Chinese Games Market Evolves to a Mixed Revenue Model

The Asian markets are often considered a guidepost for how online games will evolve in the West. In particular, observers of the Asian market point to the success of the free to play business model. In the free to play model, users get free access to games and usually have to pay for virtual items or game enhancements via microtransactions. Traditional Western MMOs such as World of Warcraft use a subscription-based revenue model.

In a recent paper, researchers from Bournemouth University, Professor Philip Hardwick and Jessie Ren noted that online game companies are re-adopting a time-based revenue model (i.e. subscription or pay-by-minute, I'm assuming).

In correspondence, Mr. Ren said that the readoption of a time-based model indicates a quick reaction to the changing preferences of the market. Evidently, some people are getting tired of microtransactions. Before you all get too worried, Ren also said that he believed the item-based model would continue to be the dominant business model. Collective sigh of relief.

The following chart (excerpted from the paper) shows the evolution of the revenue model in the Chinese market:

	Revenue model changes	Revenue Model Change Procedures
Stage 1: (2004-early 2008) Revolutionary revenue model innovation	Time-based revenue model (TBRM) ↓ Item-based revenue model (IBRM)	Period 1: IBRM was Adopted by 3 less dominant companies without much notice. oGamania (Game:Jushang), Sept 01, 2004; oHappydigi (Game:Tantra), Dec 15, 2004; oCDC (Game:Yulgang) , May 13, 2005;
		Period 2: Top 1 company Shanda adopted IBRM for its 3 games in Nov 2005, and followed by most less dominant game companies (2006-2007)
		Period 3: The last 2 dominant companies who adopted IBRM oThe9, May 2007; oNetEase, Early 2008
Stage 2 (early 2008- Present) Evolutionary revenue model innovation	Mixed revenue models (MRM) ( Item-based + Time-based + possible other models)	Top 10 dominant companies who adopted MRM oPerfect World (April, 2008); oKingSoft (May 2008); oShanda (July 2008); oGiant (July 2008); Less dominant company who adopted DRM oIyoyo.com (July 2007)