Will Internet Cafes and Online Gaming Become Less Co-Depende

[Akasha]

I personally found this article interesting. Because of my time zone I have a lot, if not majority, of friends that come from Korea, Hong Kong, China, Malaysia etc.. you get the point heh. I played in two Asian guilds in EQ and even began learning a little Korean and a little Japanese. One thing that always amazed me was that most of the guild played at Internet Cafe's... something that is extremely rare in Australia, so rare that I nearly ran up the back of a car the other day because I couldn't believe I was actually passing an Internet Cafe in the suburbs. I assumed them only to be in the main city area's.

What I was envious of however is that while in these cafe's, the guild members used to get computers next to each other... so not only were they playing side by side in game, but were able to talk to each other in real life aswell. Apparently it made the raid leaders jobs easier when you can throw your coke can at who ever stuffed up :lol:

[size=18px]Will Internet Cafes and Online Gaming Become Less Co-Dependent?[/size]

Anyone who was short or long China's Sohu Inc. (SOHU) on Friday had a hell of a day. Sohu's stock was suspended, the company announced that China Mobile has suspended Sohu�and Mtone Wireless (Shanghai), Shanghai Sifang Inc., and V5009.com (Guangzhou Rui Shi Communications)�from offering MMS on the China Mobile platform for one year from September 1, 2004. When Sohu's stock resumed trading, it plunged 18% before recovering slightly, to close the day down just over 10%. Sohu was on the receiving end of 'punitive measures' doled out by China Mobile for sending unsolicited WAP messages without prior approval from China Mobile. Smaller players also felt China Mobile's wrath.

Sohu's suspension is just one in a series of regulator-related events that are making investors nervous about China's mobile and fixed internet players. Internet cafe owners claim that they are beginning to feel the weight of new regulations, which will have an impact on China's booming online gaming industry�Pacific Epoch estimates that of the you.S. $2 billion-plus that online gaming will generate in China this year, about $1.2 billion will flow through internet cafe coffers. For the likes of game developers Shanda (SNDA) and NetEase (NTES), any drop in internet cafe business is bad news.

Amazingly, it might not be regulations that really hurt the internet cafes, but the fact that China is growing so fast and its citizens are becoming wealthier. One internet cafe owner explained that SARS prompted a large number of newly wealthy Chinese to go out and buy computers. After sitting at home for anything up to a month last year, all these new computer owners hooked up their computers to broadband. Cafe owners claim that a number of their former customers don't play games at the internet cafes anymore because they can now do so in the comfort of their own homes.

China's 300,000-plus internet cafes are still an online gamer's home away from home. From 8 a.m. until midnight, Shanghai's internet cafes fill with youth (mostly male) who come to play, plot, shoot, and conquer adversaries in the virtual worlds of Legend, Mu, Fantasy Westward Journey, and others. In addition to the two Yuan per hour that players pay for internet/computer time, they also pay between 30 Yuan and 45 Yuan per month to access the servers that operate these massively multiplayer online role-playing games. Quick calls to the major cafe chains revealed that people are doing other things at internet cafes, but mostly they are there to play online games.

In many countries, online gamers would be shrugged off as a cultish�if very well-off�little community. In China, as with most things, the sheer numbers make online gaming interesting. Internet cafes are the gatekeepers that have made the fortunes of NetEase, Shanda, The9, and others that followed. CNNIC statistics at the end of year 2003 showed that 18.1% of China's (then) 79.5 million internet users were accessing the internet at internet cafes.

In June 2003, the Ministry of Culture awarded national internet cafe licenses to 10 companies. The Ministry also issued provincial licenses aimed at pushing internet cafe owners to join chains, with the aim of reducing the number of internet cafes. Five of the national license-holders are now actively expanding their franchises, but a lot of the real action is taking place at the provincial level. Independent internet cafe operators are jumping to join the bigger chains to avoid the bureaucratic hurdles that single cafe operators face. Still, the lot of the internet cafe operator is shaky. The recent 'crackdown' aimed at keeping minors out of internet cafes appears to be simply the enforcement of rules that were already in place. The RMB 5,000-15,000 fines seem to be incentive enough to stop most cafe operators from allowing minors to play.

China's internet cafes look very much like the online gaming industry's unsung hero, raking in cash for game operators but not profits for themselves. However, game operators' marketing investments have a huge impact on individual cafes. Internet cafe operators around Shanghai look at the top games today, and ask when the line-up will change. Shanda's Legend and World of Legend, The9's Mu, NetEase's Fantasy Westward Journey, and Optisp's Legend of Mir III have dominated the top slots for the past year or so. Cafe operators claim that their customers are bored, and that the longevity of top games means that it is harder to attract new players as more and more cracks become available, making it tough for new players to survive in the games' virtual worlds. The answer, according to online game operators and internet cafe operators alike, is new games.

All eyes will be on Shanghai's The9 this November, when the long awaited World of Warcraft (WoW) goes into testing. Although never officially announced, The9 is rumored to have paid up to you.S. $12 million for the right to operate WoW in China. The online gaming rumor mill also puts the revenue share for the game at 25%�meaning that for every dollar of revenue that The9 brings in from operating WoW, 25 cents will fly out to the game's developer, Blizzard Entertainment, a division of Vivendi Universal Games.

Internet cafe operators don't seem to be excited about WoW�however, they are excited about the marketing budget associated with a national game launch. Launching an online game China-wide costs an estimated you.S. $3 million at the low-end. However, with a potential blockbuster game like WoW the marketing budget could hit double digits just for the launch. The marketing dollars mean a buzz around the game�and people filling seats in internet cafes.

Article Source : Always On