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Game Companies New Emphasis On China Challenges Activision

SAN FRANCISCO (Dow Jones)--Two U.S. videogame makers are stepping up their efforts in China, hoping to repeat the success Activision-Blizzard Inc.wow gold (ATVI) has had in the fast-growing market with its online "World of Warcraft" franchise.

Over the next few months, Electronic Arts Inc. (ERTS) and THQ Inc. (THQI) plan to publish more games online in China, moves that could help them tap a $3.4 billion market that is expected to grow more than 60% in three years to $5.5 billion. Among the titles they expect to release: THQ's "Company of Heroes" and EA's "FIFA Online 2".

The push into China represents a change in tactics for the game companies.wow gold Though tempted by the vast market, China has historically been a challenge for Western game companies because the market is dominated by local companies like Hong Kong-based Tencent Holdings Ltd. (0700.HK) and Shanda Interactive Entertainment Ltd. (SNDA).

Western companies also have had difficulty navigating both the cultural nuances of the Chinese market and the government, which approves online content before it can be sold. Battling piracy is another big issue that game makers face, as black market versions of games often surface in China within a few hours, or even before, their official debut.

The forays into China will also pit the two companies against one of the only successful foreign game makers in the market, Activision.wow gold "World of Warcraft," a fantasy world conquest game, was the third-most popular online game in China last month, according to Beijing-based search engine Baidu. A popular Chinese Web portal, 17173.com, placed "Warcraft" at No. 1.

"This is a very hard and expensive market to enter, let alone be successful," said Arvind Bhatia, an analyst at Sterne Agee & Leach. " 'World of Warcraft' continues to be the exception to the rule, and Activision will likely continue to dedicate a lot of resources to defend and grow their subscriber base."

It is difficult to determine how much revenue Activision gets from the Chinese market, although its digital Blizzard division, which creates and distributes "World of Warcraft" accounts for about 10% of Activision's revenue.wow gold And the company's top executives say China remains a key market.

"We believe there continues to be growth potential in all regions, and especially in China," said Mike Morhaime, chief executive of Blizzard, the Activision division in charge of "World of Warcraft."

Activision's success both in China and the important U.S. and European regions is one reason its shares have held up better than those of its competitors, despite a global stock market rout.wow gold Over the last 12 months, Activision shares are down 27%, compared with EA's 61% and THQ's 71% drop.


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