Although the most popular online computer games on the island are from South Korea, locally produced games are scoring megapoints with players in China, where the potential for growth is astronomical.
For most people, computer games are all about accumulating points, obliterating the enemy, and staying alive long enough to reach the next stage of the game--all in the name of recreation. But for Wang Chun-po, computer games are a serious business, one where the points refer to profits, the enemy is the competition, and the next stage involves the constant search for a big money-making game. Wang is the general manager of Soft World International Corp., the company that provides Internet users with some of Taiwan's most popular online games.
The key to success in the new knowledge-based economy, Wang notes, is maintaining creativity in the development of digital technology. "Unlike in traditional industry sectors, profits aren't necessarily a natural result of increased R&D spending and lowered production costs." In the game business, profits are sizable, and growing. In 2001 about NT$5 billion (US$145 million) worth of computer game products were sold in Taiwan, according to the Institute for Information Industry's Market Intelligence Center (MIC). This figure represented a 16-percent increase from the previous year and was a marked contrast with the 8-percent drop in computer hardware sales.
The main bulk of growth in the market in recent years has not come from personal computer games but from online ones, where players can engage in competition or cooperation with others through the Internet. Online games alone accounted for NT$1.71 billion (US$50 million) in paid subscriptions in 2001, a 255-percent increase from 2000, and the figure is expected to rise to NT$2.65 billion (US$77 million) this year.
Although many of the island's top online games are from South Korea, Taiwan companies such as Soft World have been quick to recognize a hot item, grabbing the opportunity to purchase the copyrights of foreign titles while developing their own games. "Our market may now be dominated by Koreans," says Chin Kai-hsin, managing director of online games provider and developer Welove Soft Corp., "but perhaps someday we'll make money in their country." That day may be long in arriving, however, as Korean imports dominate 60 percent of the local market. The Internet hosts about 8 million users in Taiwan, and an estimated 4.5 million are regular online players. Of these players, 2.34 million subscribe to Lineage, the island's most popular online game that was developed in Korea and introduced to Taiwan by Gamania Digital Entertainment Co. in 2000.
The success of Korean imports has inspired local businesses to come up with new games to capture the imaginations of players as well as profits. Soft World developed Three Kingdoms Romance Online and Jinyu Online, which are respectively based on Chinese history and the popular genre of knight-errant fiction. Together, these two games have seized around 20 percent of the domestic market. Welove, established in 2000 in Taipei, also divides its business equally between buying the copyrights of foreign titles and creating Chinese-style kung fu games. One of its creations, yet to be released, is based on a piece of fourteenth-century fiction, Outlaws of the Marsh, one of Chinese literature's most famous works.
This strategy of appealing to the Confucian market has been successful, and a number of Taiwan's online games have cashed in on the mainland. According to MIC statistics, Taiwan companies have captured about 60 percent of the online game market in China. Soft World's Jinyu Online, for example, is a bestseller in China and has attracted millions of subscribers. "The games we've developed are more likely to appeal to Chinese people than those created by our Korean or Japanese rivals," says Oliver Weng, director of the Ministry of Economic Affairs' Network Multimedia Industry Promotion Project. "We've just taken advantage of the similarities of Taiwan's and China's cultural backgrounds to make up for any weakness we may have in technical know-how."
Although this advantage can go both ways, competition from mainland-developed games is not yet much of a threat, Weng notes. "Computer games aren't only for fun, but they also involve a combination of cultural, artistic, and technological resources," he explains. "Because there's a greater extent of democracy and pluralism here than in China, we've been able to nurture creativity and learn how to quickly adapt to the latest trends."
Weng also points out that, as a part of popular culture, computer games can benefit from Taiwan's other achievements in related fields. The island is already a major supplier of popular music within Asia. "Taiwanese songs are being sung in karaoke parlors in some of the remotest parts of China," he adds. The ability to appeal to a popular audience can be seen in the backgrounds of those in the game industry. Soft World's Wang Chun-po once operated a music company, and Welove's Chin Kai-hsin's experience includes working with popular literature and as a TV producer. Chin is also a former director of the ROC Comics Association.
Wang Chun-po offers another explanation of why Taiwan is able to keep ahead of China in this field. "R&D is at the heart of our business, and after nearly a decade of operating in Beijing as well as other major cities in China, we've come to recognize its shortcomings in this aspect," the general manager says. Soft World, meanwhile, is actively expanding its presence on the mainland. It is now the largest distributor of computer games and a major publisher of magazines for game players in China, and the company is preparing for rapid growth. "The computer game market there will grow three times bigger than Taiwan's," Wang predicts. He is not alone in such optimism. The MIC expects the number of online games subscribers in China to surpass that in Taiwan within two years.
One way Taiwan can keep its competitive edge in the industry is to establish a strong division of labor as it did within the electronics manufacturing industry, notes Jessy Cheng, deputy secretary-general of the ROC Information Service Industry Association. Companies do not necessarily have to complete the entire process of production, but can seek to specialize in one area of the process. Taiwanese companies already have a good reputation for their animation techniques, for example, as many animated Hollywood feature films contain Taiwan designs. Moreover, the talent of one company does not make an industry, Cheng asserts. "Competition within an industry fosters creative energy and productivity."
In the broader context of the computer software industry, he expects games to serve as one of the leading forces in its development and contribute to its production value. "As a small country with limited resources, we have to focus on our advantages," Cheng notes. "One such advantage is the computer game industry, which is an area of great potential in the Confucian and even worldwide markets."
Indeed, the government has identified computer games as a part of the digital-content industry, together with semiconductors, display systems, and biotechnology as priority industries in its six-year national development project called Challenge 2008. To further help foster new talent, a college specializing in digital content is being planned for the Nankang Software Park in Taipei. The school will seek cooperation with private businesses and art schools at home and abroad to provide training in the development of computer games, says Network Multimedia's Oliver Weng. A similar training center, NuART Institute, was formed in 2001 in Taipei through the joint efforts of several leading companies that are in the business of selling computer games or creating animation, multimedia, music, and advertisements.
Because they are so common among young people, computer games also have the potential to serve an educational role. The material for online learning is another type of digital content that can be developed and promoted alongside computer games, something that Welove is currently doing. "In Taiwan, people prefer to play games at home," notes Chin Kai-hsin, the company's managing director. "And through broadband Internet access, they can also choose to learn through online courses." Oliver Weng points out that unlike in Korea, where more than 70 percent of computer game sales are through Internet cafes, individual players are the main customers in Taiwan. "These players, mostly teenagers, are all candidates for online learning. Chances are they're interested in learning through playing games," he adds. "Thousands of Internet cafes can be transformed into community educational centers."
On the other hand, perhaps Wang Chun-po is correct in saying that learning is one thing and playing games is quite another. In the summer of 2000, when online games had yet to hit it big, Gamania Digital promoted Lineage in its TV commercials with the call for people to "not pray, but play" to rise to "heaven," the Chinese name of the Korean game. With the great business potential and the fun of computer games, perhaps the businesspeople and players are about to find nothing more, or less, in them than their heavenly paradise.