The Emperor's New Game
By Eric Ransdell, Mon Oct 29 00:00:00 GMT 2001

A revolution is gaining momentum in the Chinese markets: mobile gaming.

Although China did away with its system of hereditary rule after the 1911 Revolution overthrew the last empower Pu Yi, the world's most populous nation now has a new king. His name is Lin Rui Chin and he is a 23-year-old shopkeeper living in the city of Shantou in China's Guangdong Province.

In May of this year, Chin played the just-released mobile SMS game, IQQ (Intelligence Quotient Quiz) for 16 solid hours and set the highest score in the game's brief history. Since then his friends in Shantou have dubbed him China's "King of Information".

"It was like I entered a different world filled with interesting questions," Chin says. "One where time passes very quickly."

Chin hasn't had another marathon session with his handset since setting the Chinese record. But he does admit to playing the game during downtimes in the shop where he sells plastic dolls to tourists. Says Chin, "What my friends and I like about this technology is that we all have mobile phones and we can play games anywhere and at any time."

A perfect match

To say China has been waiting for the advent of wireless gaming would be an understatement. Linktone, the Shanghai-based mobile service provider (MSP) that launched the game last April has experienced a growth rate of 2000 per cent a month (yes, a month) thanks largely to IQQ and its other game offerings. Today, in a crowded field of more than 100 MSPs, Linktone is China's market leader.

Linktone originally began as a WAP-based MSP offering games, chat and information services. But Chinese consumers weren't impressed with the format. "WAP didn't work out in China for a number of reasons," explains Jeremy Li, Linktone's chief marketing officer. "First people had to subscribe to the service, then they didn't understand how to use it, but the biggest problem was that because people had already experienced the Internet, they couldn't understand why the Internet over their phones was so incredibly slow."

After the failure of WAP, Linktone refocused its efforts on the humble SMS format and never looked back. Although the company still offers WAP games and has a few in the development pipeline, its SMS services - particularly its games - are what have rocketed Linktone to the top of the Chinese wireless gaming industry.

In addition to IQQ, the company offers a number of SMS games that range from a Tomagotchi-like grow your own pet game to role-playing adventure games to that old chestnut, rock-paper-scissors (which though it may be on the endangered species list in other societies is still wildly popular on mobile handsets and in bars, restaurants and teahouses across the length and breadth of China).

IQQ has proven so popular, in fact, that the company has launched a number of niche versions of the game. Today wireless gamers can choose from entertainment, English language and Shanghai trivia games.

Cultural influence

How did such a simple game - available for years in other formats in China -come to capture the hearts and minds of the nation's wireless gamers? Much of it has to do with Chinese culture - particularly Confucianism and its emphasis on education. One of the most interesting things Linktone has discovered is that while the game has proved a hit amongst white-collar workers (as the company had expected), blue-collar workers and those with a high school education or below have also flocked to in huge numbers.

"Blasting aliens is one thing," says Jithma Beneragama, a project manager for international gaming in Linktone's business development division, "but when you correctly guess how many different forms the shape-shifting Monkey King can assume or that Slovakia is a country in Central Europe, you actually feel you're learning something. And Chinese people really respond to that."

Culture also explains why SMS, a format that hasn't exactly fired the imaginations of gamers in other parts of the world, has proven to be such a runaway success in China. Like Japan, Korea and other Asian nations, China is a gadget-loving culture that associates personal technologies with modernity and progress.

Yet because their expense puts them out of reach for most Chinese, personal computers have not achieved the penetration levels of other Asian countries. As a result, for many Chinese the mobile phone is their first experience of a technological interface.

And unlike WAP, which promised to set a new speed limit, no one in China had any illusions about the response times of SMS having used it already to message friends and family members long before wireless gaming was a speck on the horizon. SMS is so widespread, that this year alone Chinese people will send in excess of 10 billion SMS messages.

"In the beginning we were worried about how to educate the market," says Li, "but what we're finding over the last six months is that adoption rates are going through the roof. Most users are already familiar with SMS and they're educating the rest of the market. So it's a snowball effect."

