Niko News on China's Video Game Market
Volume 22
January 2010

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Weekly Twitter Posts

Happy about the Korean court ruling to allow real money profits from cyber trading virtual goods within online games http://tiny.cc/gT1kM 9:41 PM Jan 15th from web

Shanda is on a tear with 3rd major deal in a row by buying Mochi after buying Goldcool and doing JV with Kingsoft http://tiny.cc/uy8fy 7:06 PM Jan 12th from web

Shanda Game's purchase of Goldcool follows its JV w/ Kingsoft.Goal seems to be to let Shanda have more to sell overseas http://tiny.cc/du9nk 6:52 PM Jan 11th 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.

China added 46 million Internet users in the 2nd half of 2009 and 40 million in the 1st half of 2009, according to CNNIC. This is good news for the continued growth of online games there, as online gaming is a major use of the Internet. We know that the online game industry is evolving in China though, and gamers are becoming choosier and savvier. Niko will survey Chinese gamers in the next month ahead of our 2010 Annual Review and Forecast Report and will see if their behavior and usage of online games has shifted much from 2009. We do know that online games are the future globally, too. China's online game operators have made many moves recently to expand internationally - case in point Shanda, which bought two companies (Goldcool and Mochi Media) and did a JV with Kingsoft in the past few weeks all in the name of having a big game inventory for their international expansion.

While it might not solidify into anything enforceable, and it might not even get adopted by the government, China's Ministry of Culture has announced a much needed rating system for video games. The MOC seems to be trying to clean up the industry, and this is one in a series of recent moves to demonstrate that. Truth be told, Chinese games have had ratings for years but no one has noticed or really cared. Hopefully this one will have some impact and put more of the burden of game content screening on users and their parents (in the case of minors) rather than on the government. Reports say that there will be three rating levels: Everyone, Everyone 12+ and Mature (age 18 and older). Instead of limiting rating base on content alone, this newly proposed rating system also evaluates other aspects including storyline, background, music and Visual FX.

In sharp contrast to NPD's latest report that 4% of US gamers admit to illegally downloading games via peer-to-peer networks, in China the rate is 84% admitting to the crime. Those 84% also say they download an average of 3-5 titles illegally per year. No wonder the US market can be tracked via point of sale monitoring, whereas that methodology is useless in many emerging markets, including China.
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