Live from XMediaLab: Zhan Ye, President, GameVision

From the program: Zhan Ye is President, GameVision, and a Strategic Investment Consultant for Giant Interactive Group, China’s leading online game developers and operators in terms of revenues. Giant Interactive has over 1000 employees at their headquarters in Shanghai, and over 3000 Sales & Marketing personnel throughout China. A veteran game developer and entrepreneur, Zhan Ye is one of the first-generation game developers in China. Zhan began creating PC games in 1995 and his thinking and writings have inspired many of today's Chinese game developers. Zhan established China’s first game developers magazine and served as its editorial director. He is the founder and president of GameVision, a business consulting and outsourcing management firm. GameVision's clients include global game publishers and developers, Venture Capital firms, technology vendors, and media companies.

The online game market in China and abroad: emerging trends and opportunities

Zhan used to be a hard-core game developer. He's helping Giant Interactive Group, which is one of China’s biggest gaming companies -- they’re publicly trading on the NYSE.

First, some raw data about the online game market in China. China’s online game market generated revenue of $3.04 billion in 2008, up 52.2% over the previous year. US China and Korea are the world’s top three largest online game markets, 29%, 27%, and 21% respectively. This year, China is likely to surpass the US to become the world’s largest online game market.

A true international phenomenon
The success of China’s online game market is truly an international phenomenon. Many countries have played major roles in it. It was the Korean companies who first introduced online games to China. They introduced the MMORPG genre to the Chinese gamers as well as the subscription model. The subscription model is a major innovation and breakthrough. For the first time, we had a solution to the piracy problem. The domestic market became viable and profitable. That basically opened the door for a lot of game companies in China.

Korean-made online games, for a long period of time, dominated the Chinese online market. Innovations happened at the local front too, from within the Chinese market, by Chinese companies. Localized contents = better understanding of the local audience, baby step innovations in game design. Innovation in monetization happened with the so-called free-to-play model. The second revolution.

Giant and Shanda were the driving force. Giant’s first online game, ZT Online, was completely built upon this model, and achieved unimaginable success. One single game made them a public company on the New York Stock Exchange. It reached 2.1 million peak concurrent users in late 2008. Completely changed the market landscape again, and forced everyone to adapt to the new model.

Emerging trends and opportunities

• Chinese-made online games based on free-to-play model are still going strong. ChangYou IPO on Nasdaq in March.
• Flash-based multiplayer browser games have great potential to replace the traditional 2D/2.5D MMORPGs.
• Social gaming: 51.com with 120 million registered users
• Giant invested USD$51million in 51.com
• SNS sites become launching pad for online games
• Online games integrate SNS features to build a stronger and stickier user community.

Opportunities abroad
Many well-established Chinese companies are trying to pursue opportunities in other markets. Introduce Chinese-made online games to new markets. For example, Southeast Asian market (Kingsoft’s success in Vietnam) and US market (PerfectWorld is very aggressive on that).

Global production model: combine talents from the West and China to create world-class games for the global markets

Strengths of Western and Chinese companies
West: Strong in client-side technology (3D, Physics)
China: State-of-the-art server-side technology
West: Strong console game design experience (gameplay balancing, different genres)
China: Strong online game design experience (in-game economics, micro-transaction)
West: Highly experienced developers (a lot of people have over 15 years of experience)
China: Large talent pool of young game developers

By joining forces, we believe we can create some truly amazing games in the next 3-5 years. Giant and a few Chinese companies are working on that. You will see more investments being made and more partnerships in the near future.