CYBER-GAME executives agree that the industry is a gold mine in China, but they have widely divergent views on how to best tap the mother lode.
Game revenues come from a variety of sources, including prepaid cards for game time, free-play, advertising-based models and the use of "virtual money," officials said at a game summit in Shanghai yesterday.
"Our business model will become diversified, and we will adopt an item-based charge system in the our new 'Datang,"' said William Ding, chairman of NetEase.com, referring to a role-playing game based on Tang Dynasty characters.
The item-based system allows free play, but there are charges for special weapons and other extras.
Ding, who insists on charging players for game time, said the country's No. 2 game firm will retain the current system in its mainstream "Journey to the West" game series.
Shanda Entertainment, the country's leading game firm, stopped charging users at the end of 2005. It posted a 448.82-million-yuan (US$59 million) profit in the first quarter, which was widely accepted as a successful example of the item-based model.
"The transformation has started. The subscription-based model will partially become item-based and advertising-based," said Edward Zobrist, the president of Vivendi Games.
Zhu Jun, the chief executive of The9 Limited, said the in-game-advertising model, which allows advertisers to put their logos on things like food and hotels in the game world, will generate US$1.8 billion in 2010 globally from little now.
"We can already sense the trend in China as the FMCG firms have shown interests on it," Zhu said, referring to fast-moving consumer goods companies.
The use of "virtual money," which players can obtain by spending real money, will grow in the future as the booming casual game sector expands, but it needs to be better regulated, according to Frank Ng, chief executive officer of Beijing Globallink, an online chess and poker game operator.
In 2006, China's online game revenue rose 74 percent to 6.54 billion yuan. The user base rose 18.5 percent to 31.12 million, according to joint research by IDC Corp and the General Administration of Press and Publications.
Homegrown and sports games were among those in the spotlight during the summit.
Revenue from domestically produced games has reached 4.24 billion yuan, 64.8 percent of the total, according to IDC.
Shanda, which acquired Chengdu Aurora Technology Development recently, said it intends to buy more competitive homegrown firms to expand its business line.