February 19, 2008 / 11:25 AM / in 10 years

Electronic Arts sees China among top 3 Asia markets

<p>People use computers in an Internet cafe in Xichang, southwest China's Sichuan province November 24, 2007. REUTERS/ Nir Elias</p>

SHANGHAI (Reuters) - U.S. video game publisher Electronic Arts Inc ERTS.O expects China to join Japan and South Korea as one of its three largest markets by revenue in Asia-Pacific in two to three years.

EA, which has more than 200 employees developing online games in China and purchased a stake last year in The9 Ltd (NCTY.O), also expects China to become one of its three fastest-growing Asian markets in a year or two, Asia General Manager Jon Niermann said in an interview on Tuesday.

China, where online games are dominant, is still a relatively small market for EA, which has traditionally marketed video games for consoles such as Microsoft Corp’s (MSFT.O) Xbox and Sony Corp’s (6758.T) PlayStation.

“The focus really is about how do we capture online game market share, and mobile game market share, and the biggest focus for me right now is online games in China and Korea,” said Niermann, a former Disney executive.

“By percent growth year-on-year, China is about mid of where our countries are across Asia, and we expect (China) to go to the top three positions certainly in the next year or two,” he added.

Online games, which allow players to compete simultaneously over the Internet, are particularly popular in China as they are less expensive than consoles.

PIRACY CONCERNS

In North America, where individual computer and console gaming dominates, the crossover success of “World of Warcraft”, a multiplayer online game, has given U.S. companies a reason to take online games seriously.

EA and China-based rival Shanda Interactive Entertainment Ltd SNDA.O also prefer the online gaming format in China over console-based games, as online games are difficult to copy illegally and piracy is a major concern in the country.

France’s Ubisoft Entertainment SA (UBIP.PA), which creates, publishes and distributes console games, has also said it was looking for a partner in China to help it enter the booming online gaming market.

EA’s blockbuster franchises include “Madden NFL”, “The Sims”, “FIFA Soccer” and “Need for Speed”.

China’s fast-growing game market is expected to reach more than 32 billion yuan ($4.47 billion) by 2011, according to Beijing-based research firm Analysys International.

Niermann expects Asia-Pacific -- which made up 5 percent of EA’s net revenue of $3.1 billion in its 2007 fiscal year compared with 6 percent the previous year -- to grow as a proportion of total revenue, but declined to give a specific forecast. EA Chief Executive John Riccitiello said last week that the company forecast revenue to exceed $6 billion by fiscal 2011, with digital revenue to be at least $900 million.

“If you look at the FY11 number, Asia certainly needs to be a strong part of that $6 billion within the company,” Niermann said.

($1=7.152 Yuan)

Reporting by Sophie Taylor; Editing by Edmund Klamann

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