Niko News on China's Video Game Market
Volume 19
December 2009

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Saw a report that said Shenzhen plans to nearly quadruple its i-café licenses, 948 to 3,500. Shows that i-café license ban is very relaxed 3:40 PM Dec 11th from web

Chinese govt shut BTCHINA (bit torrent site) for no license. Biggest site for illegal PC game downloads http://tiny.cc/cVpUC

8:30 PM Dec 10th from web

DigiChina, the MOC conf in Beijing, praised Chinese game developers & awarded many for innovation such as Giant for working on "green games" 8:30 PM Dec 10th from web


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Welcome to Niko News, just part of the market intelligence experience offered  to help you better understand the thriving video game market of China.

Niko Partners is the premier provider of market intelligence and custom research services on China's video game industry. There are more than 60 million Chinese gamers eager to play hit titles on systems with the latest technologies. With Niko Partners market intelligence services, you can get to know these gamers, find Chinese partners, and use our actionable market data to build and execute your strategic plan.
Though the ban on Internet cafés was never officially lifted, the fact that 134,000 are licensed now proves that the ban is unofficially over. The previous number was 114,000, though we know that provinces had the right to override the ban in tier 3 and 4 cities as demand warranted new licenses. The Niko estimate for licensed and unlicensed cafés of 30 or more seats is 170,000.
Social games in China have to take a different route to success than those in the US. In the US a social game must be a success on Facebook to really be called a success. In China there are at least five leading social networking sites (SNS), and more than 370 such sites are registered for operation. In order to be a success in China a social game must be optimized for several SNS rather than one. This is a much bigger task for the social game developers. In addition, it leads to more piracy and copycat developing, particularly due to the simple nature of the games, the general acceptance of copycat developers in China, and the difficulty to optimize one game for several sites. Does this mean that there is no social game giant in China's future? Probably not, but companies aspiring to that status need to change their model to adapt to Chinese reality.
The co-operation model, where two online operators distribute the same title as will be done by Tencent and Giant with Giant's ZT Online Green Edition, was introduced to the Chinese market more than a year ago. The implications of this are broader distribution on the one hand, but on the other hand it might muddle the market. Online operators differentiate themselves from each other by the games that they operate, the technologies they use, and the audience they serve. To share game service revenue between operators for a single title will reduce income to the originating operator, but also reduces their game service costs. Shanda has been co-operating games for Kingsoft, Ourgame, and Linekong. Niko wonders if this will eventually turn some of today's operators into simply developers or license distributors, and turn other operators into simply operators who distribute 3rd party games.
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