Intel, Shanda Partner in Online Gaming Content
Intel, the world's largest maker of computer chips, is
partnering with Shanda Interactive Entertainment to develop
online gaming content. Intel's move is recognition that
online gaming content needs to diversify from the Japanese
and American model of being tightly bundled with the game
console.
The main game console makers are Sony with Playstation
II, Microsoft with X-box and Nintendo with Gamecube. All
three players, with the exception of Nintendo,
have been hesitant to enter the China market because of
software piracy fears. Microsoft, for example, claims
that it has not been profitable in China because of rampant
software piracy. In spite of this, Microsoft has its largest
research center outside of the US in China.
Shanda
Interactive, which just went public in the US, is
China's largest online gaming company. It has built its
success by offering online gaming at US 3 cents an hour
to play on computers, usually with broadband connections,
and now has more than one million concurrent players per
hour.
Shanda has benefited from Microsoft's and Sony's reluctance
to unbundle their games from their game consoles. The
Chinese market is able to leapfrog because it is not stuck
with a user base of console gamers which it needs to maintain.
For most Chinese, spending US$150 - 200 to buy a game
console is an unacceptably high barrier. However, computers
with broadband connections are available at work, and
at Internet cafes. Increasingly, they are becmong more
common at home.
The next step in China will be development of games for
mobile phones. China Mobile, the country's largest carrier,
is intent on driving wireless value added services, and
is now offering phone blocks to commercial users at very
low prices to encourage development of value-added services.
China already has 290 million mobile phone subscribers,
and this market has not yet been tapped for online gaming.
If online gaming does take off in China, it most likely
will be a major driver for 3G phone services, which handle
data transmission at a much faster speed than the current
rate.
For Intel, this represents a chance to develop new chips
for the next generation of mobile phones. Because worldwide
demand for computer chips has slowed as the market has
peaked, Intel is anxious to diversify into other fields.
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