20 Jul 2009 11:31

Revenue growth of China's online gaming sector could slow this year - survey

Shanghai. July 20. INTERFAX-CHINA - Robust revenue growth witnessed over the last 10 years in China's online gaming sector may not be repeated this year, according to survey results released on July 20.

There is certainty that there will be revenue growth in the online gaming sector this year, but there is some concern regarding a possible slowdown, according to Chinese industry portal Tencent's weeklong survey of 15 game company chief executive officers that concluded on July 17.

The CEOs of Giant Interactive Group Inc., Beijing Kylin Network Information Science and Technology Co. Ltd. and Nineyou Information Technology (Shanghai) Co. Ltd. agreed that the sector may not be able to maintain its growth trend this year, according to the survey.

China's online gaming sector generated total revenue of RMB 18.38 billion ($2.69 billion) in 2008, expanding by 76.6 percent, year-on-year, according to statistics released by the General Administration of Press and Publications (GAPP) at the beginning of 2009. According to figures released by iResearch on June 1, 2009, the domestic online gaming market generated total revenue of RMB 6.16 billion ($901.07 million) in the first quarter of 2009, up 32.5 percent year-on-year and up 7.7 percent from the last quarter of 2008.

Zhao Xufeng, a senior industry analyst with iResearch, said that the sector has moved past its growth phase and is more mature with clearer direction and a more stable user base. "Revenues will continue to grow this year, but the growth rate will not be as high as it was in 2008," Zhao said.

All survey respondents said that domestic game companies are keen to explore potential opportunities in overseas markets, with 87 percent of companies having already launched products outside of China.

As such, the sector has and will continue to generate more revenue from the export market. In 2008, there were 33 sales of exclusive operation rights of Chinese-designed games by 15 companies to overseas operators, which saw an increase of nearly 30 percent year-on-year in export value to $70.74 million.

Asia is the primary target of Chinese online game designers, followed by the North American market, according to the survey.

Meanwhile, over 70 percent of the 15 CEOs surveyed believe that there will not be the same wave of initial public offerings among game companies this year unlike previous years due to concerns that the financial market has yet to fully pick up from the financial crisis.