Breaking the Forth Wall: Shanda’s Venture into Television

17 Nov

By Gordon Chu | Tuesday, November 17, 2009

Very little surprises me about pop culture in China, but I have to admit it took me a very long time to wrap my head around the magnitude of online games. From MMORPG (massively multiplayer online role-playing games) to fun casual games, online games are a staple in the pop culture of China’s youth.

The latest figure for the online game market is just shy of 27.5 billion yuan – or close to a little over $4B (USD). While the current numbers fall short compared to that of the United States (currently first in the world), China is expected to grow up to 68 billion yuan ($10B USD) accounting for almost half of the world market by 2012. While I do take these figures with a grain of salt, it’s hard to argue against general consensus on the growth opportunity of online games in China.

Currently, the online game marketed by Shanda, ‘Aion’ is the latest buzz – or, at least the very least, for the foreseeable future. While I have the upmost faith in the game’s ability to continue to dominate the online game market, they really have not been around for all that long. Just one year ago, it was all about Blizzard’s ‘World of Warcraft’ until regulatory restrictions and time lag significantly sapped Blizzard’s momentum to continue its growing market share.

And so, Shanda was quick to pick up where Blizzard had left off and poached the online community with Shanda’s adoption of Korea’s most popular MMORPG, ‘Aion’. Just to give you an idea of the magnitude of ‘Aion’ in China today, in a corner of Tai Jiang City (Zheijiang Province) lies the future home of an amusement park around the central theme of the popular game. In the latest report released by Shanda, there are over 6.8M online players and continues to grow since its beta release in April 2009.

I see the game’s growth as more of a strategic move by Shanda and, frankly, am not all that surprised by the initial success. Looking at Shanda, it appears that luck always seem to find its way to them and with the latest news on Shanda’s joint venture with Hunan TV, I would not be surprised if luck strikes again and could very well be the biggest pay off yet.

I admit, I am a big fan of Shanda. They are quintessentially on the cutting edge on both their online game strategy as well as their aspirations to be a true multi-platform media company. They may be the leading entertainment media company, but complacency is certainly is not in their vocabulary and are extremely active in breaking out of their niche and extend their footprint in the media industry.

In 2006, Shanda introduced their Chinese version of the set-top TV box (think Apple TV) called Shanda EZ-Pod. The concept was to integrate the television and PC experience in an interactive entertainment platform. Sounds easy, right? Unfortunately, the EZ-Pod failed to make any significant penetration in the China market mainly due to the fact the China market was simply not ready yet. Regardless, you have to admire the ambitious nature of Shanda to horizontally integrate itself from PC to the television set.

The EZ-Pod is just one example of Shanda’s business history (albeit a good example). They’ve dabbled as a private equity company investing in emerging game studios as well as entering the mobile market with the acquisition of a mobile entertainment service company in June 2009. Some ideas will work, some will not; however, I think this new venture will be the best bet yet.

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