Chinese games market forecast to exceed $1.3 billion in 2008

Tuesday 23 Jan 2007

Pearl Research has forecast that China’s games market will exceed $1.3 billion in 2008. This games market will include online, packaged PC and video games. The ‘Games Market in China’ study took into account the domestic games market as well as the market for game development and outsourcing in China.

Key findings

Online casual games are continuing to gain a footing in the market and by 2008 are predicted to constitute 30% of the online games market. Online gaming is becoming less limited, growing into gamers homes, while casual games continue to grow as well. The largest online gaming segment in China remains multiplayer online RPGs, which can generate up to $80 million in China annually.

The online games market in China has grown due to diverse game content, the lack of entertainment options, a strong consumer culture with a rising demand for leisure and technology products, as well as the low cost of playing games (it averages at $0.05 per hour).

Does outsourcing work?

China’s low cost structure, large labour force and strong infrastructure mean that it will continue to thrive as a game development and outsourcing destination. Disciplines (for example art creation) can be outsourced which will increase a company’s production capabilities as well as achieve cost savings of between 20 and 40%. However, companies have to be aware that costs such as travel, training and project management can decrease the savings which were derived from the outsourcing.

When companies outsource to China they also should take into account the challenges which they are bound to encounter: product quality; intellectual property protection; competition for skilled employees; and even cultural differences. However, Pearl Research believes that product quality will improve as game developers in China acquire experience.