On­line game firms’ Q2 rev­enue growth falls to vir­tual halt

Games:

China Daily (Hong Kong) - - BUSINESS - By GAO YUAN gaoyuan@chi­nadaily.com.cn

The rev­enue growth of on­line gam­ing com­pa­nies slid to a new low in the sec­ond quar­ter as the lead­ing par­tic­i­pants fo­cused on mi­grat­ing to the mo­bile In­ter­net mar­ket with some 465 mil­lion po­ten­tial cus­tomers.

China’s six big­gest gam­ing com­pa­nies reg­is­tered 2.5- per­cent year- on- year rev­enue growth, the slow­est in­crease in four quar­ters, the com­pa­nies’ fi­nan­cial re­ports show. The top six ven­dors held more than 87 per­cent of the on­line gam­ing mar­ket in China.

Shanda Games Ltd, the third- largest gam­ing com­pany, had the weak­est per­for­mance. It said rev­enue was flat with the first three months.

Per­fect World Co Ltd, the fifth-largest, re­ported a 13.5 per­cent quar­ter-on-quar­ter rev­enue in­crease, the only ma­jor gam­ing com­pany to show dou­ble-digit growth.

Data from Analysys In­ter­na­tional show to­tal turnover of the on­line gam­ing mar­ket hit 13.5 bil­lion yuan ($2.2 bil­lion) in the sec­ond quar­ter, up just 5.2 per­cent quar­teron-quar­ter.

Fu­ture rev­enue growth in the in­dus­try will likely re­main at low ebb, al­though some new re­leases may get a lot of mar­ket at­ten­tion, ac­cord­ing to Zhou Yun, an an­a­lyst at in­dus­try re­search firm iRe­search Con­sult­ing Group.

“New types of games, such as browser games and mo­bile games, are quickly adding user num­bers, and the mar­ket share of client-end games will de­cline to about 70 per­cent in the sec­ond half,” said Zhou.

Mo­bile games and browser games are on track to make up about 40 per­cent of the do­mes­tic mar­ket by 2016, iRe­search es­ti­mated in May.

Be­cause the mar­ket for client- end games, which re­quire users to down­load soft­ware be­fore they play, is ex­tremely ma­ture and highly com­pet­i­tive, lo­cal de­vel­op­ers are look­ing to mo­bile gam­ing for faster profit growth.

Turnover of the mo­bile gam­ing mar­ket reached 2.4 bil­lion yuan in the first quar­ter, a jump of 9.3 per­cent, said iRe­search.

As more Chi­nese buy smart­phones, their gam­ing de­mand is set for strong growth, it said. The firm added that smart­phone users spent nearly 800 mil­lion yuan on mo­bile games in the first quar­ter, rep­re­sent­ing a 20.9 per­cent quar­ter-on-quar­ter in­crease.

Xiao Hong, co-chief ex­ec­u­tive of­fi­cer of Bei­jing-based on­line game de­vel­oper and op­er­a­tor Per­fect World, said his com­pany plans to re­lease more mo­bile and browser games later this year in a bid to ex­pand mar­ket share in the emerg­ing sec­tor.

Per­fect World will “closely watch” the mo­bile gam­ing mar­ket and try to find a bal­ance be­tween client-end games and mo­bile games, he added.

Ten­cent Game, the No 1 gam­ing com­pany in China and a sub­sidiary of In­ter­net gi­ant Ten­cent Hold­ings Ltd, also said its in­ter­nally de­vel­oped mo­bile games are gen­er­at­ing more profit. It plans to re­lease more ti­tles.

The com­pany said it also plans to ex­plore over­seas mar­kets to widen its profit mar­gin.

NetEase Inc, the sec­ond­biggest on­line gam­ing provider, said mo­bile de­vices present a “ter­rific plat­form” for the com­pany to ex­tend its reach from per­sonal com­puter users to mo­bile play­ers.

Founder and chief ex­ec­u­tive of­fi­cer Ding Lei said he plans to re­lease a num­ber of new and mo­bile games in the com­ing months.

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