Electronic Arts has created a formula that it thinks will help it reap big profits in the Chinese market, reports the Wall Street Journal ("Electronic Arts Aims for Chinese Gamers With Plans for Studio," Oct. 6, 2004, p. B1).
The main focus of the article is EA's announcement that it will open a large video game development studio in China to make games for the growing Chinese market. Why bother? The WSJ points out that EA's American titles -- especially those based on American pro sports -- do not necessarily translate to the Chinese youth market. Rather, gamers in China often tap into massive multiplayer online games based on China's lengthy dynastic history. Having local developers create new titles that appeal to local gamers is a better business model than simply translating EA's stable of games that were created for the American market, the article says.
Some issues that EA may have to overcome include a shortage of local talent and consumers that can live without fancy graphics in their games, the article notes. But EA believes it has licked another issue that has bedeviled foreign software companies: software piracy. Unlike the U.S. video games market, which is based on one-off sales of shrink-wrapped discs, the piracy-prone Chinese market is already shifting away from the sale of easily copied game discs in favor of Internet-based games. The 'net model that has emerged is based on cheap subscriptions to videogame services as well as prepaid game cards -- kind of like telephone cards -- that can be bought at convenience stores and net cafes.
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