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It has been estimated that about one million game consoles are sold through the mainland's grey market every year. Photo: Bloomberg

Perfect World tipped to grow, as games take off in Shanghai FTZ

The Beijing-based company has signed a deal to pre-install its MMO games in new set-top boxes

Perfect World, a leading developer and operator of online games in China, is expected to benefit from the mainland's plan to lift a 13-year ban on foreign video game console sales via the newly launched Shanghai Free Trade Zone (FTZ).

The Beijing-based company signed a strategic co-operation agreement last month to pre-install its "massively multiplayer online" (MMO) games in a new line of internet-linked set-top boxes from Chengdu Geeya Technology, a domestic manufacturer of digital television equipment.

"As a result, game players would be able to play Perfect World's MMOs from television screens and enjoy a console game-like experience on current MMOs," Barclays said in a research note.

Nasdaq-listed Perfect World and Geeya, which is listed on the Growth Enterprise Market board of the Shenzhen stock exchange, will jointly market the products.

Alicia Yap, Barclays' head of China internet research and the lead author of the report, said: "We would view the lifting of the ban on console games as relatively positive for Perfect World, as the company has moved ahead of its peers to build up some positions for capturing console game users."

Details of the implementation of new regulations allowing foreign-funded companies to produce and sell game consoles in the Shanghai zone have not been announced by the government. Early reports said the government would probably require all the content used on game consoles to first be approved by the Ministry of Culture and the General Administration of Press and Publication.

MMO games already go through that process.

Despite the ban imposed by the central government since 2000, the industry's "Big Three" video game platforms -- Microsoft's Xbox, Sony's PlayStation and Nintendo's Wii - have been available to consumers on the mainland.

Niko Partners, a research firm focused on Asia's video game industry, estimated that there are about one million game consoles sold through the mainland's grey market each year.

Early last week, Microsoft and BesTV New Media announced a deal to invest up to US$237 million in a joint venture within the Shanghai zone. It is expected to develop new games and services for Microsoft's Xbox games to be played on the internet protocol television network of BesTV, which has about 18 million subscribers.

Barclays said the Perfect World and BesTV ventures "may create more choices for users", but it forecast console games would have a limited impact on popular, free-to-play MMO games and advanced casual games on the mainland. The mainland's video gaming market grew 36.4 per cent year on year to reach 33.9 billion yuan (HK$42.9 billion) in the first half this year.

This article appeared in the South China Morning Post print edition as: Lifting of ban on consoles set to boost Perfect World
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