A growing market

And this is only the beginning. Currently China has 120 million mobile phone subscribers, with 3-4 million new users signing up every month. But out of a population of 1.3 billion, that's still less than 10 percent penetration.

In terms of gaming, the potential market is greater by several orders of magnitude. Out of the current pool of mobile phone subscribers, Linktone, the market leader, has only 500,000 users, or about 0.4 percent of the market. And, like other MSPs, it only operates in the major cities. As China's wireless data capabilities are extended throughout the country, MSPs will be able to offer their services to more customers. Sweden's Ericsson Corporation is estimating that the Chinese mobile phone market will triple by 2005 to 350 million users.

With such a huge prospective market one would imagine that indigenous wireless game developers would be sprouting up like lalang grass. But currently there are only a dozen Chinese game developers working in their home market - most of them just small bootstrap operations with less than 10 employees.

This dearth of Chinese wireless game developers is due to another peculiar aspect of Chinese culture - that of software piracy. "In China we have no big game companies, no Sonys, no Segas, no Bandais," says Jiang Wei , chief financial officer of MagusSoft, a Beijing-based wireless game developer. "The reason is because people refuse to buy game software or they buy [pirate copies] for cheap. So it's a very difficult environment for domestic game companies to survive."

Everyone in China's nascent game developer community remembers the story of the Monkey King, a CD-ROM game brought out by the Qiandao Company of Beijing in 1999. Qiandao spent $200,000 developing the game based on the ancient Chinese legend. Within five days of it hitting the market, pirate copies of the Monkey King were available throughout the country. Qiandao sold only 7,000 copies before stopping production.

A different approach

With its PC and console gaming sectors laid low by the bootleggers, wireless gaming has the potential to bring about the successful birth of China's first indigenous gaming industry. That's primarily due to a business model where consumers are taken out of the equation. In China, game developers are either paid licensing fees by handset manufacturers for embedded games. Or they are paid by MSPs who receive revenues directly from China Mobile and China Unicom, the country's two wireless telecoms, every time someone plays one of their games. Another source of revenue is when their games are downloaded from Web sites.

MagusSoft is an example of what China's game developers are capable of when they are compensated for their work. At present the company has only 10 employees. And though MagusSoft only launched in early 2001, according to Wei, the self-funded startup is already breaking even.

That's an incredible return on investment in any industry. But for China's beleaguered gaming industry it's a watershed. How has MagusSoft managed to do it? Because the company is innovating like mad. Though it has only existed for a mere 10 months, the company has already brought 20 game titles to market.

One of its most promising games is called Skater, which the company is currently in negotiations with Siemens to license as an embedded game for handsets both in China and abroad. In it, players steer a suspiciously clean-cut skateboarder through a crowded urban environment, dodging oncoming traffic and jumping over trashcans, manholes and other obstacles to score points. With its screen refresh rate running at 7-10 frames a second and animation comparable to the early Nintendo GameBoy titles (thanks to Siemens' 32 MB multimedia card), it's as sophisticated a game as anything currently on the world market.

Like all of MagusSoft's games, it is as fun as it is simple. That's what Tony Chen, the company's creative director, loves about China's new wireless gaming industry. "The most popular games are the most simple, like Tetris," Chen explains. "That's the challenge in front of us and that's why we chose this business. Because even with big companies like Sega or Bandai with years of experience in traditional console game development, when it comes to mobile handsets we're almost on the same level."

In terms of wireless technology MagusSoft, Linktone and other companies are covering all their bets by developing games in SMS, EMS, KJava, CJava and for WAP over GPRS - which is undergoing market testing in China and is expected to be rolled out next year. And like the rest of the world, developers in China are awaiting the much-touted arrival of 3G services.

For Chinese gamers it's all upside. Not only are their mobile phones allowing them to play games anywhere and at anytime. But, thanks to the billing system that rewards successful game developers, their country may finally get the homegrown Sega, Nintendo or Bandai it has long deserved.

Eric Ransdell is the former Silicon Valley Bureau Chief for US News and World Report magazine. Now living in Shanghai, he covers mobile technology in Asia.