The pace of growth of China’s online gaming industry slowed in 2009, growing 30.2 percent to 27.1 billion yuan ($3.97 billion) over the previous year, according to data from research firm iResearch. Read More…

Chinese online game vendor Netease Inc announced that it has got the license to run Activision Blizzard Entertainment blockbuster video game World of Warcraft in China for the next three years. Read More…

China’s online game market has expanded noticeably. To date the number of online gamers in China has reached 55.5 million, a recent report said. Read More…

The Chinese government will start real-name registration for online game players this year, said Zhang Yijun, director of the Chinese General Administration of Press and Publication’s technology and digital publication department. It’s unclear if this means character names will be required to reflect the player’s real name, or if the account must use a name registered with the government.

Zhang says at the end of 2008, an anti-addiction test was implemented on 59 online games run by influential Chinese game companies and the pass rate reached 95%. Only four companies were closed for failing to meet the standards.

In 2009, China will continue to promote the online game anti-addiction system and launch the real name certification system, hoping to raise online game companies’ attention to accelerate the development of relevant software. The real name system will ensure that gamers register to play games using their real names and real identification.

China-based blogs total 107 million, with more than 42 percent of netizens running a blog, a senior information official said here on recently.

Cai Mingzhao, deputy director of the Chinese State Council Information Office, made the comment at the 2nd U.S.-China Internet Industry Forum.

The number of blogs was about 40 million just a year ago.

Cai noted Web 2.0 service, which makes writing and other sorts of participation of Internet users possible, has inspired many people to create content online.

There were 253 million people online in China as of June, up 56.2 percent year-on-year. E-commerce transactions amounted to 2 trillion yuan (about 300 billion U.S. dollars) in 2007, and 25 percent of netizens had bought something online as of June this year.

“China has the world’s largest online population and I believe the number is showing continuous growth,” said Hu Qiheng, director of the Internet Society of China.

Hu said online music and news are the most popular types of web content in China, and instant communication services, video streaming, search engines and online games also ranked high on the popularity list.

“The Internet is a strong driver of the reform and opening-up process of China and a new engine of the development of China’s economy and society,” said Cai.

The Chinese love affair with the internet will see digital ad spend increase 40% to $5.2bn (£3.07bn) next year, making the booming Asian online economy roughly the same size as the current UK market, according to a report.

The study by KPMG, to be unveiled today at the MediaGuardian Create in China conference in central London, estimates that the total ad spend on all media in the Chinese market will grow by 22% this year and 19.5% next year.

By the end of next year, the Chinese ad market will be worth $37.85bn, a year-on-year increase of more than $6bn on 2007.

The report, called Destination Digital: Opportunities in China’s Media and Advertising Market, argues that UK media companies need to tap into the Asian tiger economy, particularly the digital sector.

KPMG estimates that the Chinese digital sector – including ad spend on internet, email ads, in-store LCD screens and mobile – will grow by about 73% this year and 43% next year to be worth $5.2bn (£3.1bn).

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According to the Internet Advertising Bureau, the UK digital advertising market was worth £2.8bn at the end of last year and will be worth close to £3.5bn for 2008 based on current estimates.

However, the scope for growth in China is huge with core internet ad spend – primarily the paid search, online display and classified markets – accounting for 8.5% of total media spend in the country.

In the UK, internet ad spend accounts for around 20% of the total media market.

“China has truly emerged as a leading market for digital media including web 2.0 technologies such as social networking, blogging, online gaming and cross-platform services,” said Honson To, a partner at KPMG China.

“Chinese internet user numbers are higher than anywhere else in the world and so far only 19% of Chinese people are online,” Honson added.

KPMG estimates that there are 100 million bloggers, 601 million mobile phone users, more than 250 million web users – an extra 91 million going online in the last year alone – and 120 million online gamers.

Between 2003 and 2007, online ad sales in China grew by more than 60% annually, compared with around 10% growth for newspaper and TV advertising.

The report also estimates that Chinese internet users spend 14 times longer online per week than US users.

