Video games

China has between 125-140 million internet users today (~10-12% of the population). But Chinese use the internet for very different purposes than most US users. A large majority of Chinese internet usage is for “entertainment” whereas in the US, a majority is devoted to news/information gathering, with entertainment being secondary. Online video games are extremely popular, and over ~50% of internet usage in China is devoted to video games. Chat is probably as popular as email, and that makes up the next ~20% of internet usage.

I had an interesting talk at lunch the other day about the video game industry in China.

A number of companies are working on different ways to take advantage of the huge video game market. One of my friends here is working for a startup that transfers cash payments made at rural internet cafes into online payments in video games (most rural Chinese do not have credit cards and cannot directly pay online).

This New York Times article (free registration required) on Chinese Gold Farmers is really interesting as well. To summarize, an industry has sprung up in rural China where wealthy consumers (a mix of Westerners, Chinese, and other Asians) who play video games pay hard currency to Chinese players to earn extra points, skills, or advance to new levels in online games. These Chinese players work 12 hour days “playing” video games and earning points for paying customers. The customers make cash payments online to intermediaries in exchange for the stronger character or additional points.

Additionally, the current rumor (unsubstantiated but very believable) is that in many rural areas, local government officials are forcing prisoners to play video games in jail. The local officials collect the money and the prisoners spend their days earning points for paying customers in virtual worlds.