Niko Partners Releases China Videogame Market Forecast

San Jose, CA - April 25, 2006 - Niko Partners, a leading research and consultancy firm on the Chinese gaming market, today announced results from its latest report showing impressive growth for the Chinese videogame market in 2005. According to Niko's fourth annual report on the market, 29 percent of China's 27 million gamers played games more than 60 hours per month, which helped contribute to a 23.6 percent growth rate in China's videogame market from 2004 to 2005. The Chinese market, of which 84 percent is comprised of online games, now stands at $683 million. The market is forecast to enjoy a compound annual growth rate of 24 percent for the period 2005-2010, climbing to $2.1 billion.

"Chinese gamers' passion for massively multiplayer online role-playing games (MMORPGs) has extended to the casual and premium casual segments," said Lisa Cosmas Hanson, managing partner of Niko Partners. "Premium casual games provide new gamers greater access to the online game market and open up an alternate source of entertainment for hardcore gamers." Niko Partners projects that premium casual games will gain in popularity comparable to MMORPGs over the next several years, achieving 40 percent of all online revenue by 2010.

Other key findings related to overall China videogame market growth include:

Internet Cafés: Gamers access the online gaming universe an average of 4 hours per day through the estimated 20 million PCs in China's 265,000 officially licensed and unlicensed Internet cafés, almost all of which have broadband access and regularly maintained PCs.

Adoption of Broadband in Homes: One factor contributing to the rise in gamers is faster adoption of broadband in homes, which enabled more gamers to access online games.

Increase in Casual Gaming: Casual games, including puzzle, board and advanced casual games, comprised 20 percent of the online market in 2005 and should rise to nearly 40 percent in 2010.

Hard-Core Gamers: 29 percent of all gamers were classified as hardcore in 2005, up from 20 percent in 2004. The definition is based on more than 60 hours of online game play per month.

Social and Cultural Preferences

There are different preferences held by gamers in China, Niko Partners reports. In particular, gamers enjoy softer graphics and brighter colors of the games. Socializing and competing with friends while gaming are primary factors in the popularity of Internet cafés. When next-generation consoles legally launch in China in the next 1-2 years, their online functionality will allow gamers to continue these social and competitive aspects.

"Not only is it imperative for a foreign videogame company to understand the preferences and demands of Chinese gamers, they must also strive to develop games that fit the restrictive regulations of the Chinese government," continued Ms. Hanson. "The Chinese market is different than other global markets, and it will take perseverance as well as innovation in business models for foreign companies to succeed there."

The 2006 Chinese Videogame Market Study by Niko Partners is a comprehensive review and forecast of the 2005-2010 Online, PC, Console and Handheld games market. It was written based on more than 36,000 points of data collected by Niko Partners in 10 Chinese cities.

ABOUT NIKO PARTNERS
Niko Partners was founded in 2001 as an international business expansion consulting services firm for the multimedia software industry. Since 2003, we have conducted and published primary market research on the China digital entertainment market, both in the form of syndicated reports and as custom research studies. We also execute market-entry strategy projects using research and our extensive Niko Network of associates throughout China. The goal of the research and strategic advisory services is to help digital entertainment industry clients understand the market, strategically enter or expand market share, and continue to profitably grow within China. The company is based in Silicon Valley, Shanghai and Beijing.

For information on the study, please contact:

Lisa Cosmas Hanson
Managing Partner
Niko Partners, LLC
408-354-0888
lisa@nikopartners.com

or

Eric Gonzalez
Account Supervisor
Kohnke Communications on behalf of Niko Partners
415-777-4000
eric@kohnkecomm.com

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