Spot On: Cracking the Chinese market

February hasn't been an especially kind month to developers and publishers of massive multiplayer online games. Earlier this month, Ubisoft decided to nix Uru Live, the online component of Uru: Ages Beyond Myst, which it released last December. The Myst sequel was no failure, selling 350,000 copies, but the publisher felt the interest in Uru Live did not warrant its cost. And last week, news trickled down from Redmond that Microsoft Game Studios was pulling the plug on Mythica, a role-playing game set in an persistent world based on Norse legends and deities.

The lesson? Launching an MMOG is no cakewalk. But are MMOG-makers taking the lessons of Uru Online and Mythica to heart? A quick survey of the MMOG landscape finds numerous publishers still willing to sink millions into the sector. City of Heroes, The Matrix Online, Tabula Rasa, Dungeons & Dragons Online, and Middle Earth Online are a few major titles that continue development.

Recently, however, the MMOG space has taken a new twist, one that will likely raise the stakes even higher. US-based publishers are now trying to bring their games to China, a country that has a stellar track record of localizing externally developed MMO games and making millions from subscription cards and game-café licensing fees. The revenues are substantial, hence the lure. But it's more than money.

"Asia is a much more exciting market than the US right now," said Jason Bell, new LA studio head of Turbine Entertainment, developer and now publisher of the popular MMORPG Asheron's Call. "The average gamer in Korea or China spends over 10 hours a week playing online games, with an estimated 20 percent of Internet users in China [being] regular online gamers--out of 70-million-plus Internet users."

Bell's figure is corroborated by numerous sources. IDC senior analyst Jun-Fwu Chin, based in Kuala Lumpur, Malaysia, studies the online game market in China. IDC and the Chinese government collaborated on the country's first state-endorsed study. Figures released last month pegged 2003 revenues from online games in China at $159 million, a 46 percent increase over the previous year. Additional stats released last month at ChinaJoy, the country's first MMOG trade show, put the number of online gamers at a little over 13 million, split almost down the middle between gamers who play free games and those who pay to play. That total number is expected to grow to more than 41 million by 2007.

Internet access in China is also on the rise, as is the number of game-savvy Web users. And while a few major Internet service providers control a majority of the market (such as Shanda Network, NetEase, and the9.com), the user base is predicted to grow so much that observers believe there is room for new, small companies to prosper, albeit in a more competitive space. "The number of online service providers will increase, as will the number of online games," predicts Chin. "But instead of a dominant market, you'll see a more combative one." Currently, gamers in China have their choice of more than 140 Chinese-language MMORPGs.

Chin emphasizes that the sector will continue to offer an upside for the newbie developer. "The market has the mass to absorb [new products]." Bell agrees, telling GameSpot even a small share of the Chinese market could provide a noticeable spike in his company's bottom line.

The temptations are many, but the road into China isn’t exactly a downhill glide.

By far, the biggest impediment to entering the Chinese market comes in the form of determining what is appropriate and compelling content for the Chinese gamer. "The most challenging factors are questions of game design and business relationships," says Mark Jacobs, president and CEO of Mythic Entertainment, developer of Dark Age of Camelot. "The first hurdle is to somehow create a game here that addresses the needs, wants, and concerns of another market."

Echoing Jacobs' assessment is Joon S. Oh, director of business development at Singapore-based FGOG Pte, Ltd., one of a small number of online service providers licensed by China's Ministry of Culture to do business in the online gaming sector. "Some Chinese gamers are actually uncomfortable with playing Western games," says Oh. One of the reasons Korean game developers have been successful in the Chinese market has to do with what Oh calls "cultural proximity," something that a US-based design team is incapable of offering. "Chinese gamers can relate to the characters better, as they [often] represent ancient Chinese historical characters. The weaponry, swords, and armor have a lot to do with Chinese [history]. Ancient medieval titles such as Legend of Mir I are doing well because the gamers are used to those issues." Other top sellers in China that have come from Korean developers include Mu Online (WebZen), Lineage (NCsoft), and Legend of Mir 2 (Actoz/WeMade).

This shouldn't surprise a sophisticated observer. "The key for US games to break into the Asia markets are similar to what's required in the US--recognizable IP, strong content that appeals to local gamers, and game styles that appeal to the local market," says Bell.

But it's a lesson overlooked by many. Says Mythic's Jacobs: "I believe the shores of Asia will be lined with the corpses of online games whose owners, in their hubris, believed it is simply a matter of doing a great game here and taking it there."

"From the game design standpoint," continues Jacobs, "if it is difficult here to make a hit game for Western markets--which is a market that most of the North American and European game designers have grown up in, of course--won't it be that much more difficult to create a game for a market that you did not grow up in?"

Noting recently canceled MMOG products and games that have underperformed, Jacobs is obviously skeptical about making a swift killing in Asia. "We can think we know what makes great entertainment here, but in reality, the vast majority of us don't, because if we did, all well-produced books, games, television series, and films would be blockbusters. So, the first hurdle is to somehow create a game here that addresses the needs, wants, and concerns of another market."

Says Chin: "For an American-based or English-language-based game to successfully enter the market, the criteria is not based in language, it is based on content. Chinese gamers want something close to their culture."

Next week, Spot On will continue its coverage of the MMOG sector in China, focusing on the potential pitfalls that face foreign developers and publishers interested in tapping into the Chinese market.