China's Game Industry Hits 100b Yuan in Revenues

Originally post on tech.sina.com.cn on 29/12/2014 (For full Chinese article, click here)

BEIJING, 29 December. 2014 will soon be over. For the Chinese game industry, 2014 will be memorable because this is a year marks history: China's game industry has reached one hundred billion yuan in market value.

According to the 2014 China Game Industry Report, data show that in 2014 the total size of game industry revenue reached 114.48 billion yuan, an increase of 37.7% over last year. Various market segments include: game client sales revenue of 60.89 billion yuan, a year-on-year increase of 13.5%; web game sales revenue of 20.27 billion yuan, up 58.8%; mobile game sales revenue at 27.49 billion yuan, an increase of 144.6%. This is the first time mobile gaming has surpassed the value of web gaming.

At the China Annual Game Industry Conference (CAGIC), which recently concluded in Beijing's Great Hall, senior vice president of Perfect World, Wang Yu Yun, said: "When I attended CAGIC 10 years ago, the Chinese game industry had just started up. Gaming was focused on mainstream games from abroad, and our own original games had yet to come into their own. Gaming could not compare with movies or traditional cultural products. Today, the Chinese game industry is not only bigger and stronger, but the industry has successfully output to more than 100 countries and regions. China has taken root in global gaming."

Chinese game industry in 2014 reached a total market value upwards of over one hundred billion yuan. This includes client games, web/browser games, mobile games, al of which saw growth overall, and console video games, now and emerging growth industry. Game industry enterprises are accelerating the development of new products and have doubled product output, significantly enhancing competitiveness [Ed: and competition] of enterprises. The momentum of growth in overseas markets is increasing quickly. In terms of TV and game console market prospects, Microsoft, Sony are accelerating pace to enter the Chinese market, and more and more game companies expect game consoles, game boxes and entertainment boxes serving as media platforms to develop the video game market. With the convergence of the Internet and videos games, Jingdong and other Internet companies such as TCL are teaming up to enter the video game market. Qihoo360, Baidu, Alibaba and other Internet giants actively layout domestic gaming industry.

At the same time, the production number of games has entered a rapid growth phase. Compared to last year, due to the huge volume and considerable growth of mobile games, the overall number of games has been pushed to a whole new scale. From a quantitative analysis perspective, video games have been showing a clear "pyramid" structure.

Client-based network games occupy the top, where high input for high quality output defines survival, a quality > quantity approach. Web games are situated in the middle of the pyramid, with the ability to develop quality games, and where reducing the number games can lead to a rise in quality. Mobile gaming represents the bottom of the pyramid, seizing the market gap in the share of the end user dividends, low-input, high output, far exceeding the number of games online, client-based games and web games. Despite a projected decline in gaming demographics, which make effect a slowdown in client-based gaming, emerging market segments such as web games and mobile gaming market anticipate significant increases in size and further expansion of market income scales.

After tipping the scales over 100 billion, opportunities and challenges for the future of the Chinese game industry have changed. Chinese game companies face more intense domestic and international competition. In order to achieve greater development in the future, game companies need to plan ahead and to increase investment in key areas. In doing good business, whether domestically or in overseas markets, it's now necessary to get a sense of the technical aspects of the development of various market segments - such as front-runner Perfect World has done.

For example, although the Perfect World client game was thriving, the company did not rely solely on this product line to achieve development. By virtue of its strength in cutting edge technologies and moving decisively to distribute games, Perfect World has pursued a boutique strategy and now has three major product lines: client, web and mobile games, all of which are high quality. With excellent products, whether in the domestic market or overseas, Perfect World has a strong competitive edge.

In the console games market, Perfect World will cooperate with Microsoft and players can look forward to the launch of their entry into the console games market in the near future. It is worth mentioning that Perfect World is also working with many partners in the area of set-top and TV boxes to launch game products, in order to see future profits. A few years back, Perfect World invested in distribution of each of its product lines - returns now look good.

In the development of overseas markets, technology research & development and talent reserves, Perfect World has not wavered since its 2013 "Perfect Entertainment, World Sharing" global development strategy commenced. It has continued to work with national partners to join the next generation of online entertainment technology while continuing to gain strength in overseas markets - such as this year, during which the Indonesian market in Southeast Asia was a focus. In terms of its talent pool, Perfect World Co., Ltd. has set up investment in education, preparing for the establishment of an International Digital Arts school in collaboration with world-renowned universities, and it continues to support the education sector, especially in foreign and cultural exchanges. Today, Perfect World's series of initiatives are seen as achieving decent socio-economic benefits.