China Online Games Market 2010

China has 400 million Internet users, a quarter of them avid gamers, according to the China Internet Network Information Center. Despite that enormous market, shares of Tencent, the Chinese market leader in Web-based games, has dropped 23 percent this year. Perfect World, another major operator, is off 47 percent, and Shanda Games (GAME) is down 42 percent.

With more Internet users in China than any other country, the Chinese game market seems ripe for growth. Two-thirds of Chinese have never been online and nearly half of China's Web surfers are under 25. Gaming companies have lot to worry about : while they see plenty of potential growth in poorer regions, it's getting harder to find players who aren't already online in Beijing, Shanghai, and other big cities.

The industry's revenues are likely to grow 22 percent this year, to $4.5 billion, that's far below last year's 40 percent. All that means the search for new hit games is urgent. This year, Chinese companies will launch 400 new titles, vs. 250 in 2009, competition is getting really hot. It's hard to stand out in the market because many operators have been churning out similarly themed medieval fantasies with titles such as Battle of Immortals and Dragon Power. Just search how many "3 Kingdoms" (san guo) MMO are there in China?

The there is the Chinese government new regulations to worry about, the Ministry of Culture on June 22 announced regulations setting guidelines for the look and feel of games and requiring that social gamers register under their real names. The ministry also set limits on sales to minors of items using virtual currency, or points earned playing online. But what's most scary is the poaching of games development teams that is happening in the Chinese MMO industry now. Companies are hiring head hunters to practically steal competitors or potential game development teams with x2 the salaries sometimes. Some are using unethical techniques to WIN at the game by way of obtaining source codes illegally. Such practises are what killing the industry today.