KPMG also forecasts that China’s huge TV market – 1.19 billion TV viewers over the age of four and one-third of the global cable TV market, which accounts for more than 60% of the country’s media spend – also presents opportunities for western companies.

“Content generation represents a big opportunity. Chinese TV producers are increasingly likely to need to look outside China to secure appropriate content and programme formats for different channels,” Honson said.

KPMG also said that radio in China had staged a comeback in the past 10 years, as more city dwellers buy cars and will grow from zero share of the country’s media market in 2004 to 3.5% by the end of next year.

The Chinese newspaper sector is growing but, like in foreign markets, China’s 2,000 papers are seeing weaker revenue growth.

By the end of next year, the sector will account for 9.6% of the Chinese media market, down from a 19.4% share in 2001, according to KMPG.

China’s dot-com economy grew nearly 63 percent year on year in the second quarter, despite increasing inflation and the effects of the Sichuan earthquake, a Shanghai-based research firm reported recently.

Revenue generated by China’s online search, game and travel providers reached 13.32 billion yuan (US$1.94 billion) in the April-to-June period, iResearch said.

Because of the runup in prices and the natural disaster, the quarterly growth rate was only 14.9 percent.

In addition to the revenue earned by Internet services firms, overall trade volume generated by buyers and sellers also rose during the quarter, hitting 29.1 billion yuan, up 22.6 percent from the first quarter.

Online game revenue, which was influenced by the earthquake, gained 9.2 percent quarter on quarter to 5.08 billion yuan, compared with 13.4 percent growth in the first quarter.

China halted all entertainment services nationwide, including online games, for three days in May to mourn the earthquake victims.

“New-media leaders are outpacing the old-media players as the online media break down the barriers (geography, distribution and content) to make them accessible to anyone, anywhere, anytime,” Richard Ji, a Morgan Stanley’s analyst, said in a report.

China’s Internet population recently took the No. 1 spot from the United States for the first time.

On June 30, China had 253 million Internet users, compared with about 220 million in the US, according to the China Internet Network Information Center.

There’s even higher potential ahead. Only 19.1 percent of all Chinese are Internet users, compared with 60 to 70 percent in the US, Japan and South Korea.

And the Beijing Olympics, which opens this weekend, provides even more good news. The Games are expected to fuel a surge in online advertising and cyber games, according to the report by iResearch.

The Internet economy will be powered by online advertising for the Beijing event and the advent of third-generation telecommunications services in the world’s No. 1 mobile phone market, iResearch said.

The coming high-speed mobile network will allow handset users to enjoy new and faster data services, such as video conferences and film downloads.

Among the cyber-market segment, Baidu still leads in the search sector, with Alibaba.com dominating online auction services, followed by foreign players Google and eBay. Competition in online games is heating up as many newcomers have entered the fray. Only about 27 percent of China’s online game revenue was contributed by major Internet portals such as Sohu and Sina, according to iResearch findings.

The Pudong New Area government in Shanghai expects to attract more than 200 animation and cartoon enterprises into Zhangjiang High-tech Park within five to 10 years, the district government said recently.

To forge the city’s animation industry base in Zhangjiang, the government plans to set up an “animation valley” as Phase 2 of the Zhangjiang Creative Industry Base.

The new facility will also provide a creative hub for animation and comics artists and investors to tap the vast potential of the Chinese domestic market.

The valley has teams of animators, together with BG artists, graphic designers and directors.

Each link in the animation production process can be completed at the facility, including graphic design, storyboard, layout, coloration, compositing, visual effects and post-production.

In the past three years, Zhangjiang Creative Industry Base has attracted more than 20 companies in comics and animation making.

These include Fantasia Animation, which is China’s first privately owned animation company that is qualified to export their products, and Hippo Animation, which specializes in producing 3D and 2D animation feature films, TV series, games and short mobile animation series.

Other tenants include City Animation, which adapts online literature into comics that are available in the city’s 4,000 supermarkets and convenience stores.

These enterprises are well integrated with the nearby online game base, which was established three years ago.

