Virtual Goods News

This week research firm Analysys International issued a report stating that the Chinese online gaming market was worth $906 million in Q2 2009, with growth expected in future quarters. Most Chinese gaming firms generate the majority of their revenue from sales of virtual items in freemium titles. Revenue may also generated through a pay-to-play model where users purchase time cards that allow them to play an online game for a certain period. 

The market value of Chinese online games in Q2 2009 represents a 39.5% year-over-year increase. Tencent Holdings controlled roughly 20% of that market and generated roughly $181.6 million in revenue. Shanda Games controlled another 20% and generated roughly $180.2 million in revenue. NetEase came in third with 12.7% of the market and generated about $114.3 million in revenue. 

NetEase's most successful game is the Chinese version of World of Warcraft, which encountered operational difficulties throughout Q2. NetEase's future status is uncertain, due to a ruling by the Chinese government on Saturday that would ban foreign investment in the Chinese games industry. It is believed that the term "foreign investment" may be interpreted very broadly by the government and used as an excuse to ban foreign titles like WoW from operating in China. 

Despite this, the Chinese online games industry is still expected to grow by 30% to 50% in 2009. Total annual revenues for Chinese gaming are expected by industry regulators to be in the range of $3.5 to $4 billion. It's worth noting that in 2008, Tencent Holdings on its own generated almost $1 billion in annual revenues.  

[via Reuters]