Online game firms' Q2 revenue growth falls to virtual halt
Updated: 2013-08-31 08:17
By Gao Yuan (China Daily)
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 quarter-on-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 second-biggest 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.
(China Daily 08/31/2013 page9)