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Videogame Market In China Explodes Despite Piracy

MARKET FORECASTED TO BECOME $2.0 BILLION BY 2009

For Immediate Release

Niko Partners 2005 Report

San Francisco, CA - March 21, 2005. Niko Partners, a leading market research firm, today announced that the videogame market in China is experiencing rapid growth, particularly in the online games segment. According to a new report released by the company, online games revenue is forecast to reach $2.0 billion by 2009. Additionally, China had 28.8 million gamers in 2004 and Niko Partners projects that number to grow to 55.5 million gamers by 2009.

"Online games are emerging as the preferred platform for gamers and publishers," said Lisa Cosmas Hanson, managing partner, Niko Partners. "The online game platform is an excellent solution for the Chinese market, meeting the consumer demands for social interaction, entertainment, and intellectual stimulation. It also meets the needs of publishers because revenue is earned from fees gamers pay to play games, rather than from purchases of game software units that have long been the victim of piracy in China."

Niko Partners projects that the online games market will rise at a compound annual growth rate of 33.8% from $467.8 million in 2004, to $2.0 billion in 2009.

Currently, all online games are played on a PC, and half of all gameplay takes place in the 350,000 Internet cafes across China. Internet cafes provide online access at a low price point while also offering a social venue that drives much of the demand for games in the Chinese market, Niko Partners reports. The firm also reported that the next generation of consoles will offer increased online functionality which will augment the existing online infrastructure. Niko Partners predicts that by 2009, 91% of console games will be online games.

Getting into the Chinese market as a foreign videogame company can be a challenge. The government in China welcomes international investment in the growth of a domestic games market, yet regulations governing the videogame industry are difficult to navigate. "Foreign videogame companies need to adapt their business models to make them appropriate for the demand of the Chinese market and the restrictions on content by the Chinese government," says Ms. Hanson.

With China projected to have 55.5 million gamers by 2009, it is important for videogame companies to prioritize understanding in order to capitalize on this growing market. The 2005 China PC, Console and Online Video Games Market Study by Niko Partners is a comprehensive review and forecast of the 2004-2009 total games market. Niko conducted 366 interviews in ten Chinese cities with Internet cafe managers, retailers, developers, publishers, online game operators, and videogame industry executives. The report, published today, is 75 pages in length and contains both quantitative and qualitative analysis on the Chinese videogame market.

For information on the study, as well as pricing, please contact:

Lisa Cosmas Hanson

Managing Partner

Niko Partners, LLC

(415) 269-7303

lisa@nikopartners.com

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