When Chinese gaming companies first tried to lure Cindy Armstrong to China, the Sony Online Entertainment executive was less than enthusiastic. "At first, we kept saying ?No, no, no,'" says Armstrong, vice president of international operations. She now blames her 'American ignorance' for her reticence.
Armstrong eventually agreed to come to China last year, where she discovered that online gaming companies were already doing a booming business. More surprising, she says, Chinese 'gamers' were already well aware of EverQuest, Sony Online's popular online game, through local gaming magazines, websites and internet bulletin boards. Armstrong was also impressed with the quality of the internet infrastructure and the growing army of Cyber citizens crowding the country's internet caf?s. She agreed to do a deal based on that visit, something she says she never thought she would do.
In December the game was made available in China to anyone who wanted to be a Beta tester; within two days, 20,000 people had signed up, and new players were registering for temporary free accounts at a rate of 2,000 a day. Ubi Soft, Sony's partner in China, says players were due to begin to start paying at the end of April.
In January, Ubi launched a heavy advertising campaign as part of a pre-launch promotion that also included organising events at 2,000 internet caf?s in 15 major cities around China under the slogan 'You play, we pay.' A colourful EverQuest van has been driven around the country visiting internet caf?s, shopping malls, universities and sports stadiums from Kunming in the southwest to Harbin in the northeast and Urumqi in the northwest. There are events planned during the summer to raise the game's profile, and Sony Online may even run EverQuest television commercials, which it has never done in its principal market, the US.
Sony and Ubi are also planning a referral programme in which players will be given rewards for introducing others to the game. Julien Le Bigot, Ubi's project manager in Shanghai, says his goal is to cover the whole country. "Our main market will be the big cities, but we're going all the way," he says.
"There is already a lot of buzz," says Armstrong. She describes the company's first media event in a Beijing night club last October, when young Chinese fans arrived decked out in EverQuest warrior outfits and brandishing 'weapons.' At one recent promotion, hundreds of people lined up in the cold for three hours. At an internet caf? in Shanghai on a recent afternoon, a life-size stand-up of the scantily-clad Firiona Vie, an EverQuest female warrior, guards the entrance. Inside, the walls are covered with posters as gamers arrive to learn the intricacies of the game from the company's 'game masters.' Players came to the Shanghai event from the nearby cities of Nanjing, Wuxi, Hangzhou and Suzhou, some travelling several hours to get there.
"This is the first Western online game to come to China, and there is some intrigue in that," says Armstrong. More important, she says, EverQuest is a community-based game that requires teamwork, and so fits neatly into Chinese culture. Players form guilds and coordinate their strategy through an online chat function.
And then there is the fantasy factor, important in a country with few options for entertainment. The game, which is rather like Lord of the Rings, has 13 races and 14 different classes of people, and enables gamers to play under several identities. "EverQuest gives people a chance to be what they're not, a chance to get away," says Armstrong.
Tang Shixiong, a 38-year-old Taiwanese restaurateur in Shanghai, devotes up to 10 hours a day to the game. "I'm the boss, so I have the time," he says. Pang Jian, a 30-yearold project manager in Beijing, says he has been playing EverQuest since it was launched four years ago, using his Boston-based brother's credit card to pay the monthly bill of US$12.95. He was a member of a 400-strong guild, and has made friends with some of his fellow guild members. Pang recently switched to the Chinese version of the game, now available on a local server, and says he chalks up three hours a day.
Sony executives say EverQuest is also popular because it's constantly being upgraded to keep players from being bored. Pang agrees: "I've played a lot of other games, but after three months they get boring. EverQuest is different."
Multiplayer online games like EverQuest are enjoying a booming market in East Asia. South Korea leads the field with fantasy games such as Lineage. Japan is a close second. EverQuest launched recently in Japan, South Korea, Hong Kong and Taiwan.
Other participants are also entering the market. The three Chinese portals, Sohu, Sina and Netease, have all jumped into the gaming business. Softbank of Japan has made a US$40m investment in Shanda Network Development, a Shanghai company that owns the game Legends of Mir II. According to Shanghai Daily, Shanda is the leader in China's online gaming market, supporting 60m registered users, a number that can't be verified. The South Korean developer of Legends of Mir, Actoz Soft, scrapped its partnership with Shanda last month, accusing the Shanghai company of breach of contract for failing to pay it 27 percent of its revenue as commission.
Duncan Clark, managing director of BDA China, the telecoms and technology consultancy, believes the numbers being thrown around in the sector are not reliable, but he is confident that there are millions of players, and that they were spending an average of RMB25-50 a month. He adds that the numbers are growing about 30-40 percent a month, albeit from a low base.
Some analysts predict that China could be the biggest Asian market for such games by 2007. "The game sector is heating up," says Clark, who estimates that there are tens of millions of players in the country. "We see 2003 as a really active year for the industry."
According to the IT consultancy IDC, the online game market in China was worth RMB910m at the end of 2002, up 188 percent from a year before. The market is expected to be worth RMB5.5bn by 2005, IDC says.
There are more than 60m Chinese online today, making it the second largest internet population after the US. Even some old urban buildings boast high-speed transmission lines, providing a good infrastructure for online games. No one knows exactly how many internet caf?s there are in China, but they can be found in practically every corner of the country, even in small mountain towns. Shanghai, for example, is said to have 5,000 internet caf?s, some with as many as 1,000 computers.
Sony and Ubi Soft have invested considerable resources in making the game a success. Ubi Soft has spent 'hundreds of thousands' of US dollars on internet infrastructure and has translated 1.5m vocabulary items into Chinese. Efforts are being made to update the vocabulary with each new extension. Armstrong says Sony Online will launch English and Chinese updates simultaneously. Forty game masters occupy Ubi's Shanghai office, offering 24-hour technical support and refereeing when players get into cyber squabbles.
In the US market, Sony Online makes a chunk of its revenue from boxed sales that include software, but the bulk of earnings comes from monthly subscription fees. Rampant piracy in China means the company will be giving away the software here and relying solely on subscriptions. Players will be able to purchase pre-paid cards in internet caf?s, software shops, bookstores and small kiosks selling phone cards. This gets around the problem of low credit card ownership in China. The price for playing is likely to in the region of RMB0.3-0.5 per hour, similar to other games. Armstrong is encouraging Chinese to copy the software programme as much as they want. "The bottom line is making it as easy as possible," she says.
The real test will come when the company starts charging to play at the end of the trial period. Clarke believes that the market is getting increasingly competitive, but that EverQuest had an advantage in that it was already well-known before actually launching. "There's definitely a mob appeal working in their favour," he says.
In the US, some 10 Ubi are betting that once Chinese players get a taste of the game, they will develop the habit. In the US, there are more than 430,000 registered players. By April, there were already more than 300,000 Chinese playing the game for free. "The key now is long-term retention, and converting these people to paying customers," says Armstrong. "Part of the retention factor is getting people drawn into the game and having them create their own persona."
In the US, some 10 percent of players are said to develop a serious long-term addiction to the game. An American psychologist says games like EverQuest provide a stimulating sense of virtual community in a fantasy setting, a combination that some find difficult to leave behind.
Potentially addictive games could raise thorny issues for an authoritarian Chinese government that is still coming to terms with the social impact of the internet. For now, games like EverQuest appear to be safe from censure. An official at the Ministry of Culture, who conceded little knowledge about EverQuest, says that the government would not interfere so long as such games do not involve gambling, sex or antigovernment activities.
For now, the real challenge is whether Sony Online and Ubi Soft can promote the appeal of EverQuest beyond a quirky Chinese subculture, and tap into a much broader, fast-growing group of Chinese netizens.
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