The China market offers the best opportunity for Taiwanese online gaming companies to expand as the local market becomes saturated, a government-funded think tank said yesterday.
"With the growth rate of the nation's game software market declining, companies have to switch their business focus to the booming Chinese market for survival," said Claire Hsu (許瓊宇), a senior analyst at the Market Intelligence Center (MIC, 市場情報中心) of the Institute for Information Industry.
Sales in Taiwan's online gaming industry was NT$1.71 billion in 2001, about 250 percent growth from 2000's NT$480 million. The MIC estimated that the growth rate will significantly decline to about 17 percent in 2004.
On the contrary, the average annual growth rate of China's online gaming market is expected to be around 112 percent between 2001 and 2003. "When it comes to 2004, I believe the size of China's [online gaming] market will surpass Taiwan's," Hsu said.
An industry professional said the Chinese market brings them "huge" opportunities. "Currently only 35 million Chinese, or less than one percent of the population, use the Internet, and there is a lot of room for growth in the near future," said Eugene Chang (張育嘉), vice president at Waei International Digital Entertainment Co (華義).
He said that, according to his experience, about 25 to 30 percent of these Internet users will convert to online games. "Therefore, the number of potential customers in China is astonishing," Chang added.
Waei International, famous for the popularity of its online game "Stone Age" (石器時代), entered the China market in 2000 and currently has about 5 million members in China.
In 2001 about 60 percent of Waei's sales came from Taiwanese markets and the remaining 40 percent mainly from China.
"But this year I expect most of our sales will come from China," he added.
Meanwhile, government analyst Hsu said companies have to speed up their moves toward China.
"Until last year Taiwanese firms still held most, or up to 80 percent, of China's online gaming market, but this year that may drop to 50 percent," Hsu said.
Many Korean companies and several Chinese firms are starting to get a bigger chunk of the market.
Hsu said Taiwanese firms will still have a strong competitive edge in China for the next three years.
"We share the same language with China, and therefore our Chinese-language games can be sold to China immediately without any modifications," Hsu said.
In addition, Chinese gaming software companies still lag behind Taiwanese firms in terms of graphic design, game-plot development and sound effects.
"However, these competitors may catch up very quickly ? Taiwanese firms have to move faster," she added.
Other than Waei, Taiwanese firms like Third Wave Publishing Co (第三波), Soft-World Corp (智冠) and Chinasoft Co (華彩) have already set up branch offices and retail networks in China. Gamania Digital Entertainment Co (遊戲橘子) is also scheduled to start selling online games in China some time this year.
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