China's Antiaddiction Policy Isn't Likely To Roil Net Gamers
BEIJING -- Chinese regulators are toning down a policy aimed at reducing the time youths play online games -- a move that should help China's gaming companies have another year of stellar growth.
The General Administration of Press and Publication has been working with seven major Chinese gaming companies to test a so-called antiaddiction system intended to contain daily play within five consecutive hours. The system was rolled out in August on an experimental basis, after parents expressed concern that gaming was creating problems such as children skipping school. Under the system, if young players get back online after their five-hour daily limit has been reached, they won't be able to accumulate points to raise their rankings.
The antiaddiction system currently applies to all players, but the agency recently said it will respond to complaints by exempting people ages 18 and older -- the games' main customer base.
Kou Xiaowei, deputy head of the agency's Audiovisual-Electronic & Internet Publishing Department, says regulators will enforce the revised policy by requiring all players to register their real names, so authorities can see how old they are. "We're still working on the details of the real name registration," he says. "It's hard to say when it will be rolled out."
Richard Ji, an analyst in Hong Kong for Morgan Stanley, says the new approach "will offer parents some comfort without shaking the sector."
In 2005, China's online gaming sector generated revenue of $455 million, up 53% from a year earlier, according to the agency. BDA China Ltd., a private-sector telecommunications research firm, estimates industry revenue will rise 44% to $655 million this year and will reach $1.8 billion by 2010.
Mr. Ji estimates that even after the antiaddiction system fully takes effect for the industry, it should cut industry revenue only 3% to 4%. Only 14% of China's online game players are under 18 and only about 30% of these minors play multiplayer, role-playing games for more than three hours a day, he says.
Jim Sun, an analyst in Shanghai with Evolution Securities China, says the regulator's decision to revise its policy "clears the uncertainties" around Nasdaq Stock Market-listed Chinese Internet game operators.
Evolution Securities has maintained its buy ratings for NetEase.com and The9 Ltd., both listed on Nasdaq.
Mr. Sun says he likes NetEase because of its differentiated marketing strategy. The two most popular games -- Fantasy Westward Journey and Westward Journey II -- target players in big cities and second-tier cities, respectively.
Morgan Stanley's Mr. Ji, meanwhile, calls the company's pricing model "smart." He says its pay-per-hour model and relatively higher prices have effectively prevented players from playing too long, while still ensuring good returns for the company.
For 2005, NetEase reported online game revenue of $170.9 million, an increase of 119% from 2004. Online games accounted for 81% of total revenue. Even after NetEase American depositary shares fell 1.9% Friday, to $90, they are up 60% this year. In early trading yesterday, NetEase shares were up 80 cents, or 0.9%, at $90.80.
The9's strong growth has been driven almost entirely by having the China distribution rights for "World of Warcraft," a global hit developed by Blizzard Entertainment of the U.S. It accounted for almost all of The9's fourth-quarter sales of $26.3 million, compared with the previous year's figure of about $1 million.
Launched in China last June, "World of Warcraft" has attracted players at a "flying" pace, Mr. Sun says. He projects it will bring The9 revenue of $120 million this year and $150 million in 2007.
American depositary shares of The9 soared 7.3% Friday on a Goldman Sachs report speculating that it will get a third-party pact from Korean online game developer NCsoft Corp. This year, The9 has risen 73%. Early yesterday, The9 shares were up 90 cents, or 3.4%, at $27.42.
Not all online gaming companies are doing well. Shanda Interactive Entertainment, an early entrant in China, reported its first quarterly loss, of $66.8 million, for the period ended Dec. 31.
On Feb. 28, Evolution Securities downgraded Shanda to sell from hold and cut its target price to $10 from $16. On Friday, Shanda shares closed at $13.98 -- down 8.3% for the year. Evolution noted that both the number of concurrent users and Shanda's operating revenue fell in the fourth quarter. Its former hit "War of Legend," on the market since mid-2003, is losing players to newer games, and its new games haven't attracted as many players as the company expected, Mr. Sun says.
This isn't a problem just for Shanda. Even companies enjoying great success must develop deep pockets, as only 20% of online games prove profitable on average, Mr. Sun says. Industry executives estimate it costs several million yuan and a few years to develop a massive multiplayer game.
Shanda has sought to diversify with EZ Pod, a device that lets players access games, videos and other services through a personal computer using a television-style remote control. "I think the idea is absolutely right, but our expectations for a solid return [from EZ Pod] is no sooner than 2007 or 2008," Mr. Sun says.
With heated competition at home, some Chinese companies are seeking to expand overseas. Kingsoft Co.'s "Swordsman Online" had a peak concurrent user rate of 136,000 in Vietnam in February, making it the most popular online game in that country, says Li Xuemei, who is in charge of Kingsoft's overseas operations. Her company aims to get listed on Nasdaq.
Entering other markets "is not easy....Cultural differences are something that Chinese operators need to be aware of when tapping the overseas markets," says Morgan Stanley's Mr. Ji. "Plus, the domestic market is still full of opportunities, as online gaming players only account for 25% of China's Internet users."
