Asian Video-Gamers Taking Over Cyber-World?

The videogame market in China is growing faster than games can be released. The number of online gamers is expected to reach 230 million over the next few years, more than three times the current estimated level of 69 million gamers, according to the China Internet Network Information Center. Revenue from the Chinese game market rose 39% last year to 25 billion RMB or $3.7 billion. While investors and businesses are eager to get in on the heady market growth, significant hurdles stand in their way.

Businesses entering the ripe Chinese market are discovering that rampant piracy and government bureaucracy cut into their potential profits. Companies like Shanda Interactive Entertainment Ltd. lose over 1.5 billion in annual profitability to hackers and pirates. Expenses related to piracy are increasing with new users, as companies are forced to fight off private servers running their games with the help of advanced tracking technologies and weekly security sweeps. Beijing-based start-up Kylin Games said it spends almost 10% of its revenues on secure online services to keep hackers from lifting its game code.

Because of its enormous forecasted growth, the market has received increased attention from authorities in China. New, protectionist regulations from Beijing are shielding the Chinese market from foreign investment in domestic online games, as well as gangster and mafia-themed games. Its no wonder when Shanda Games Ltd, a market of multiplayer online games with roughly nine million users, raised more than $1 billion in an initial public offering on the Nasdaq Stock Market last year.

While this gaming obsession offers exciting market opportunities, one has to wonder about the social consequences of this mass video-game movement. On the positive side, video games introduce children to computer and information technology, which is increasingly important in this day and age. Gaming can provide practice in the use of fine motor and spatial skills, and even has therapeutic applications with patients. Detrimental effects from over-dependence on gaming are that they foster social isolation, encourage aggressive behavior, retard independent thought or creativity, and can even create confusion between reality and fantasy. Several studies even claim that young men randomly assigned to play Grand Theft Auto III exhibited higher blood pressure, more permissive attitudes toward using alcohol and marijuana, and more uncooperative behavior.

Although this market may be booming from a financial standpoint, companies should be held accountable for the content they are releasing and an appropriate ratings system must be enforced to monitor the violent and potential harmful effects of these games.