ChinaJoy opens in Shanghai; local biggies join Western execs in Day 1 of conference

An opening day forum sees Chinese officials pledging to regulate and foster booming online game industry; Western publishers put their best feet forward to compete for a piece of the action game biz in China.

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SHANGHAI, China--This morning, in the spanking-clean facilities of the New International Expo Centre in eastern Shanghai, a gaggle of high-ranking Chinese officials responsible for managing the fast-growing online game industry in China made consecutive presentations to about 200 members of the Chinese and pan-Asian game press. The occasion was the second ever ChinaJoy, an E3-like event that is backed by The General Administration of Press and Publication of P.R. China, one of two key government organizations that authorizes and approves the sale of both online and offline games in China.

One after the other, the officials promised to use the resources of the Chinese government to fund, nurture, and grow the online game industry in that country. By some estimates, online games are expected to drive revenues equivalent of $1.8 billion by 2008. The officials' common aim? To bring a sense of respect and order to a sector currently known for a vast amount of hacking, cheating, and piracy.

Immediately following those opening remarks, a number of publishing VIPs (probably better known to most GameSpot readers) chimed in with their own sets of promises and goals. Bruno Bonnell of Atari, Doug Lowenstein of the ESA, and Jon Niermann of Electronic Arts all made brief but passionate presentations. Executives from China-based powerhouses Shanda, Netease, and Kingsoft also participated in the morning session.

The message from local officials was clear: The Chinese game industry needs to increase domestically created content that more overtly promotes traditional Chinese culture. Also stressed was a crackdown on piracy and hacking. Furthermore, it was said that censorship of games was to be expected if game content didn't conform to government standards.

"We will offer preferential treatment to local developers and encourage the domestic industry," the vice general administrator of the General Administration of Press and Publication, Yu Yongzhan, said in his opening remarks. His organization holds sway among the small group of powerful government agencies that regulates the game industry in China. "Games should find their roots in Chinese culture," Yu said. "We will ban harmful games; we will [only] approve some."

Echoing Yu's comments was Yan Xiaohong, the vice director general of the National Copyright Bureau. "We must attach great importance [to our mission] at the beginning of this industry. [Our goals are] to improve copyright laws, to dole out punishment to violators, to increase awareness, and to educate young people to avoid [piracy and cheating]."

The officials were forceful in their statements, but much of their tones seemed like reflections of style rather than of substance. One after another, the officials recognized that now was the time for China to make its move by acting on the world stage. "2004 is a turning point in digital entertainment in China," Ding Wenwu said. He continued by saying it was important to "change the bias toward the game industry and to recognize it as a pillar of technical and economic growth." Wenwu is the deputy director of Electronics and Information Product Administration, a central government authority.

Overall, the officials, each in his own words, expressed the need to commit to attracting capital, a devotion to encouraging strategic alliances to train the R&D talent required to grow the sector, and a dedication to doing whatever it takes to encourage a local industry that is less reliant on foreign-developed game content.

The Western execs each offered his own sets of presentations, quite obviously playing to the audience of key government decision makers present.

Jon Niermann, president and managing director of Electronic Arts Asia, outlined "what we're going to do not only in Asia, but also here at the center, in China." Niermann was resolute in his commitment to China. He painted EA in colors that marked it as a longtime global player, noting the company's early commitment to the European markets. Niermann also said that the online space was no stranger to Electronic Arts, pointing to the company's acquisition of one of the first major online game developers, Origin Systems Inc. He also promoted EA as a multinational company, reminding attendees that EA now drives over half its revenue from markets outside of its home territory. As for the future, Niermann said that "growing Asia is among our top priorities at EA this year."

He then announced that former POGO head Erick Hachenburg had recently relocated to Shanghai to manage the worldwide efforts of Electronic Arts in the online space. "This is a real market," Niermann said, "but we can also learn from the companies here." Hachenburg will not only lead EA's online efforts worldwide, but also all China business as well.

(Gamers may be interested to know that during Niermann's presentation, he showed a screenshot of FIFA Soccer 2006 for the PlayStation 3, currently being developed--at least in part--at EA's Vancouver studio. The screenshot showed a smoothly rendered image of a soccer player in hot pursuit of the ball. The image was shown only for a few seconds, but in the badly lit hall, it hardly counted for much, save for the fact that it might have been the first time a screenshot from PS3 development was shown to the press.)

Bruno Bonnell, chairman and CEO of Atari, also touted a company line that put doing business in China at the top of its list. Seeing what he calls "huge growth potential" in China, Bonnell seemed to aim his comments directly at Chinese officials, saying he knows "importing is not the right way" to grow Atari's presence and stature. Instead, it was "collaboration" he sought. As with Niermann, Bonnell did everything but hang a "Ready 2 Do Business With U" sign on the podium as he spoke. "Let's hope the next decade will be the Asia buildup" for Atari, Bonnell concluded.

Finally, Entertainment Software Association (ESA) president Doug Lowenstein put his own spin on the opportunities that lie ahead in China. He infused the comments of the government officials who spoke before him with a good old-fashioned reality check. "Actions must match these positive words," he said, adding that "all [progress] can be stopped without the relentless effort, by government, to rid piracy in the region."

Specifically, Lowenstein focused on three areas that the Chinese government should look closely at. First, he pointed out the lengthy amount of time the government takes to review games, which currently gives pirates a head start in preparing their own unauthorized copies. He also expressed a concern, when it came to quotas, that might be imposed by the government to limit the number of games that can be imported into the country. Such a move, according to Lowenstein, would also permit pirates to take advantage and sell games that the government is trying to keep out. Finally, he encouraged the government to consider civil and criminal remedies against those who maintain unauthorized servers, which can generally deny revenues to the rightful publishers.

Presenting in the afternoon session were additional government officials, as well as executives from VU Games, Square Enix, Namco, The9.com, Ubisoft, and Sony Online Entertainment.

Expect additional coverage from Shanghai when the show floor opens to the industry and press Tuesday morning.

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