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The China Angle: 'Deja Vu'

The China Angle: 'Deja Vu'

June 18, 2007 | By Shang Koo

June 18, 2007 | By Shang Koo
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In Gamasutra's latest China Angle column, Pacific Epoch's Shang Koo looks at recent announcements of hardware manufacturer Changhong partnering with Microsoft to herald in what could be a Chinese console resurgence, and examines the crossover potential of several novels and games.

Rebirth Of Chinese Entertainment Console

The price of a Nintendo Wii console with four controllers has dropped below 2700 Yuan (US$260) in China. The consoles are sold with mod-chips already installed and include several pirated games. While game consoles have been popular with Chinese urban youth since the late 1980's, no foreign console maker has yet entered mainland China due to the piracy problems. Enter the internet.

Chinese online game company Shanda Entertainment launched an entertainment console in November 2005. The "EZ Station" (pictured) was little more than a PC that connects the TV to the Internet, allowing for online games, IPTV, and web surfing. The online content business model theoretically solved the content piracy problem. In reality, the poorly planned and expensive PC based console was limited by TV's low resolution and had no unique content.

Luckily for Shanda, its EZ Station strategy had little R&D costs, as it was based entirely on the PC platform. Shanda also spread much of its product development to TV and PC makers, allowing the hardware companies to release PCs and PC based set top boxes with the "EZ" label.

Mired in low margin manufacturing, Chinese TV makers including Changhong and Hisense jumped on the opportunity to launch "high tech" home entertainment systems based on Shanda's "EZ" Standard. In test markets, China's savvy and thrifty consumers were not impressed. Shanda never released the console to the mass market.

A year and a half after Shanda' "EZ" debacle, Changhong got its second chance. On Monday, Changhong announced that Microsoft will purchase a 94 million Yuan (US$12.3 million) stake in the company and will partner with Changhong to develop products linking PCs to TVs using the Internet.

Microsoft has been looking for partners and entry strategies for its Xbox consoles for several years. The Changhong investment might be the first step in Microsoft's intricate strategy, but will likely end as a cheap lesson on China's console market, at least in comparison to launching the Xbox in China.

Books To Games To Books To...

Upcoming new games for Summer 2007 include Netease' Westward Journey III, a major upgrade of the company blockbuster MMORPG Westward Journey II. The game is based on Chinese literary classic Journey to the West, which is also the basis for Netease' other blockbuster Fantasy Westward Journey, a cartoon style MMORPG that has recorded over 1.5 million peak concurrent users.

In preparation for the launch of Westward Journey III, Netease will partner with Beijing based publishing company Hua Wen Tian Xia (www.zhijibook.com) to release a novel based on the game around July. The novel will also be available on Chinese portal Tom Online's literature site Huan Jian Shu Meng (www.hjsm.net).

Of China's literary classics, only one is more widely read than Journey to the West - Romance of the Three Kingdoms. Despite the novel's popularity, MMORPGs based on the classic have seen little success. Chinese Internet giant Tencent hopes to buck the trend when it starts open beta testing for its in-house developed cartoon style 2D MMORPG QQ Sanguo on June 29.

Tencent has a monopoly on instant messaging in China, with over 150 million active users for its QQ IM platform. But despite its youthful user base, the company has never attracted and retained a significant MMORPG fan base for its two current MMORPGs QQ Fantasy and QQ Huaxia. QQ Sanguo is a major piece of Tencent's strategy to dominate online games, but has been bogged down in various stages of closed beta testing for over a year.

Aside from Popular Chinese novelist Hai Yan will host a press conference for his new book "Wu Zhe" ("The Dancer") in late June. Hai's romance novels have been successfully adapted into several TV series, and details of a TV series based on Wu Zhe is expected at the coming announcement.

Chinese online game company 9you and Beijing Zhong Sheng TV and Movie Culture Company reached a partnership to produce a 30-episode TV series based on the book in March. 9you operates the casual online dancing game Audition in China.

China Welcomes Newest Batch of Gamers

Millions of Chinese high school seniors celebrated the last day of China's annual college entrance exam early this month. The three day long exam is the only determining factor for college admission; there is no make-up exam. After three years of studying for the most important exam of their life, high school seniors can finally relax for the summer.

China's online game companies are unlikely to see an immediate boost, however, as outdoor summer activities often outweigh the immediate need to level-up. However, senioritis in China lasts all four years of college; expect a major boost in user numbers come Fall.

[Shang Koo is an editor at Shanghai-based Pacific Epoch, and oversees research and daily news content on China's new media industries, with a concentration in online games. Pacific Epoch itself provides investment and trade news and publishes a number of subscription products regarding the Chinese technology market. Readers wanting to contact him can e-mail [email protected].]


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