- Each sector in the online gaming value chain does not develop evenly.
- The user’s privacy may be offended.
- There might be hostile attack to the operators.
- There might be harm to the youth, who are used to be addicted in the virtual world. That might affect their physical and psychological health.
- The increasing market size. The number of the web dwellers keeps a high growth rate in China, there’s large space and potential for the business development.
- The worldwide network is looking for a better profitable pattern. Since the Chinese network market tends to mature, the investors are searching for the new economic point. Therefore, besides the E-mail boxes and the web advertisements, the online gaming has become a new focus.
- Furthermore, the prevalence of the ADSL and the popularization of the games based on mobile telecommunication will be a push to the rapid development of the industry.
- The increasing number of the mobile phone users provides a prosperous foreground to the online game operators.
- The biggest challenge in making the business work is maintaining an active online community, since the industry is highly dependent on high traffic volume because of the low prices.
- The business requires constant research. It has to keep up with the latest trends.
- It couldn’t ignore the current events, either.
Porter’s Five Forces Analysis:
- Many world-class manufacturer, such as Microsoft and Sony, have rolled out online services, they are increasing their investment in the business gradually.
- The support from the China’s telecom in the value chain. The telecom companies in different regions of China cooperated with the online gaming manufacturer, the agencies and the web stations, which established a stable bridge between the games and the players.
- The customers’ cultural background: the players can use the anonymity of the virtual world to express their individuality in ways they cannot in their relatively formal, rigid societies. That contributes to the addiction of many players.
- The business target market is the young singles, who choose this way for entertaining and communicating, as most of them are still living with parents and aren’t free to date in the Western sense.
- The low-price services. Some of the games are free to play.
- The Chinese government drove the household prevalence of the broadband. The increase of Web speed helps the online gaming business grow up.
- The establishment of an online service does not cost much. So it does not need large amount of capital at the beginning.
- The development of the e-commerce helps the distribution.
- How could it be changed for Chinese market?
After making the SWOT and Porter’s analysis of the online gaming business in China, I would like to say that such a business would be successful and there are a few suggestions for the business adaptation to the Chinese market.
First of all, the investor should try to establish a more effective industrial value chain with good cooperation and coordination between the sectors. For example, some game operators have revenue sharing agreements with telecom operators in which they receive a percentage of the revenues from traffic generated by their online gamers. Good cooperation could create a win-win situation.
While the traditional games have suffered from the serious piracy problem in China, the online games would avoid such problems to some extent, as most of the online games are based on the massive online communities.
Besides, most of the Chinese online gamers are used to the free access. How much profit could online games bring if they are not free to the users? That’s a main problem which should be considered carefully. Therefore, the operators should consider the situation and strengthen the extra functions or services to the payers.
There are other issues which should also be taken into account, such as the product design, the users’ classification, and so on.