China’s game market is booming, recording sales of US$9.8 billion in 2012, a growth of 35.1 percent over the previous year. The market includes PC online games, PC console game and mobile online game.
According to IDC data, after a quick growth before 2008, the China game market saw a turning point in development in 2009. The growth has slowed sharply, at almost equal paces in 2011 and 2012. IDC forecasts that the China game market will see a slower growth during 2013-2017, with the CAGR approximating 16%. In contrast, the greater culture industry where the game market dwells is booming.
IDC believes that the China online game industry will be increasingly involved in pan-entertainment, another content-derivative industry, because of the following factors :
1. The rapid growth of the culture industry is one of the driving forces for a continued revenue increase of online game enterprises.
IDC forecasts that the outputs of the China culture industry will grow at a CAGR of 30 percent in the 12th Five-year Plan period, higher than that of the actual sales of the China game industry (24 percent). It is expected that the China culture industry will grow faster than the China online game industry around 2013, thus challenging the future growth of the latter.
Moreover, China’s GDP per capita exceeded US$3,000 in 2008, a critical point for an explosive growth of the culture industry. The number in 2011 was more than US$5,400, laying a sound foundation for a continued fast growth of the culture industry. Along with the constant upgrading of the China culture industry, the pan-entertainment content industry related to online games will be a deployment focus of online game enterprises.
2. Online game enterprises are facing complicated competitions and challenges.
On one hand, pan-entertainment is not only a driving force for the development of China Internet industry, but also a channel for online content monetisation of offline entertainment enterprises. The online game industry, with its mature business model, will inevitably be one of the best choices. This will make the fiercely competitive online game market even more complicated.
On the other hand, representative Internet enterprises have taken the lead in pan-entertainment deployment, which has, in turn, given their peers more pressure.
When taking an overall look at the pan-entertainment deployment of China online game enterprises, there are frequent examples in the pan-entertainment industry, from the online game “Legend of Sword and Fairy” to the well-received movie and TV play; from “Mole’s World”, a children’s social game, to the animation series; and from the online game “91wan” to the online novel.
Another good example is Tencent Interactive Entertainment Group, which was the absolute leader in pan-entertainment deployment in 2012. Tencent put forward its online-game-based pan-entertainment strategy in 2012 with the aim of building an integrated interactive entertainment platform. It had its pan-entertainment strategy deployed in 2013 by introducing several popular animations from Japan and adapting “Naruto” for an online game.
IDC believes that with the constant attempts and boosts of Tencent and other large-scale online game enterprises, there will be a wave of pan-entertainment deployment by the rest.
3. The monetisation of existing user resources is diversified.
IDC data shows that the increase of China online game users continued to slow down in 2012, affected by a slower increase of China Internet users. Satisfying the various entertainment demands of existing users and digging deeper for their value while attracting new users will be another driving force for the involvement of online game enterprises in the pan-entertainment industry.
In general, Chinese online game enterprises will constantly deepen their involvement in various areas of pan-entertainment, mainly by means of industry alliance and capital operation.
However, enterprises should be aware that with certain differences among different areas of pan-entertainment, the integration should be a step-by-step progress which proceeds at a controlled pace.