Chinese game market explodes

A report published by market intelligence firm Niko Partners, specialists in the Chinese game industry, states that the country's video game market saw spectacular growth in 2006.

The report found that revenue from the overall video game market jumped by 68% last year, with the online gaming sector generating USD 995 million in revenue, an increase of 74% from the previous year.

Unsurprisingly, the report singled out China's booming internet cafe culture as the main driver for this growth. The introduction of free-to-play massively multiplayer online games - in which players pay for virtual items - has, according to Niko's managing partner Lisa Cosmas Hanson, further stimulated this trend.

"Chinese gamers pour into the cafes every day to play online and LAN games with friends. They spend money in the games on virtual gifts for friends, services for their characters, and virtual items to help with leveling," said Hanson. "The intertwined nature of China's Internet cafes, social gaming culture, and few entertainment alternatives at a low price point, will continue to be the basis for strong growth through 2011."

But the Niko report goes on to paint a picture of overall good health for the Chinese market. Sales of offline PC games, mostly from Taiwan, rose 28.5 per cent to 904,000 units in 2006. And alongside the 20 million PCs in China's 225,000 internet cafes are an increasing number of consoles, although these are all grey imports, console hardware currently being prohibited in China.

Hanson added: "If a game company can get an impressive game or console to market in China, the gamers there will embrace it. That said, getting a product into the market is not easy. The complex regulatory environment in China is still the greatest barrier to entry for foreign game companies."

China added 3.4 million gamers in 2006, reaching a total gaming population of 37.5 million, 90 per cent of whom play online games. Niko projects this number to increase to 71.9 million gamers by 2011.