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Internet gaming: 'A winning gamble'

China Daily, December 24, 2012

• China's online gaming industry is set to grow rapidly as the nation connects more people with broadband Internet, said Mike Morhaime, president and chief executive officer of Blizzard Entertainment, a United States video game developer.

  Visitors playing online games at a recent digital entertainment expo in Shanghai. Digital entertainment has huge market potential in China. [China Daily]

  With its existing broadband access, China is already the world's largest market for online games and it will continue to grow quickly, said Morhaime.

  "To have a good experience means the company should keep every player updated and keep the content updated," he added. "To be able to do it quickly and conveniently for our players is dependent on a good Internet connection."

  Morhaime also said the reliability of the Internet infrastructure is key for online gaming operators.

  The number of Chinese residents on the Internet hit 550 million in the third quarter of this year, said Zhang Feng, director of the communications department under the Ministry of Industry and Information Technology.

  Blizzard is the developer of world-famous games including Starcraft and World of Warcraft, which have millions of players globally.

  Launched in 2009, the company has teamed up with NetEase Inc, a Beijing-based Internet and online game services provider, to release games into the Chinese mainland.

  The cooperation helped NetEase to make a profit initially but the deal failed to boost the company's online game sector because the rate of increase in the number of China's PC players slowed over the past two years.

  Decreasing revenue from World of Warcraft "partially offset" NetEase's earnings from advertising services and the company's self-developed online games, said a third-quarter report from NetEase.

  Earlier this year, the Chinese company renewed its license with Blizzard for World of Warcraft in the region amid declining revenues from the game.

  "Both Blizzard and NetEase value the user experience and putting the product first, making sure that the product is right before releasing it," said Morhaime, adding that based on this common ground, the companies were able to maintain cooperation and make similar decisions.

  In October, Blizzard and NetEase had the first simultaneous world launch of the latest edition of World of Warcraft series: Mists of Pandaria.

  Launching products in China with other countries simultaneously has been a goal for Blizzard for a very long time. The company started the process early to allow time for government approval, said Morhaime.

  "The climate in China has become much more friendly toward the game industry. That has allowed us to achieve the goal of having a simultaneous launch. From my perspective, I think we are heading in the right direction," said the chief executive officer, who acknowledging there is still room for the improvement of regulations.

  The challenge for the company is that it has to guess the government's attitude each time. Unclear government regulations are a big distraction and use time that could be spent on making better products, said Morhaime.

  "When we know exactly what the regulations are, it will make it easier to navigate our path," he said. "The clarity of policy is all we need from the government. When we have questions we need clear answers."

  Another challenge is from emerging platforms including mobile games and browser games, which have both experienced rapid growth recently.

  The turnover of China's mobile gaming market is soon going to hit 5.2 billion yuan ($835 million) as the number of players reach 270 million, said a report from Beijing-based research firm iResearch Inc.

  Industry insiders warned the quickly growing mobile gaming sector could erode the market share of PC games. The number of Chinese mobile game players is likely to exceed PC game players by the end of this year.

  However, Morhaime thought that the new gaming platforms are providing a lot of opportunity for all game developers including PC games.

  "I don't see the new gaming platforms will necessarily replace PC games. There are still audiences that want a more deep, immersive experience. That will provide room for all types of games to develop," said Morhaime.

  In addition, having more accessible platforms and a larger sale base will actually provide opportunities for PC game makers as well because the aggregate number of players is bigger. The time spent on gaming will continue to grow, he added.

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