The current market is estimated to be worth 4.43 billion yuan (around $645 million), and with no predicted slowdowns, one wonders what we'll be seeing this time next year (or even fourth quarter of '08). And with companies like Perfect World making a foray into Western markets, we'll just have to wait and see where China's industry is heading long-term.

China market: 2Q08 online gaming services valued at 4.43 billion yuan [Digitimes via GamesIndustry.biz]

Is it relevant for the qualification as theft whether the stolen fortune stays officially in game? Well, not to me. I see no reason for distinguishing between virtual and physical theft. The original owners of the stolen Habbo furniture obtained the items after they bought credits with real money, and do attach value to those items. As long as the original owner looses something of value (such as virtual items) due to the act of another individual who gains possession over the item, it should in my opinion be qualified as theft, no matter whether the locus delicti is in the physical or the virtual world.

I love this virtual law stuff, so many areas are so vague - I do wonder what sort of changes are going to be going on the books in the next decade or so.

Why not qualify the taking away of virtual objects as theft? [Terra Nova]

Shanghai, China - February 19, 2008 - Shanda Interactive Entertainment Limited (Nasdaq: SNDA), or Shanda, a leading interactive entertainment media company in China, announced today that it has entered into an agreement for exclusive license with NCsoft Corporation (KSE: 036570.KS), or NCsoft, Korea's leading online game developer and publisher, to operate Atrix in mainland China. Atrix is expected to begin commercial operation in China in early 2009.

Atrix, created and published by NCsoft, is an online casual war game featuring exciting combat and breath-taking scenery. The game began official operation in Korea in June 2007 and has been well received by players.

Atrix is the second game to come out of Shanda's strategic alliance with NCsoft, which was announced in November 2007. At that time, Shanda announced the exclusive license for the highly anticipated MMORPG AION: The Tower of Eternity, which is expected to begin close beta testing in China in the second half of 2008.

"We are pleased to partner with NCsoft to introduce Atrix to China. We expect long-term success from both Atrix and AION, based on our strong integrated platform and expertise as the leading online game operator in China," said Tianqiao Chen, Chairman and CEO of Shanda. "We will continue to work closely with NCsoft to introduce additional high quality and exciting new titles to China."

"We are excited to cooperate with Shanda in Atrix, which marks our entry into casual games in China," said Kim Taek Jin, NCsoft's CEO. "Our strategic partnership with Shanda is an important part of our plan to become a truly international online game company, and we believe it will benefit both companies well into the future."

"Maybe they hit the wrong button on the calculator," said a source close to Shanda regarding small and medium size gaming companies overshooting their values.

Ye Youzhong, CEO of Kaixin Investments, said that online game companies had recently overvalued themselves by over tenfold, making investments in them unprofitable when considering that the current price-to-earnings ratio of listed Chinese gaming companies is around 30. He said that if bought for a price of 12-15 times their real value, it would take a full three years—including the market listing process—before the investing company saw any profit. Moreover, he added, a lot of these companies had no chance to be listed in the first place.

I'm sure everything will balance out in the long run, and I can't imagine this will have a huge impact on the speed with which the industry in general is growing. Still, it's interesting to look at the inner workings of some of these big companies and what they're worrying about.

Online Game Industry Deals Paralyzed [EEO]

The gamer surnamed Zhang discovered six virtual items, worth more than RMB1,500, missing from his game account on November 22, 2006 and contacted Shanda regarding the disappearance. Shanda said that the company had taken the items in accordance with a police investigation regarding the sale of stolen virtual items. According to the report, Shanda failed to follow police instruction and return the items after the investigation ended. Having spent much time away from the game, Zhang said he plans to take Shanda back to court. This time he plans to sue for the RMB150,000 he claims to have spent in the game during the past five years. Zhang sued Shanda in the Hunan Qiyang People's Court.

Over $20,000 USD seems excessive, to say the least. Will it fly in a Chinese courtroom? I guess we'll find out.

Shanda Pays For Stealing Gamer's Toys [Pacific Epoch via PlayNoEvil]

Shanda (Nasdaq: SNDA) subsidiary Aurora Technology has frozen game accounts of male players who chose to play female in-game characters in its in-house developed MMORPG King of the World, reports 17173. Aurora stipulates that only female gamers can play female characters in the game, and it requires gamers who chose female characters to prove their biological sex with a webcam, according to the report.

PlayNoEvil's commentary points out that this doesn't seem like it will last long: a webcam gender verification system seems to be fraught with potential problems and headaches, and Aurora is trying to remove at least one aspect that attracts some people to online, fantasy-based games: the chance to be someone or something else.

