China opens wallet to homegrown online game

China's first domestically developed game, "Legend of Knights Online," hit 80,000 paid simultaneous players last week, a positive sign for the growing Chinese software industry in a Korean-dominated market.

The Beijing-based company behind the game, Kingsoft, said it needed several hundred Internet servers to meet demand. Kingsoft has updated 30 versions of the game during the two months of the market test period, something they say overseas companies could not have responded to as quickly, reported the People's Daily, a Chinese daily.

"Legend of Knights Online" is based on popular Chinese martial arts and Chinese-style love affairs. The "Xia," Chinese warriors, draw on local mythology rather than western-mythos monsters and soldiers.

Kingsoft CEO Lei Jun said the company had plans but no definite timeframe to promote the game internationally, and hoped to follow the success of China's international blockbuster film "Crouching Tiger, Hidden Dragon".

Piracy has hampered commercial sales of PC games, but as online games require payment to play, usually with a prepaid billing card in China, local consumers are opening their wallets.

The People's Daily estimated that there are over 70 Chinese enterprises in the online game industry. That industry is estimated to be worth around $242 million this year and is expected to more than double next year, according to analysts. An IDC report put the direct contribution of the online game industry to China's telecommunication sectors at $823 million in 2002.

According to the report in the People's Daily, a recent survey showed that 10 million consumers in China had subscribed to broadband access in order to play online games. The growing demand is fueling not just game software developers but Internet cafes, Internet service providers and hardware vendors.

The current market leader in China is Shanda. Its crown jewel is the South Korean multiplayer fantasy game, "Legend." Players pay a flat fee of $4.25 a month for access. Shanda is already profitable and is expected to earn between $60 million and $72 million in revenue in 2003.

Korea has 70 percent of the game software industry, with just 10 percent for games made in China, but the Chinese government hopes to change that soon. Two new online game projects have been listed in China's "863" High-Tech Program, a national science and technology development program, indicating official support.

CNETAsia staff reported from Singapore.