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Friday, March 24, 2006

Blogging from GDC

Blogging from GDC.

I’ve spent the past several days at GDC (Game Developers Conference). The San Jose Convention center was packed with geeks, dorks, and suited-up business people.

I’ve never seen a longer line for a keynote than the one waiting for Sony’s Phil Harrison’s keynote on Wednesday, which literally circled the Civic Center. Of course, only when I reached the end of the line, a nice girl told me that press and analyst can just go through the VIP entrance. In my personal humble view, the Nintendo keynote on Thursday beat the Sony keynote. It’s funnier and Mr. Iwata talks about how to expand the gaming market beyond the hard core gamers. Too bad I did not get a copy of the Brain Age game, since I had to step out 15 minutes before the keynote ended for an important meeting.

What I really want to blog here is the panel on Friday morning, “Entering the Chinese MMO Market”. Which was moderated by Eugene Evans, VP of Business Development of Mythic Entertainment, a major U.S. MMO developer. The other panelists included Monte Singman and Zhan Ye. Monte is now the CEO of Radiance Digital Entertainment. He’s an old friend of mine, who sit on my panel at E3 2004, when he was still at Shanda Networks. Mr. Ye is the Editorial Director of a new Chinese magazine called Game Creation, the first of its kind. A gentleman from Shanda, who was supposed to be on the panel, was absent.

The panel was very interesting and informative. A variety of topics were discussed and a lot of juicy details revealed.
Here are the highlights:

Chinese market in general
Monte: China is more than one market and local governments have their own motivations. It’s challenging for companies to operate. Shanda had local offices in each major city. It’s very expensive and laborious. For instance, there is no one logistic office in China that could ship goods to any address in China. Logistics is definitely an issue. In addition, there are also major differences between southern and northern China. For instance, online games are really flourishing in countries like Chendu and Chongqing, where people have a lot of free time. Gamers in Northern China may not want the same games.

Internet Café
There are chains in China but there are also many small mom and pop shops. Definitely an interesting issue for both the regulators and operators. The Ministry of Culture administers the Internet Cafés and it has difference concerns than GAPP (General Administration of Press and Publication, the government body that regulates all media formats including games).

In China, the cafés don’t share the game operators’ revenue, unlike in South Korea, and therefore they need to look for other revenue streams. For instance, they charge the operators $3 per PC to place the games on the desktop. The operators also pay for posters to promote the games in those Cafés. They charge $3 per poster. It’s also funny that you can outbid the other companies by paying more. For instance, you can pay $4 to tier down the posters from another company and then $3 to post yours.

Piracy issues
There is no easy answer here. Cleaning up piracy takes time. The government will first stop the piracy for local publishers, and then foreign publishers.

Hosting Servers Overseas
Can you put the servers outside of China and then only circulate the clients in China? Is it possible? China has the Great Firewall that can cut off the access to the servers and groups of IP addresses. China’s firewall is very advanced. There is no way to operate servers overseas. There are also payment issues. The government is using advanced American technologies, predominantly from Cisco systems. You have to be in China or have a local partner!!!!

Part Two Coming this Weekend! Stay Tuned.


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