防沉迷系统无碍网游公司业绩增长
中国监管机构在限制青少年上网游戏时间的政策上将有所松动，这应有助于中国网络游戏公司再次实现惊人的业绩增长。
新闻出版总署(General Administration of Press and Publication)与中国7家大型网络游戏公司对“防沉迷系统”进行测试，该系统旨在将游戏玩家每天的连续游戏时间限制在5小时以内。鉴于许多家长对网络游戏引发逃学等问题的担忧，有关部门推出了这套系统并于去年8月开始试运行。当玩家的游戏时间超过5小时后，他们将不能继续积分、升级。
防沉迷系统目前适用于所有玩家，不过新闻出版总署最近表示，将对要求对18岁以上游戏玩家──网络游戏的主要消费群──取消上述限制的呼吁作出回应。
新闻出版总署音像电子和网络出版管理司副司长寇晓伟表示，监管机构将要求所有玩家注册真实姓名，以强制执行修改后的规定，这样管理机构就可以明确知道玩家的真实年龄。他说，我们仍在研究实名制的一些细节，现在还很难说政策出台的具体时间。
摩根士丹利(Morgan Stanley)驻香港分析师Richard Ji表示，新政策“将使家长更安心，同时也不会对网络游戏行业造成太大影响。”
据新闻出版总署统计，中国网络游戏行业在2005年创造收入4.55亿美元，比上年增长了53%。电信业研究公司BDA China Ltd.预计，网络游戏业今年的收入将增长44%至6.55亿美元，到2010年收入将增至18亿美元。
Richard Ji预计，在防沉迷系统全面实行后，对整个行业收入的影响也只有3%至4%。因为中国只有14%的网络游戏玩家不满18岁，而在这些人中只有约30%的人每天会花3小时以上玩多人在线的角色扮演游戏。
英国益华证券(Evolution Securities China)驻上海分析师孙佳明(Jim Sun)说，监管机构修改政策为那些在那斯达克市场上市的中国网络游戏运营商吃了定心丸。
益华证券维持对网易公司(Netease.com Inc.)和第九城市(The9 Ltd.)的买进评级。这两家公司都在那斯达克上市。
孙佳明说，因为网易与众不同的市场策略，他比较青睐这家公司。网易公司最受欢迎的两款游戏──《梦幻西游》(Fantasy Westward Journey)和《大话西游2》(Westward Journey II)将目标玩家分别锁定在大城市和二类城市。
摩根士丹利的Richard Ji称网易公司的定价策略“很精明”。他表示，网易按小时计费，其费额也相对较高，这既有效控制了玩家的游戏时间，又保证了公司良好的回报。
网易2005年网络游戏收入为1.709亿美元，比2004年增长了119%。网络游戏收入占总收入的81%。虽然网易美国存托股票周五下跌1.9%至90美元，但今年迄今已上涨60%。在周一的早盘交易中，网易股票上涨0.8美元至90.8美元，涨幅0.9%。
第九城市的强劲增长几乎全部归功于其拥有《魔兽世界》(World of Warcraft)中国独家代理运营权。这款风靡全球的游戏由美国Blizzard Entertainment开发。第九城市2,630万美元的第四季度销售额几乎全部来自《魔兽世界》，而上年同期数据仅为100万美元左右。
孙佳明说，去年6月在中国正式发行的《魔兽世界》迅速吸引了玩家的注意。他预计这款游戏今年将为第九城市带来1.2亿美元的收入，2007年的收入将达1.5亿美元。
在高盛公司(Goldman Sachs)发表报告称，第九城市有可能得到韩国网络游戏开发商NCsoft Corp.的第三方协议后，其美国存托股票周五暴涨了7.3%，今年已累计上涨了73%。第九城市股票周一早盘上涨0.9美元至27.42美元，涨幅3.4%。
并非所有中国网络游戏公司业绩都如此出色。盛大互动娱乐有限公司(Shanda Interactive Entertainment Ltd.)在截至12月31日的季度中首次出现6,680万美元的亏损。
益华证券在2月28日将盛大的评级从持有降至卖出，目标价也从16美元降至10美元。盛大股票周五收于13.98美元──今年已下跌8.3%。益华证券指出，盛大的同时上线人数和营业收入第四季度均出现下滑。孙佳明说，2003年年中发行的《传奇世界》(War of Legend)曾火爆一时，不过玩家的注意力已转向新游戏，而盛大新游戏吸引的玩家数量未能达到公司预期。
这并不仅仅是盛大的问题。即便是获得巨大成功的公司也必须努力赚钱，因为平均只有20%的网络游戏可以盈利。行业管理人士预计，开发一款多人在线游戏需要耗资上百万元人民币、花费几年时间。
盛大希望通过易宝(EZ Pod)实现多样化发展。电脑安装易宝后，可以通过遥控器玩游戏、看电视录像以及享受其他服务。孙佳明说，“我认为这个想法当然很好，不过我们认为，易宝最早要等到2007或2008年才能为盛大带来可观的收入。”
面对国内激烈的市场竞争，一些中国公司将目光转向了海外。金山软件(Kingsoft Co.)海外业务主管李雪梅表示，《剑侠情缘网络版》(Swordsman Online)2月份在越南的同时上线人数达到了13.6万人，这款游戏也成为越南最受欢迎的产品。金山的目标是在那斯达克上市。
Richard Ji表示，进入海外市场“并非易事……文化差异是中国运营商进军海外市场时要注意的一点。另外，国内市场仍然充满机会，因为网络游戏玩家只占中国互联网用户的25%。”
