The China Blog: Online Gaming, Telecom, Digital Home...

Saturday, March 25, 2006

GDC Part 2

GDC Part 2

Other challenges
Data center license is strictly regulated in China. You cannot host a server without the license. The concept of hosting a server overseas just won’t work.. The government even needs to know the location of the server. Even setting up a personal BBS on your own server will need to get approved.

Conflicts among Regulators
Multiple agencies want a piece of the lucrative market including GAPP-General Administration of Press and Publication, the MII and the Ministry of Culture. You have to deal with all of them. Many of their rules are quite ambiguous.

The Beijing Accord
A government regulation from last August, which was designed to reduce the addiction to MMOs. The operators need to implement time restrictions. In particular for youth aged under 18. How effective has this been? It has not been very successful. The players and operators both have motivations to fight against it. The government does not have technical solutions to implement this.

The restriction was actually inadvertently introduced by Shanda. Shanda made an announcement before WOW was launched, which was going to implement a fatigue system. Shanda made an announcement without a solution but the government liked the idea. Shanda then dealt another blow to the industry by introducing free-to-play games.

Monte, nevertheless, believes this is important for the market. Too many social issues related to addiction and if the operators don’t deal with it, they risk the government shutting down the market.

Investment from the government
The 100-online-games initiative from the government. Is it going to be an even playing field? Is it another reason for not going to China?
You need to read the details of the plans. It might be an accounting trick. The government may ask the operators to chip in and then count as part of its number. Monte has not seen any of that money. Many local governments already have large local grants. Xiamen actually has promotion policies to attract gaming companies.

Q&A session
The government requires SAP licenses for each company and for each game. If the game is developed by Chinese company, it’s easier, but for foreign companies it’s harder to get the approval.

What about guilds and in-game communication among gamers?
Operators need to provide easy access to public securities and then they don’t need to bear a lot of responsibility. Some online guilds actually hire attorneys to fight for their rights.

Revenue and cost
45% operation cost. The dominating model used to be 25-30 yuan per month for monthly subscription fee. Now we are in the age of virtual item trading. WoW is so popular in China, people are going crazy.

Shanda’s philosophy for introducing the free model: it hurts me a hundred and it hurts my enemy 1,000. It did not hurt the enemies more but hurt Shanda more. NetEase did not follow. They say they have quality games.
For item-trading model: 17% of players playing casual gamers pay and they pay for everybody. 230,000 concurrent for Freestyle Street Basketball. They are making 15 million RMB a month based on virtual item-trading only.

Which is the best MMORPG operators to deal with since it seems to be the only way for foreign companies to enter, which is to license the games to local partners. Minor operators won’t give you good success.
Shanghai: Shanda, The9, T2CN,
Beijing: Sina and Sohu
Shenzhen: Tencent
Guangzhou: Netease


Post a Comment

<< Home

Interesting News Today