Change of tide in China’s online gaming market

According to a report on cnngo.com, companies from around 30 or so countries set up booths at ChinaJoy, China's largest gaming and digital entertainment exhibition (the country's answer to E3), which was held in Shanghai last week.

China's lucrative gaming market was worth more than US$3 billion in 2009, and will continue to grow dramatically in the coming years, according to Niko Partners.

The online gaming world has seen a change of tide in recent years. "The Chinese market has moved dramatically in terms of technology," says Martin Wilkes, sales and business manager for Firelight Technologies, a Melbourne-based company that provides audio solutions for video games.

"Games have become part of the Chinese culture and will only increase in potential because of the size of the population."

Once considered mediocre at best, "the increased quality and technological complexity of online games made in China is fueling interest from foreign publishers hoping to help domestic developers release their products overseas," says Carsten van Husen, CEO of the German-based online game publisher Gameforge.

During the conference, which included sessions on the global development of Chinese games and global social games and "their Chinese hopes," Gameforge signed its first deal to distribute Warrior King, a MMO (massively multi-player online) game produced by Beijing-based LineKong Entertainment Technology, in the West.

"Korea has always been leading the industry but the Chinese are obviously very clever, creative and massive, so they are coming on strong," van Husen says.

Yet while Chinese gaming companies have been investing internationally and there are a few examples of Chinese social network games that have been successful abroad (Sunshine Ranch, a SNS game developed by Rekoo, has performed well in Japan and the United State, for example), some say it will be a while before Chinese developers can make any major inroads in the West largely due to cultural divides and lack of market expertise.

Meanwhile, cash-rich Chinese companies like Tencent Holdings and Shanda Games are already trying their luck in the West. Tencent recently invested US$300 million in Digital Sky Technologies, the Russian Internet holding company that acquired a stake in Facebook last year, and Shanda Games, a subsidiary of Shanda Interactive Entertainment Limited, purchased San Francisco-based Mochi Media for US$80 million in January.

On the other hand, Zynga, the San Francisco-based company known for its social networking game Farmville, acquired XPD Media, a social gaming company based in Beijing in May.

"There is a lot of stuff happening between the East and the West right now," says Ludovic Bodin, co-founder and CEO of Cmune, a Beijng-based company that builds 3D games for social networks. "Everyone is trying to work with each other."