Page 2 of 2 Rising fortunes in China's
electronic world By Daniel Allen
won't reveal how much Coca-Cola
paid to have its logo plastered all over its
online basketball game, but admits online
advertising now brings in several million yuan a
month. T2CN expects income from in-game
advertising to rise 20% a month until the end of
this year.
In another market development,
officials from Shanghai-based Asian gamevertising
firm GameGlance announced in January that
the
company had received a $2 million investment from
a China-based technology consortium. GameGlance is
regarded as the first in-game advertising provider
to enter the Asia market, back in July 2005. The
company primarily serves advertisers looking to
bring titles to the Asian market, with a strong
focus on China.
Not wanting to be left
behind, Shanda has its own gamevertising plans.
Shanda president Tang Jun claims the company is
developing an in-game advertising platform, and
according to some analysts, Shanda will soon form
a joint venture with Shenzhen-based 4A Advertising
Agency to further its in-game advertising
business.
Online ad boom Gamevertising aside, the migration of
advertising from print to online is an
accelerating trend in China's expanding ad market.
"Brands have decided to take the Internet
a lot more seriously," said Chris Reitermann,
managing director in China for digital and direct
marketing shop OgilvyOne, which has about 100
people involved in online marketing on the Chinese
mainland.
Online ad spending in China has
been growing by more than 75% annually for the
past three years, and is expected to top $1
billion this year. While 'Net advertising
represents just 2.3% of the total ad market in
China at present, the balance is changing fast.
"New media's advertising revenues are
starting to catch up, and will surpass those from
traditional media within 10 years," commented Cui
Baoguo, director of the Center for Media
Management Studies at Beijing's Tsinghua
University. "There's huge potential for growth."
The shift is giving a major boost to some
Chinese Internet players. Advertising revenues at
leading 'Net portals grew by 25% or more last
year. Sohu.com Inc, China's third-biggest portal,
now gets about two-thirds of its revenues from
advertising, double the proportion of just three
years ago. To attract more ads, Sohu.com has
signed marketing deals connected to next year's
Beijing Olympics. "Companies want to segment and
target their marketing," commented Sohu.com
chairman Charles Zhang.
Vagaries of
virtual life Many of us might not realize
it, but the virtual worlds that we usually dismiss
as frivolous games are becoming regular meeting
places for a growing number of people, boasting
complex and thriving financial systems that are
having an increasing impact on the real world.
In the West, Second Life (SL) is an
increasingly popular 'Net-based virtual world by
software company Linden Lab. "Residents" interact
with one another through motional avatars,
providing an "advanced level of social networking
combined with general aspects of a metaverse". SL
statistics claim that more than 144,000 customers
spent money "in-world" last December.
Even
though Second Life's first "millionaire", Anshe
Chung, is from China, and the Western virtual
world is attracting the attention of a growing
number of Chinese, SL has yet to arrive officially
on the mainland. However, China now has its very
own home-grown rival to SL in the form of HiPiHi.
HiPiHi, founded in Beijing in October
2005, is a privately held company funded by
Guangcai Investment Group. It is unique in China,
and the second company worldwide after Second Life
offering a truly interactive and open-ended
experience to online users. The Second Life-like
three-dimensional virtual world has just started a
period of beta testing, during which time 100,000
invitees will become the first residents of the
HiPiHi world.
Hui Xu, founder and chief
executive officer of HiPiHi, was the general
manager of MyWeb China and was nominated as one of
the Top 10 China Internet Heroes in 1999. He said,
"It is absolutely a misunderstanding of the
virtual world if people think HiPiHi is a copycat
of Second Life. The virtual world is not just a 3D
environment, but a complicated social system
including the property policy, financial policy,
etc. HiPiHi is born in China; we really hope it
can embrace our own culture."
Because of
the current lack of credit cards in circulation,
for many Chinese consumers the introduction to
e-commerce comes through the use of virtual
currency. Several hundred million dollars' worth
of virtual currency was purchased last year, and
the size of the virtual-currency market is growing
30% annually. The numbers have become so large
that the Chinese government has issued warnings
about the effect virtual currency can have on
China's financial stability - money-supply
problems, inflation, and avenues for
money-laundering (see China's virtual currency threatens
the yuan, Asia Times Online, December
5, 2006).
Tencent, the provider of the
leading QQ instant-messaging service and leading
online game host, is China's virtual-currency
leader. Its customers can purchase Q-coins using
cash, through mobile-phone cards offered in tandem
with China Mobile or, until recently, by winning
the coins in online gaming competitions.
Cutting-edge media are quickly penetrating
all levels of Chinese society, and developments in
technology are redefining the way companies
advertise their products and collect revenue. The
new business environments that the Internet,
interactive games and cyberworlds are creating are
fast translating into real-world money.
Surfers and hooked gamers are captive
audiences, perfect targets for brand promotion and
willing to spend larger and larger sums on
"virtual" items. Companies that ignore the
increasingly digital lifestyle of their consumers
do so at their peril, especially in China's
increasingly sophisticated digital markets.
Daniel Allen is a freelance
writer and photographer from London who has lived
in China for the past three years.
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