Online gaming to bounce back after taking historic downturn

The online gaming industry saw a small drop in the second quarter this year, with a total revenue of 7.78 billion yuan ($ 1.14 billion), falling by 0.5 percent compared with the previous quarter, according to a report released by Analysys International Wednesday.

In the first quarter this year, the growth rate of the once booming online gaming industry has been reduced to the lowest point, 4.1 percent. In the second quarter, except a few game makers like Tencent Game, Changyou and Juren, most of the game makers in China reported a decrease in revenue.

"Well-designed games have contributed to the good performance of the three companies, despite the overall downturn of the industry. The market now is over supplied with similar products," Yu Yi, an analyst with Analysys, told the Global Times. "Players are bored with these knock-offs. And although demand in the market is still strong, players still feel reluctant to pay when there are so many free games."

This is the first contraction of the industry after years of fast expansion. Despite the slowdown, analysts say the industry is expected to grow at 30 percent this year.

"With GDP per capita and disposable income gradually increasing, entertainment will become a major pursuit for the Chinese people, and online game will serve as a major outlet for people," Ren Yuxin, president of Tencent Games, said during a speech Wednesday.

"Online gaming companies should focus on diversifying their products to meet the needs of different market segments. The industry should be user-oriented. This is key to the future of online gaming," Yu said.

According to a report from Analysys International, over 230 million gamers will be online by 2012, contributing to a 73 billion yuan ($ 10.78 billion) industry.

By Liang Fei

Source: Global Times