Shanda's Aurora Bans Transsexuals [Pacific Epoch via PlayNoEvil]

Shanda's market cap today is $2B. It's not far-fetched to assume their purchase price might be close to $3B. The only companies with that kind of cash on hand are EA and Microsoft .... Netease (NTES) has a market cap of $2.06B. The9's (NCTY) market cap is $1.14B. Nexon is privately held, but with $235M in revenue two years ago, they won't be cheap either. The point is, there aren't many deals left among the virtual goods establishment.

The billion dollar question is: Where will these numbers be next year? Or in 2-3 years?

My gut says that in two years, North American companies will be "priced out" of acquiring a leadership position in the global virtual goods market.

To avoid this fate, big American publishers need internally developed/wholly owned virtual goods projects or partnerships with newer, smaller virtual goods companies ....

Of course, there are plenty of games that are ridiculously popular in Asia that will never be able to make the leap to Western markets, and there are plenty of poorly-designed, cheaply produced games that aren't going to provide years of revenue for their creators, but there is something to be said for 'keeping up with the times.' More traditional channels are never going to go by the wayside, but those free-to-play models around the margins are providing a challenge to the more standard fare.

US Publishers Can't Buy Asia's Virtual Goods Lead

When we first started, it really was very tough. Venture capitalists, investors — they didn't understand this business model. Our colleagues told us it was all about page views, but our product was an online game client [software that didn't involve loading Web pages, as other Internet products including search Web sites use to attract advertising revenue]. So when page views are king, they said, 'How can we give you money?'

It's an interesting and short interview - a somewhat enlightening look at the inner workings of a company who won't be going any time soon.

Shanda Co-Founder Finds Hard Choices Satisfying {WSJ]

DOA Online will be distributed within China, Hong Kong, and Macao by Shanda, an online entertainment company that specializes in massively multiplayer online and casual games. Development will be handled by the internal Tecmo team LieVo Studio. Virtual panties will be exposed by Kasumi, Tina, Helena, Lei Fang, Christie, Hitomi and Ayane. All involved are thrilled to take part in this profitable venture.

While gameplay details are totally nonexistent, I predict this will turn into a casual, yet (e)xtremely sexy, series of beach-themed games in which great gusts of wind wreak havoc with inappropriately sized and ill-thought outfits.

Shanda Interactive Entertainment, one of Mainland China's biggest players in the online gaming market, has just entered into agreements to license and distribute their games in Vietnam, Hong Kong, and Macao. In Vietnam, VTC Intecom has gotten the rights to Crazy Kart and Woool (that would be World of Legend - where does the extra 'o' come from? Your guess is as good as mine) for a period of 3 years; Hong Kong-based CSOFT is getting the exclusive rights to Magical Land and Crazy Kart in Hong Kong and Macao.

With Chinese-developed games gaining a serious foothold in the rest of Asia, it's probably only a matter of time before they start looking outside of Asia for their new markets. With the stealthy introduction of Korean games in Western market, could Shanda or Beijing Perfect World games be far behind? Maggie Greene

Shanda Licenses Woool, Magical Land and Crazy Kart to Overseas Markets

Shanda Interactive Entertainment - one of Mainland China's biggest game operators - has run into some trouble with the South Korean-developed Legend of Mir 2. This is the same game that spawned a rather bitter legal battle between the game's developers and Shanda, who had the distribution rights for China.

PlayNoEvil has an interesting discussion on Gamasutra's May 15th The China Angle, which talks about Shanda's current problems with the games and how much money they're shelling out in an attempt to fix it. PlayNoEvil focuses on what this situation can tell us about game security more broadly: 'games that have weak security designs can ensure continued license payments,' 'changes to business models can seriously affect security,' and 'money wins.' Time will tell how well Shanda manages to resolve these issues. I'm pretty sure there are two Korean companies who are probably saying 'what goes around, comes around' right about now. Maggie Greene

A Security Story - Shanda's Legend of Mir 2 Misadventures [PlayNoEvil]

It's not just players and net cafes who are planning their strategy to getting around the anti-addiction controls being put in place on July 15th. Now Shanda, operator of several big Mainland Chinese MMOs, is getting in on the act by providing an in-game workaround that allows players to circumvent the anti-addiction controls they are testing out in their MMORPG Magical Land. Over at billsdue, there's a nice translation of an explanation of the workaround. It's hard to argue with the original post's assessment:

I don't think anyone should be surprised that game companies are trying to find ways around the anti-addiction system, but I also don't think anyone should be surprised if the government starts taking action to make this system have some teeth. There are way too many front page stories in the Chinese media about the system for the government to just let it be circumvented so obviously.

Maggie Greene

Shanda Selling Workaround To The Online Game Anti-addiction System ( ) [billsdue]