China’s Ministry of Culture tightens grip on MMO industry

It’s tough for a Western game developer, working with partners in the region, to maintain creative control of its product in China. And it is getting tougher every day. The Chinese government announced late Wednesday night that it will tighten regulations on online games even more.

China’s Ministry of Culture said in a circular that it would require game operators to re-examine the content of the games they offer to make sure it doesn’t contain and “obscene or violent content” or anything that might be considered “lowbrow.” But what it really means is that the Ministry of Culture wants to stamp out any themes that go against the government’s socialist views. The circular also said that operators must limit the number of virtual marriages and player-versus-player combat sessions in these games.’

The circular says as much plainly enough: they want game operators to “enhance socialist values” and hire “specialist” to monitor content. No doubt these “experts” will be provided or recommended by the Ministry of Culture.

The changes will affect a lot of operators including Shanda Games, NetEase, The9, CDC Games, Tencent Holdings etc. Most of these companies will simply comply with these requests. But do game developers in North America, Europe and other parts of the world want the Chinese government to say what it can and can’t have in its games?

On the other hand, Blizzard learned the hard way that you can’t win against the Chinese government when it tried to switch operators (from The9 to NetEase). Now World of Warcraft is no longer running in that region.

As harsh as this truth is, it should be troubling to any MMO creator who wants to maintain their original vision and have it running in China.
Operators in the region have no choice. NetEase’s Chief Executive Officer William Ding said in an earnings call on Thursday, that, while he had not seen the full details of the circular, his company is willing to comply..

China’s online game industry is incredibly lucrative and growing; by the end of 2009 it should record growth between 30 - 50 percent, with estimated sales revenue of 24 - 27 billion yuan (that’s $3.5 - $4 billion USD). The total number of online game players is estimated to be more than 50 million.

Chinese government cracks down on World of Warcraft

Activision Blizzard and top Chinese online gaming company NetEase continue to have problems in China as government regulators put the squeeze on the duo related to World of Warcraft. NetEase announced this week that the General Administration of Press and Publication (GAPP) has returned its application to operate the latest version of Activision World of Warcraft in the region due to “gross violations” of regulations.

The Chinese government run agency emphasized the point by posting a statement on its Web site demanding that NetEase suspend charging users to play the game, and started rejecting new account registrations. This news certainly puts into question World of Warcraft’s future in the lucrative region and also didn’t help both companies’ stock prices, which took slight hits.

Analysts familiar with the region believe that this is tantamount to a turf war, after Blizzard walked away from a contract with another Chinese online games provider The9, which the Chinse government apparently favors. While that is certainly a factor, the Chinese government has been cracking down on game content that it sees as undesirable. It especially enjoys cracking down on companies that have foreign investment; in Oct. the government banned many forms of foreign investment into the country’s online games industry.

And the news certainly isn’t hurting NetEase’s competitors; Shanda Games saw a bump of 3.1 percent, while The9 closed at 4.3 percent yesterday on the news. But it does hurt Western companies like Activision and EA, who want to crack the market and take some of the profits being generated there; the Chinese gaming market is projected to grow by 30 - 50 percent this year to $4 billion.

China Game Developers Conference 2009 speakers

The organizers of the China Game Developers Conference (CGDC) 2009 and Howell International Trade Fair Ltd. announced that 10 more speakers have been lined up for its event. These speakers will include representatives from such companies as Blizzard Entertainment, EA, Ubisoft, Microsoft, THQ, NCSOFT, NEXON, Giant Network, Shanda Games, Tencent, The9, Netease, Perfect World, 9 You and Kingsoft. All CGDC speakers will be announced over the course of the next few weeks.  But you probably want more specifics, right? Here’s a partial list of speakers:

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Taewon Yun, Platform Operation Director, Blizzard Software Development (Shanghai) Company Ltd. - Case study: Balancing game data using tools

David Kristofer Fried, Senior Game Designer, Ubisoft Shanghai - Lecture: Cultural Philosophies of Game Design

Lei Zhang, Senior Audio Expert, Ubisoft Shanghai - Lecture: Mixing in the Game Audio

Ben Mowery, Director, Scaleform - Lecture: Designing Game User Interfaces with Flash Workflow

Yuxin Ren, Senior Executive Vice President, Tencent Corporate - Lecture and Panel: Innovation and development on “ComeStayPay mode”

Quan Chen, NVIDIA PhysX Tech Support Engineer - Lecture: Effectively using a physics engine application in online games

Jerry Mao, Vice President, Object software - Lecture: Effectively using a physics engine application in online games

Yongquan Li, R&D Technical Director - QWD1 Lecture: Effectively using physics engine application in online games

Xinchun Gu, Senior Development Manager, The9 Co., Ltd. - Lecture: Applications of P2P technology for online games

Shiying Wang, Director and Producer, The9 Co. Ltd - Lecture: Social Psychology in Online Games

Conference registration has started, with a 10 percent early bird discount for those who register before June 10, 2009. For more information on conference passes check out www.chinagdc.com.cn.

NetEase Scores WOW Contract

Blizzard Entertainment announced this morning a World of Warcraft licensing deal in Mainland China with NetEase. NetEase and Blizzard have worked to bring other games to the region - last summer the companies announced a deal to bring Warcraft III, StarCraft II, and its Battle.net gaming platform.

Today’s freshly announced deal is a three year contract that will see NetEase handle the game in the region including server support, customer support and applying game updates and content as directed by Blizzard.

Blizzard said that the deal will ensure a more stable product for the region - just like other regions around the world.