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Asian game companies run up scores

Image from Blade Online game from Changyou.com

TEXT OF STORY

Kai Ryssdal: Today an online game company from China, Changyou, it's called, went public. Did pretty well, too. The Asian gaming industry is still somehow managing to thrive despite the global recession. It's a business model that has some Western rivals envious, as Marketplace's Scott Tong reports.


SCOTT TONG: Twenty-three-year-old Xu Jia is an office worker by day. By night, she's a dancing queen, at least in the virtual world.

Every evening she and tens of millions of Chinese go online to play computer games like this one, "Audition." It's a digital disco, where Xu Jia's character boogies to the keystrokes. Her friends are wired too, so their characters join in. Now, if you're OK with a virtual dancer that looks generic, the game is free. But Xu Jia sports a low-cut, body-hugging, Cat Woman number. And to dress her character this way, Xu Jia has to pay the game company real-world money.

Xu JIA: I can buy my character clothes I wouldn't dare to wear in real life. Girls may not be able to dance in real life. Or they may not be beautiful. But all that can happen in online games.

Every month, Xu spends about $6 to be the hot girl.

JIA: If you want jewelry like a ring, you need to pay. Then, if you hook up with a guy dancer and get extra points, your ring gets prettier.

If all this strikes you as weird, remember the real people playing these online games are fueled by real forces like vanity and peer pressure.

Game developer James Jen:

JAMES Jen: All the things that drive purchases in the real world -- your ego, your appearance, or how you appear to other people -- you know, greed, envy, revenge, all of these are very strong motivators.

The sale of these virtual items has China's game sector thriving. Revenue grew 76 percent last year.

This fighting game was designed by Changyou.com, the company that's debuting on Nasdaq.
To reach a certain level, you need good weapons. Pay up. Other games let you own a digital pet. You just have to fork out real money to pay the vet. Jen says all this profit potential has the online game industry buzzing.

Jen: In Shanghai, it's the only place in the world where every single game company has offices here. Everyone is trying to understand this Chinese game phenomenon and how to monetize it.

It's not totally Chinese. Korean firms are in this space, too. But mobile game developer Frank Yu says the point is the Asian companies are years ahead of American firms in finding ways to monetize the Web.

Frank Yu: Look at Facebook. Facebook's pretty large, but they're still struggling to make a profit. It's almost like when Japanese car manufacturers came to the U.S. after the U.S. got complacent in terms of car design.

So how did China get a headstart in turning online fun into a moneymaking industry? Well, for one thing, the Internet here has been the go-to place for entertainment since day one. The alternatives just don't cut it.

SAM Fleming: You know what, traditional media -- television and movies -- I've been here long enough I can say it's pretty bad.

That's Sam Fleming of the Internet consulting firm CIC. He says China's one-child policy means millions of young people have no siblings. So when they play, it's online.

Fleming: The Internet is very, very social. I would say it's social and entertaining before it's about information.

As Web life has evolved in China, so have Web game makers. They've honed the art of luring folks in, addicting them, and then selling them stuff. Now, Frank Yu says, these Chinese firms want to take the model global, and go after American gamers. And in the process, they want to acquire U.S. game companies, who produce some of the snazziest products in the world.

Yu: There's a lot of very talented people in studios in Seattle and Austin. Chinese companies want to cherry pick for the best values. They can purchase, because of the recession, almost at a bargain.

And just maybe buying those American companies can help bridge a massive culture gap. But no one thinks it'll be easy. Just ask all the U.S. firms who came to China and botched it several times themselves before they got it right.

In Shanghai, I'm Scott Tong for Marketplace.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.
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Virtual products are definitely not just an Asian-market phenomenon.

IMVU, an American company whose users both create and purchase virtual goods, has recently recorded six consecutive quarters of record revenue, accelerating even as the economy
crashed. The site is among the largest 3D virtual communities in the world and attracts millions of visitors a month.

Unlike most traditional gaming sites, IMVU's virtual 3D chat rooms let users shop while they play and interact online. IMVU's users spend actual money for everything from a new wardrobe for
their digital doppelgängers and gifts for their avatar pals.

Especially during a down economy, online shopping feeds the urge for inexpensive entertainment and low-
cost shopping sprees for those that can no longer afford a trip to the mall. Better still, for tech-types looking to supplement their income during the recession, creating those items and selling them on IMVU is an easy way to make some extra cash.

The American element missing from this otherwise excellent piece of reporting, definitely deserves a follow up segment.

There ARE companies in the United States that have been active in this space for years. My own company, Three Rings, for example has been doing microtransaction-driven games for about 5 years. It is only recently that the larger Western game companies have taken notice but, some of us smaller players have been at this for awhile.

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