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Last Updated: Sunday, 9 November, 2003, 23:25 GMT
Wizards with Chinese characters

Mary Hennock
BBC News Online business reporter in Guangzhou

Harry Potter and Frodo Baggins are helping to revive Chinese traditional culture.

Harry Potter books on sale
Casting a spell in Shanghai
Michael Tong gambled his future on this startling belief in May when he took charge of developing online games for Chinese internet portal NetEase.

NetEase games are virtual worlds designed to be played by thousands - the record is 150,000 at once - full of wizardry, Kung Fu and supernatural sword play.

And Potter mania is helping to conjure up a market.

"Our guess is that in cities like Shanghai or Beijing, Chinese would be looking more to the West, would be reading Harry Potter or Lord of the Rings, but our guess is they'll still be interested in Chinese myth," says Mr Tong.

Chinese translations of the bespectacled boy wizard's adventures have sold at least 6 million copies, sparking interest in Chinese wizards too.

Dragons and demons

Chinese myths are stuffed with shape-shifters, dragons and half-human creatures. Wizards (or mages, as Mr Tong calls them) fly with the help of Kung Fu breathing and meditation, rather than Harry's Quidditch broomsticks.

You kill monsters in teams. If you say you're a girl...it's easier to make the team
Michael Tong
Mr Tong's team of 30 games developers and graphic artists dream up new worlds from a bare, low ceilinged office on an industrial estate in Guangzhou, south China.

Games designer Chen Dujindan, aged 25, works up to 65 hours a week. He lives ten minutes walk away but keeps a sleeping bag spread out by his desk. He and his colleagues eat supper at their keyboards.

Some friends "think this is not a serious job," he grumbles.

Young woman in a beach cafe
NetEase targets teenagers

NetEase and rival portals Sina.com and Sohu.com - all listed on the US Nasdaq technology stocks index - are slugging it out for domination of China's online games market.

The market is likely to be worth $250m this year, says Duncan Clark, head of technology consultancy BDA China, who formerly sat on NetEase's advisory board.

Games provided nearly one third of NetEase's total sales of 146.3m yuan ($17.7m; 10.6m) in July-to-September 2003.

And games fuelled a 96.6% jump in revenue from the same period of 2002.

Winner takes all?

Fear of piracy has kept console-based games giants Nintendo and Sony out of China, though privately imported boxes are available. Only in late 2003 did Nintendo, struggling to boost global sales, dip a toe into China with a localised version of its GameCube console.

Man buying DVDs, Shenzhen
Pirated goods are everywhere

The PC-based mass role playing games favoured by NetEase side-step piracy problems, requiring users to log into the central software and servers.

They also rely on building up loyalty to a virtual community, something that is harder to steal than a software code.

Korean-designed games have been the most influential in China; both NetEase and Sina.com work with Korean firms.

NetEase wants its games traditional: "Our conscious decision is that this is our advantage," says Mr Tong.

Two of its three titles are based on rebellious Monkey King's antics in Journey to the West, a story every Chinese child knows.

New looks for old heroes

China's past commercial isolation, austere Communist ethics and state-run publishing houses meant that - unlike Japan - it failed to develop modern comic book heroes.

A young couple walk past a soft drinks stall in Beijing
Internet dating sites caused a row

With no Chinese Batman to compete with Monkey King, technology-addicted city kids still love him.

NetEase targets younger surfers than its rivals, going for 15-to-20 year olds, rather than over-20s.

"We don't want to make it too aggressive, like the principle of the game is to kill. In future we want to make it more cute," says Mr Tong.

NetEase's tribes of little people differ from the central Lara Croft-style lone warriors often seen in Western quest games.

That's because NetEase wants to get lots of kids online simultaneously, in teams.

It wants more girls playing too. No reliable data exists on China's games market, least of all on players' gender. Many online 'girls' are really boys.

"You kill monsters in teams. If you say you're a girl...it's easier to make the team," says Mr Tong.

He loves soccer games but doubts local versions would work: "There are not that many heroes in the Chinese football team."

Dating sites too hot

He shrugs off critics who blame internet addiction for poor schoolwork: "There are games that make children into vegetables, but not when they're well researched."

Earlier this year, NetEase found itself facing a more serious outcry over pornography.

Poster for 'The Lord of the Rings', Shenzhen
Middle Earth heads east

Problems arose after it agreed to let smaller portals piggyback on its site, hoping to expand its services and attract more users. Some of those portals turned out to offer porn.

NetEase has since severed links with them.

But the scandal led China's mobile phone operators to block customers from using phones to pay for online services via SMS text messages.

This form of payment was a smart innovation as few Chinese have credit cards. It was lucrative too as web portals got 85% of the SMS tariff.

The road back is hard, with the mobile operators checking each product "step-by-step", says Mr Tong.

NetEase's third quarter 2003 figures showed a 20.7% fall in revenue from SMS and e-commerce (to $7.6m) compared to the second quarter.

Luckily, games revenues rose 56% to $6.8m.

But nothing is likely to halt China's sexual revolution. Internet dating is increasingly popular, especially in rich coastal cities where many people are new arrivals.

"I think people do put up their real pictures on it, so people are not shy to do it," says Mr Tong.

Chinese web portals are seeking an edge in their home market from games; longer-term they dream of going global.

Games development costs in China are a quarter of those in the US, but "revenue generating power is similar", says Mr Tong.

Games franchises often run to more than 10 titles, whereas five is usually the maximum for a hit movie.

"We see a lot of reasons why we should want to do it ourselves," he says.




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