There’s a breathless report out today about the Chinese online gaming market.
Analysys International (sic), a Beijing-based research firm, reckons that revenues from online gaming are likely to grow by 42% each year until 2012, rising from 26 billion yuan ($3.8 billion) to a staggering 73.1 billion yuan.
There’s no doubt that online gaming is lucrative, and growing strongly, but this prediction is far punchier than previous estimates. For example, IDC, another research firm, reckons revenues will only hit 40 billion yuan in 2013.
Analysys has made its guess based on China’s current internet penetration compared to other Asian countries.
Currently, it says, only 27% of people in China have the internet, while over 70% of South Koreans and Japanese are online.
If internet penetration grows, there are likely to be 230 million online gamers in China by 2012, it says.
I’m skeptical of this sort of explosive growth. While internet penetration in China may be more modest than in Japan and South Korea, it is hard to find anywhere which doesn’t even have an internet cafe.
Kids in the countryside who are curious about online gaming go to their local cafe to log on. And the urban middle classes who probably make up the majority of gamers have no problems with web access.
According to the last report from the China Internet Network Information Center, 51.2% of internet users in China are under 25 years old. That indicates to me that a lot of the young people who want to be online and playing games are already doing so.
Then, of course, there are problems with the market itself. In recent months, the Chinese government has indicated that it intends to keep a more careful eye over the games, and forbidden foreign companies from playing any part in the sector.
That means that some of the most popular online games may never make it to the Chinese market.
Although World of Warcraft is available in China (although it is currently having some hiccups), it is the only Western game in the Chinese top ten. Eight of the others are domestic games. And while China is clearly capable of creating its own games, they may not match the creativity of those globally. A lack of foreign investment into the sector may also stymie its growth.
I’m sure that online games will continue to be successful, but I’ll eat my own broadsword if the market is worth 73.1 billion yuan in three years.