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SCMP Reporter

Authorities face several challenges in their efforts to get a world-class gaming sector in place

The mainland is fast becoming a virtual Middle Kingdom and could soon dominate the global online games market, as broadband internet penetration continues to grow and vast computer gaming communities thrive.

A study released last week forecasts that China will be the largest online gaming market by 2007.

Despite all  this potential, the mainland still  lacks the relevant legal and regulatory infrastructure to fully protect the rights of industry investors and the welfare of online gamers nationwide.

To reach that stage, mainland authorities - just like players in an interactive game - must overcome several levels of challenge before they can confidently assure the world that they have a world-class online games sector in place.

The missing infrastructure has also been keeping Microsoft from formally releasing its Xbox video game console and software in China, although the mainland's grey market has quietly introduced these products to local enthusiasts.

'Patience is an important aspect to this, as the online games market in China is still in its infancy,' said Alan Bowman,  general manager at Microsoft's home and entertainment division in the Asia-Pacific region and Greater China.

Mr Bowman said the mainland needed to provide 'the right intellectual property [IP] framework' to protect the rights of international investors and domestic developers who wanted  to export their products.

'We want to work closely with the government to get their blessing to enter its domestic markets. We also want to work on IP protection to ensure a viable business operation,' he said.

At present, Microsoft's Xbox is the only remaining holdout among the world's top video-game console brands that  has not formally entered China.

Sony, which has sold more than 60 million of its PlayStation consoles worldwide, released its Play- Station 2 system in China last December amid fears of software piracy. It gave no sales projections.

Instead of releasing its GameCube, Nintendo launched a China-specific gaming device called the iQue  in October last year. Piracy or not, the online games business in China is huge. Research firm International Data Corp estimates the industry raked in 1.3 billion yuan in the mainland last year, and is expected to generate  6.7 billion yuan annually through 2007.

Mr Bowman said one concern was inadvertently running afoul of government censors.

'We have been very sensitive to cultural requirements and we're looking to engage more [with the] government to adopt some form of classification system,' he said.

In  this area, the mainland is apparently keen to adopt a regulatory scheme. The Ministry of Culture, the Ministry of Information Industry and the General Administration of Press and Publication are all manoeuvring to regulate the video games software market.

'A regulation on the classification of PC and video games would safeguard consumers' rights to information and enable parents and children to make informed decisions when they decide which games to buy,' Teng Jiachi, secretary-general of the China Consumers Association, said in July.

Reports in the mainland said the  government intended to invest between one billion and two billion yuan to develop the online game publishing market.

Market research firm DFC Intelligence  has estimated that the worldwide online game industry will be worth US$9.8 billion in 2009, up from $1.9 billion last year. More than half of last year's revenue  came from Asia, with   the most buoyant markets  being Taiwan, Hong Kong, Singapore, Japan and Australia.

Microsoft has moved to carve itself a slice of Asia's large online gaming pie through its Xbox Live online gaming service, launched early this year. The software giant's ultimate goal is to make all of its games available on Xbox Live, which blocks any attempts made to hack into or copy gaming titles.



Internet turns China into top online player