Frontier Scan
China's online game market, in over a decade of growth, has received significant attention from capital markets. In the early stages, market investments were primarily concentrated on online game developers and operators. However, in the "post-online gaming" era, the focus of investment will shift.
Growth Trends
The Tsing Research Analysis Center believes that from the evolution of China's online gaming market, the main growth trends of China's online games can be summarized into seven aspects.
1. The trend towards 3D in China's online gaming products is evident. After the rational return of the online gaming market, to achieve long-term growth, content providers in China's online gaming industry will focus on improving game quality and diversifying game categories. Notably, 3D gaming products deserve attention.
2. The process of media transformation and exploration of new charging models will accelerate innovative business model development in China's online gaming industry. On one hand, with the acceleration of the media transformation of online games, advertising will become a new profit growth point for online games. On the other hand, regarding the charging model of online games, revenue models like item or time-based charges will face challenges. It is expected that in the future, China’s online gaming profits will show unique charging models such as “players exchanging items among themselves, while online game operators receive a commission,” thus enhancing user stickiness while innovating profit models.
3. Revenue and user numbers in China's online gaming market continue to grow, but at a slowing pace. It is estimated that the market revenue for China's online gaming in 2010 will reach 33.89 billion RMB, an increase of 32.38% compared to 2008. The market user base for online games will reach 338 million people, an increase of 27.31% compared to 2008.
4. Cross-border cooperation cases in China's online gaming industry are increasing. With the rapid integration and development of China's cultural and entertainment industries, cross-industry collaboration in China's online gaming will become more evident, especially in its connection with traditional cultural and entertainment products. Mergers and joint operations will become important ways of cross-border cooperation.
5. China's online gaming industry will accelerate its overseas expansion. It is predicted that after 2010, besides some large online game operators building their own overseas operating systems, some small and medium-sized online game content providers will enter overseas markets through joint operations and cooperative development. The overseas markets worth paying attention to are still mainly concentrated in Southeast Asian and Russian markets.
6. Core enterprises will enter the online gaming market through mergers or strategic investments. Mergers and strategic investments will become the main routes for core enterprises to enter the online gaming market. Three types of core enterprises are worth paying attention to: first, film and media organizations; second, Chinese telecommunications operators; third, some Internet companies, such as Baidu. Additionally, with the "boundary-less" development of Internet and mobile Internet applications, some capable wireless Internet companies will also enter the online gaming market.
7. The "national team" will primarily enter the online gaming market through cooperative means. As the regulatory intensity of China's online gaming market increases, the government controls every aspect from content, operation, revenue to virtual currency. On one hand, it ensures the healthy development of the online gaming market; on the other hand, after the market reshuffle, the "national team" may participate in the online gaming market through mergers or joint operations. In the first half of 2010, the cooperation between CCTV.com and Changda, as well as the IPO of "red online games" China Youth Online Games Network, were all precursors of the "national team" entering the online gaming market.
Four Major Investment Directions
Tsing Research Analysis Center believes that future investment opportunities in China's online gaming industry will mainly concentrate on the following four aspects:
1. Small and medium-sized online game developers, even small-scale game development teams. Initially, the investment hotspots in the online gaming market were concentrated on large game developers and online game operators. As the market enters a consolidation phase, enhancing game quality is crucial for the continuous development of game manufacturers. Manufacturers with overseas game development backgrounds are worth paying attention to.
2. Comprehensive or vertical online gaming...
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