Define China
Niko Partners' Lisa Hanson offers a snapshot on the enigmatic, but crucial, fast-growing games market
Continuing our look at the videogames markets around the world, next up is China, an enigmatic if numerically dizzying country which for many will hold the key to the future of games in the next decade.
To find out if conventional wisdom was an accurate assessment, we sat down with Lisa Hanson, managing partner at Niko Partners and an expert on the Chinese videogames landscape.
China's market is predominantly PC online game-driven. By the end of 2008 the total revenue was USD 2.75 billion for PC online games, and that marked the first time it surpassed the US PC games market, which was USD 2.5 billion.
For 2009 we're forecasting USD 3.65 billion in revenue, moving all the way up to USD 8.8 billion in 2013, from online game revenue - which is a hefty increase. We're going from about 60 million online gamers, which some people are telling me is an underestimation of the picture now - but it's all a matter of definition.
Our definition is somebody that's played an hour of games in the last 30 days, and that doesn't include the mobile segment - so they can't have just played five minutes of mobile game per day at the bus stop.
We think that will go to 100 million gamers by 2013, and within those 100 million gamers probably at least 50 per cent of them will be paying, whereas right now we have about 30-35 million gamers pay. So it's a greater absolute number of paying users overall.
It's actually a decline in the ratio of paying users to total numbers - from 35 million out of 60 million paying now, to 50 per cent in the future.
On a compound growth rate it's only about 19 per cent, and we've had huge growth over the last few years. 2008 over 2007 was something like 73 per cent, and the year before that was about 70 per cent. This year versus last year it's about 35 per cent growth - and that's with World of Warcraft being offline for a while.
As we have slowing growth, basically to keep our forecast reasonable we're pulling down the growth as much as we can. By 2013 we're sub-20 per cent for the revenue growth, but we still have this big boom in internet users. So the sub-segment of total internet users who will be gamers is about 100 million.
Those are people that play through social networking sites, web games, casual games - but there'll be a widening of the game genres to accommodate more people beyond just today's definition or demographic profiling of a gamer.
Presumably there'll be some additional models that can capture revenue from these other areas that are, by and large, entirely free segments. The 40-50 year old women who are playing Popcap games at home - if Popcap figures out a way to monetise those users then that's one way to gain more revenue in the market place.
These are still hypothetical, but if the web games turn into revenue-generating rather than what they are now - and the same with social network games... and by 2013 consoles will either be legal and using console games, or they won't be anywhere at all.
That forecast includes online game revenue that might be derived from the console game platform, because there will be an online distribution model for console games.