Niko Partners, the leading market intelligence firm on China’s video game industry, today reiterated the vibrancy of China’s video game industry, based on findings from its newly published 2010 Chinese Video Game industry Annual Review & Five-Year Forecast report.

“Niko forecasts that by the end of this year 93 million Chinese gamers will play a mix of PC online, offline, console and handheld games, yet only the online segment generates legitimate revenue,” said Lisa Cosmas Hanson, managing partner of Niko Partners.

• Niko’s recently forecasted online games revenue in 2010 at $4.52 billion
• There is strong demand for digitally downloaded PC offline games as well as consoles and handhelds, in spite of piracy and the regulation that bans consoles
• Niko calculated that total Chinese game software and services revenue, including PC offline, console, handheld, and (primarily) online games, reached $4.61 billion in 2009, up 28 percent from 2008
• Chinese consumers are entering the online game market at a rapid pace thanks to casual games such as social networking service (SNS) games and other growth drivers.
• China’s 165,000 Internet cafés are used for social entertainment and competition as home PC penetration rises and gamers spend more time gaming at home.
• Chinese console gamers have eschewed previous generation consoles in favor of the Xbox 360, Wii and PlayStation 3.
• The regulatory landscape continues to be burdensome for game companies.
• China could have 100 million new gamers over the next 2-3 years, driven by social networking games, MMOs and casual games.
• Chinese gamers prefer the Free-to-Play (F2P) model of online games in which online operators generate revenue via the virtual economy, rather than the time-based model in which access is provided for a fixed number of pre-paid hours.
• 63% of gamers surveyed increased their spending on online games in the past year.
• Social Networking Sites (SNS) games have gained popularity among Chinese consumers, and 88% of the gamers Niko surveyed claim to play SNS games.
• The primary reasons gamers with PCs at home go to an Internet café are to be social with their friends and to participate in gaming competitions.
• At least 65% of gamers use Internet cafés at least part of the time.
• There were 68 million online gamers in China by our definition at the end of 2009 and by 2014 the number should reach 141 million, a 15.5% CAGR.

The 2010 Annual Review & Forecast report is available now for $8,000, and a subset version focused on online games, the 2010 Chinese Online Games Market Review & Forecast report, is available for $5,000. To purchase, contact: info@nikopartners.com

According to an article in Forbes, VinaGame has 65% of Vietnam’s gaming market. The article also gives market estimates for India, Korea and China.

Analysys International says that the China Online Game Market reached almost 26.1 Billion Yuan in2009, exceeding analysts’ expectations.

• The market for online games in China reached 26.093 billion Yuan in 2009
• There are now 107 million online gamers in China

According to a story in Reuters, China’s online game revenue has grown 30.2% over 2008 revenues to $3.97 Billion. The article also estimates that there are:

• 50-60 Million online gamers in China
• This represents almost 20% of the people online in China
• Revenue is expected to double over the next three years

According to a report by Pyramid Research, Smartphones will capture 37% of the worldwide cell phone market by 2014. This is an increase of 16%in 2009.

• China will capture the No. 1 position in 2010
• Brazil will have a CAGR of 43% over the next five years
• India will have a CAGR of 39% over the next five years
• Turkey will have a CAGR of 37% over the next five years
• Nigeria will have a CAGR of 34% over the next five years
• Latin America will be the fastest growing region at a compound annual growth rate of 48%
• Africa and the Middle East will have a 39% CAGR

Pyramid also forecasts sales of 1.8 billion smartphones over the next five years

Niko Partners is the leading analyst firm covering the China Games Market – according to today’s Niko Partners’ newsletter:

• There are now 134,000 licensed Internet Cafes in China.

Niko states: “The previous number was 114,000, though we know that provinces had the right to override the ban in tier 3 and 4 cities as demand warranted new licenses. The Niko estimate for licensed and unlicensed cafés of 30 or more seats is 170,000.”

You can sign up for the newsletter here if you are interested in following the game market in China.

Frank Yu is someone I met and had the privilege of hanging out with on my last trip to China back in April/May. He’s one of the key people responsible for launching Xbox in Asia and I just found a great presentation of his on Slideshare which presents the history of the Chinese gaming market. Here’s the presentation:

According to a release from IDC, there were more than 450 million mobile Internet users worldwide in 2009, a number that is expected to more than double by the end of 2013. Here are the highlights from IDC’s Worldwide Digital Marketplace Model and Forecast”:

• More than 1.6 billion people – a little over a quarter of the world’s population – used the Internet in 2009
• By 2013, over 2.2 billion people – more than one third of the world’s population – is expected to be using the Internet
• More than 1.6 billion devices worldwide were used to access the Internet in 2009, including PCs, mobile phones, and online videogame consoles
• By 2013, the total number of devices accessing the Internet will increase to more than 2.7 billion
• China continues to have more Internet users than any other country, with 359 million in 2009
• The number of Internet users in China is expected to grow to 566 million by 2013
• The United States had 261 million Internet users in 2009, a figure that will reach 280 million in 2013. India will have one of the fastest growing Internet populations, growing almost two-fold between 2009 and 2013.
• The United States has far more total devices connected to the Internet than any other country
• China is the leader in in the number of mobile online devices with almost 85 million mobile devices connected to the Internet in 2009
• The number of Internet devices in India, both mobile and fixed, is expected to grow commensurate with the number of Internet users
• Worldwide, more than 624 million Internet users will make online purchases in 2009, totaling nearly $8 trillion (both business to business and business to consumer)
• By 2013, worldwide eCommerce transactions will be worth more than $16 trillion
• Worldwide spending on Internet advertising will total nearly $61 billion in 2009, which is slightly more than 10% of all ad spending across all media
• Worldwide spending on Internet advertising is expected to reach almost 15% of all ad spending across all media by 2013 as Internet ad spending grows surpasses $100 billion worldwide

Niko Partners’ forecast for 2009 revenue of $3.65 billion (24.9 bil RMB) was right on target, matching what the China Games Industry Association (CGIA) announced at the Ministry of Culture’s conference held in Beijing on December 1st. At the conference it was also revealed that there are:

• 750 online game companies in China
• Only about 20 of them make significant revenue
• Revenues generated by mobile and web games will exceed $370 Million (RMB 3 billion)

Our friends at JLM Pacific Epoch reported that the Ministry of Culture is now clearly in charge of online game regulation and content approvals for China. For a long time, there has been some confusion as to which ministry was responsible to make decisions about online games while they were actively operating in the country. GAPP is in charge of the initial review and approval for online games, but the MoC is responsible for market supervision for online gaming, animation and related industries.