China is now the largest mobile telecommunications market in the world. According to data published by the China Ministry of Industry and Information Technology there are almost three times more mobile phone handset users than Internet users in China. The total amount of mobile phone users as of the end of 2008 is estimated at 600 million.
In January 2009, the Chinese Ministry of Industry and Information Technology issued 3G operation licenses to three mobile phone network operators, namely China Mobile (using TD-SCDMA technology), China Unicom (using CDMA2000 technology) and China Telecom (using WCDMA technology). Our management believes that mobile device games will play a key role for the telecommunication industry as value-added service to allow these three operators to continue generating profits in a much tougher competitive environment which is seeing a decrease in revenues generated by voice usage.
The majority of online game revenues in China come from massively multi-player online role-playing games (MMORPGs). An networked game with multiplayers can have a longer product life span than single-player causal games
The mobile gaming segment generated revenues of RMB 120 million ($17.5 million) in 2007. Our management believes that 2009 is likely to be a turning point for the mobile game market in terms of rapid expansion due to the upcoming launch of 3G services in China. Revenues from the online mobile game market in China are expected to have almost tripled to RMB 380 million ($55.65 million) in 2008 and to grow accordingly in 2009.
The Opportunity
The mobile phone gaming sector, as one of the key revenue earners in China's mobile value-added services market, provides online or down-loadable games that allow mobile device users to play against the game or to engage other users via their mobile handsets. These types of applications represent a lucrative and fast-growing sector within China’s rapidly evolving telecommunications industry.
With the growing demand for new content boosted by the 3G era in China, it is estimated that the Chinese mobile phone game market sales will reach RMB 4.2 billion in 2011 with a staggering annual growth rate of 45.54%. The substantial growth is driven by the unique Chinese marketplace where mobile phone users have a pent up demand for leisure entertainment, commercial application of the new 3G network, and quick development of mobile phone multiplayer games.
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