CKGSB Knowledge Authors

Playing for keeps: Online gaming in China

June 09, 2009

Over the past decade, online gaming has boldly entered the heart of mainstream mainland entertainment. Parents who may have once chastised their children for spending too much time playing online have, themselves, become zealous fans of zombies and angry birds.

“In North America, Europe, or Australia, if you tell people, ‘I’m a World of Warcraft player,’ they’ll say, ‘Hey, get a life. Get some sunlight.’ But in China, if you tell your friends at school or work that you’re playing so-and-so game, they won’t think you’re a geek,” explains Frank Ng, CEO of online game firm, Ourgame.

Ng’s enthusiasm for gaming is evident as he recounts childhood memories of rounds of Pac-Man, an activity that, for a certain generation, was almost viewed as a rite-of-passage. His passion for games colors his description of his job: “You can play games all day in your office and no one can say a thing about it.”

Founded in 1998, Ng’s Ourgame has grown into a $30 million company with 450 employees. Headquartered in Beijing, with satellite studios in Shanghai, Xi’an, and Chengdu, it currently ranks twelfth in China’s overall game market.

As the popularity of online gaming in China rises, the success of some Chinese online game companies is growing. According to a special report issued by Pop Soft Magazine this December, the total nationwide revenue of online games in 2011 amounted to RMB 40 billion ($6.3 billion), a 30% increase from the previous year.

The boom of the Chinese gaming market has benefited from the skyrocketing number of gamers. In May of this year, China Securities Journal predicted that China would become the largest gaming market in the world by 2014.

Understanding the psychology of Chinese gamers is paramount to comprehending consumer behavior patterns. Many popular games are designed for people who are willing to invest heavily in their virtual identities. The player can become a king or queen, or the ultimate hero, providing that they have the financial means by which to fund their respective paths to glory.

“In Japan or Korea, people will pay more for good-looking avatars. But in China you can’t sell that,” explains Ng. “People want more practical things. Chinese gamers might buy clothes with special attributes that make the avatar stronger, but they don’t care so much about appearance. They can run around naked for all they care, but just give them the best sword and they’ll be happy.”

Before Ng joined the company, Ourgame primarily focused on card games oriented towards the domestic market, such as online poker, mahjong, and chess. However, Ng had a vision for games that are more complex and his eye on the international market.

Under Ng’s leadership, the company started developing a game that multiple players can play at once (a category known as MMORPG – massively multiplayer online role-playing game). The company is also working on a 3D “Street Fighter” game and Monopoly-like online board games, both of which it plans to market abroad.

At present, however, Chinese online games are suffering the same fate as many other Chinese cultural products. The lack of creativity in the content design of games, and the prevalent “copycat” attitude have both weakened its ability to compete internationally. At the current stage, most of the exported games from China target the less-developed South-east Asian markets.

Despite the fact that games “made in China” are still in a fledging phase of development, some Chinese cultural elements, do give an opportunity for global recognition. For example, the game “World of Kung Fu” combines traditional martial arts with Chinese literary prose and cultural traditions. Its content helped its expansion in the North American market and led to its favor by players even outside of China.

Ng aims to lead Ourgame into the ranks of the top three national gaming companies. While he plans to expand Ourgame’s international sales, China remains, by far, his chief target market. Although local competition has gotten tougher, especially since instant messaging giant, QQ, has quickly established itself as the industry leader after entering the gaming business six years ago.

In the past couple of years, the online gaming market in China has entered a new phase. Chinese companies have started hiring “home-grown” programmers to create games instead of merely importing licensed game titles from Korea and the US. This change enables Chinese companies to develop at lower cost, providing a comparative, yet important, advantage in this worldwide competition.