The country’s biggest base for online games, this part of the park is home to over 30 online game developers and operators.

These include SNDA Entertainment, The 9, and Electronic Arts. Online game companies at the park have captured a combined 75 percent share of the Chinese online games market, according to 2005 figures.

“The combination of animation and online game development can help to form integrated industries that can optimize resources,” said Yuan Liqiang, general manager of the Shanghai Zhangjiang Creative Industry Development Co Ltd.

The plan also involves building China’s first animation museum and animation cinema. The “animation valley” will be a market-oriented research and development platform jointly invested by the Pudong New Area government, Shanghai Zhangjiang (Group) Co Ltd and Shanghai Movie Art Academy, district officials said.

The final goal within a decade is to create more than 5 billion yuan (US$730 million) in output value of animation-related products, and have three to five leading companies in the comics and animation, film and TV post-production and design sectors. In other words, it will be cartoon central.

A complete industry chain including creation, planning, brokerage, post-production, marketing, communication, extensive development and tourism is expected to be forged.

On April 25th, 2008, China Internet Network Information Center (CNNIC) released the Research Report of China Youth Internet Behaviors. The report studies the online behaviors of 107 million China’s netizens under the age of 25. (Download the report in PDF format here)

According to the report, China’s youth netizens are more inclined to entertainment demand. The most used online serves for youth are IM(91.3%), online music(91.1%), online movie/video(82.9%), search engine(73.4%), online games(68.2%), online news(63.4%) and email(58%).

If compared with the average usage level of all Internet users, the usage rate of online games, online music and online movie/video among youth are much higher than average rate. For example, 68.2% China’s youth play online games, compared with that of 59.3% for all netizens. However, only 63.4% youth visit online news sites, 10.2 percentage lower than the average level of 73.6%.

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Young Internet users also have stronger desire to make friends and communicate with friends online, 55.9% of them have the experience of making friends through the Internet, and over 90% of them use IM tool, most likely QQ, to chat with friends online. One third of China’s youth have updated their blogs/spaces in last six months, higher than the average level of less than one fourth. For university students, even over half of them have updated blogs/spaces in last six months.

The report said, rural young users have some different online behaviors, they mainly use Internet for online chatting and online music, which have similar penetration rates as that of urban users. The usage of search engine, email and online news among rural young users are much lower than those of urban youth, ranging from 11 percentage to 19 percentage.

The report also proposed some suggestions to regulator, such as to strengthen the regulation on Internet cafe and to deal with the online game addiction problems among youth.

BusinessWeek published a special report on virtual world recently, with one article on virtual World in China which featured Hipihi, Novoking and UOneNet (a.k.a. uWorld).

Hipihi has announced the beginning of its public beta testing phase, after over a year private test. The private test was much longer than they previously expected. Hipihi’s homepage shows it has just over 50k registered users and growing.

uWorld, another virtual world on BusinessWeek’s article which we first profiled in October 2007, finally started its close test in March. As Hipihi, uWorld also partnered with IBM on virtual world development.

Though Hipihi has a lot of buzz on the media, it is still struggling in attracting more users to reside. Kaiser Kuo is more optimistic on it, he thought “deep-rooted MMORPG culture” in China and “willingness of Chinese to strike up online friendships with strangers” will help them in the long run. But virtual world and MMORPG have quite different culture, one could doubt that MMOPRG culture among Chinese youth will let them migrate into virtual world. To exploit the culture of online networking with strangers, you need to create more value which only virtual world can offer. Novoking might be a good example. Its strategy of focusing on entertainment, esp. music and dancing, may help them to target more females, and attract users of online games as Audition.

Even though virtual world in China did not see high growth, there is more company see its potential. Yaolan.com, a community targeting parents with kids under 6 or parents-to-be, plan to launch its virtual world soon. Wang Ruibin — Yaolan’s PR manager — watched the demo and said on his blog, Yaolan world will target mommy and mommy-to-be as well. Each user will have a kid for them to experience what will happen when bringing up a kid, sounds like a 3D life simulation game.