Games market in China grew 60% to $1.66 billion in 2007, expected to exceed $3 billion in 2010

San Francisco, CA, March 19, 2008– Pearl Research forecasts the online games market in China will exceed $3 billion in 2010. The market grew more than 60% to reach $1.66 billion in 2007. These findings are contained in Pearl Research’s exclusive 130-page“Games Market in China” study.

Allison Luong, Managing Director of Pearl Research said,“The year 2007 exceeded expectations with the market growing more than 60%, driven by compelling and diverse content, free-to-play games, and rising demand for leisure and technology products. Chinese-themed and advanced casual games are expected to drive revenues in 2008 and beyond.”

“A key trend to track in 2008 is rising average-revenue-per-user (ARPU). Certain online games are reaching $7 to $12 a month in average-revenue-per-user, significantly higher than past averages of $5 or less per month. I believe there is still room for average-revenue-per-user to grow, as game operators enhance monetization efforts from free-to-play games,” said Allison Luong.

Pearl Research’s key findings:

- China’s most popular online game, Netease’s“Fantasy Westward Journey” has 1.66 million peak concurrent users, followed by Giant’s“Zhengtu Online” with 1.52 million peak concurrent users. Successful MMORPGs can be highly profitable. Game operator Giant Interactive generated the majority of its $209 million in revenues from one title,“Zhengtu Online.”

- Game operators in China experienced strong revenue growth in 2007. The biggest gainers were game operators Shanda (up 49% to $338 million), Giant (up 274% to $209 million), The9 (up 30% to $175 million) and Perfect World (up 593% to $95 million). Coinciding with this revenue growth was a wave of initial public offerings (IPOs) by game operators Giant, Perfect World, NetDragon and KingSoft.

- The study also contains highlights from Pearl Research’s Phoenix Generation research initiative, consisting of more than 200 one-on-one, personalized interviews conducted with Chinese youth. One key finding is that games are a social phenomenon, with gamers often playing casual games to connect with friends and flirt with others. Gamers cite cheating and account thefts as a top reason for abandoning a game and seek out game operators with a reliable reputation.

Pearl Research’s“Games Market in China” study provides an in-depth analysis of the Chinese games market. The report contains 2006 to 2011 forecasts; inhibitors and drivers to growth; deep marketplace analysis; profiles of key market players; and strategic conclusions. Please call (+1) 415-738-7660 or email research (at) pearlresearch.com to inquire about this report.

About Pearl Research

Pearl Research, a business intelligence and consulting firm, specializes in the digital entertainment and technology markets with a special focus on emerging markets and platforms. Based in San Francisco and China, Pearl Research publishes in-depth research reports and provides customized research and consulting services. For more information, visit http://www.pearlresearch.com.

Contact

Jeff Yip

Pearl Research

pr@pearlresearch.com

PH: 415-738-7660ext. 4


Games PressGames Press is the leading online resource for games journalists. Used daily by magazines, newspapers, TV, radio, online media and retailers worldwide, it offers a vast, constantly updated archive of press releases and assets, and is the simplest and most cost-effective way for PR professionals to reach the widest possible audience. Registration for the site and the Games Press email digest is available, to the trade only, at www.gamespress.com.