui, public relations director of Shanda.
Mr Liu of NetDragon also believes online games attract a different crowd. 'Console games are about people playing against a machine, while online games are more about people playing with other people.'
But in his view, anyone who enjoyed online instant messaging could be a potential online game player. 'A lot of what you do in online games is the same as what you do with MSN - make friends, chat with them. It is just that in the game, there is a common goal, for example, to kill a monster.'
Nevertheless, cultural differences can be a strong barrier to the adoption of mainland online games in the west.
Part of the reason why mainland games are popular in neighbouring regions is that many of these countries are strongly influenced by Chinese culture.
Mr Liu thinks that a game with a western cultural background could be an 'ice-breaker' in other markets. 'What we may need is content such as Superman or Spiderman,' said Mr Liu, adding that sales in western markets could increase fivefold if such games were developed.
However, Mr Wang of Kingsoft expressed doubts that mainland companies could develop a successful game that was very different from Chinese culture.