Fighting the Online Video Game Wars in China Essay Example

the pie. Equines practices: Hand in hand with China's special political and socio-economic condition goes their industry-based situation.

The two relevant forms of gaming are PC and online video games. Due to the fourteen years ban of console-based games the video game market is dominated by online video games. Online gaming in China represents one of the largest and fastest growing Internet business sectors in the world. With 457 million Internet users currently active in the peoples Republic China, the country now has the largest online user base in world, of which two-thirds engage in online game play.

There is a major difference in payment regarding online video games compared to PC games. In order to play PC games, the customer has to invest into the game first before being able to play.

Online video games are cheap or free of charge to join the game, but in the course of the play the gamers have to purchase extensions to continue successfully. Over the years, Chinese costumers got used to the latter. In this context strong domestic players like Tangent, Intense and Changing have developed.

Q Games is one of the popular online games.

It was developed by the Tangent Group, which is the fifth- largest Internet company in the world after Google, Amazon, Alabama, and Ebay as Of October 2014. In 201 2, Tenement's revenue outstripped Passbook's by over $2 billion. Overall, the Chinese online video game market outweighs PC games in gamer number and revenue. Chinese customers are used to the special payment practices in online video games.

Additionally, domestic video game producers are sharing the market among each others. Aloes: Copying, whether

a painting or a literary work, has a long tradition in China. It was a way of learning, of showing admiration and respect. In China, the issue of digital piracy is not merely legal, but socially accepted. It originates from the high demand for cheap and affordable pirated goods as well as the overpayment connections of the businesses which produce such goods. China continues to have the highest commercial value of pirated software at $8.

9 billion among developing countries and second in the world behind the US at $9. Billion in 2011. 3. Answering Case Study questions: What differentiates winning firms from losing and also-run firms in this industry? In this section, we are tying to find out the kind of competitive advantages a winning company has in the video game industry comparing to a weaker opponent.

Resource-based considerations - BRIO framework: Value: patenting, ability to rapidly respond to challenges, dominant position in key markets Winning firms in the Chinese video game industry are not bothering with patents.

Computer programs as such cannot be patented, but they may be protected under the Regulations on Computers Software Protection, formulated in accordance with the Copyright Law. In fact, China's accession to the World Trade Organization (WTFO) in December 2001 seems to have helped, by requiring China to revise its copyright, trademark and patent laws to bring them into line with international standards. An invention containing a imputer program may be patentable if the combination of software and hardware as a whole can actually improve the prior art, bring about technical results and constitute a complete technical solution.

F-room an ethical perspective, the Chinese, from the citizens'

point of view, do not see it as morally or ethical wrong to buy or sell pirated goods since they've always done it and has been a part of their culture. Due to the less abundant amount of wealth in the country in combination with their cultural ties, the Chinese are not having a strict stance on software piracy.

How is this affecting the leading video game producers in China? Well, all of Tenement's products have in common, that they show remarkable similarities with the products of international competitors.

Jack Ma of Alabama Group stated, "the problem in Tangent is no innovation; all things are copies. " Nevertheless, Tangent is performing very successful with this copying strategy. As of 2009, the company held over 400 patents. As a result, patents are not necessarily a competitive advantage in the Chinese video game market. Maybe it is something else.

Winning firms in the Chinese video game industry have the ability to rapidly respond to challenges. In 2001 , a new business del emerged in China with pre-paid cards in Internet-Cafes. The impact of this innovation was immediate in a way that it has steered the market towards Moos.

The big Western firm were not able to adapt to changes quickly. This is because of the high entree barriers to the Chinese market like partnering with a domestic firm. Due to the fact that domestic companies were part of that innovation in the video game market they could cope with the new market situation more successfully.

Winning firms in the Chinese video game industry have dominant positions in the market. Undoubtedly, this is the case as Sarah has

shown you in her industry-based analysis. Adding up to her valid points, China's government did a great deal favoring domestic firms.

As mentioned in the beginning, their list of recommended games only consists of games from domestic enterprises.

Despite of this, the Chinese market does not play to Sony', Microsoft' and Nintendo' traditional strengths in console games. Therefore, these firms needed to adapt and acquire new capabilities in Moos. Strategic change is hard and risky during the maturity phase. This is why the big Western companies decided to pursue different paths like partnering with local game developers. In that respect, winning firms in the Chinese video game market are highly innovative, fast-reacting and dominant players.

Rarity: Winning companies have valuable resources and capabilities that secures their competitive advantage; but how rare are these resources and capabilities? In our case, Chinese firms are not competing against international companies on the online video market.

So they are mostly exposed to domestic competition. International companies try to benefit from their Chinese competitors be partnering with them in different ways. Sony, Microsoft and the Walt Disney Internet Group are working with local name developers to implement their products in any way.

This leads to another challenge.

Imitation: Being an intangible asset, video games are easy to imitate. It is not only the code, but also the ideas like the storyline, characters and design that are more then a source of inspiration for video game producers. Right here, the question needs to be addressed why customers choose to play a certain video game over another. Presumably, it is a combination of price and certain features of the game. But obviously,

it's not the cheapest video games that are the most popular ones.

For this reason, these certain features that make a video game popular would need further investigation in order to get a comprehensive analysis.

What we can say is that it seems not to be primarily important whether a firm differentiates from other firms or whether its capabilities are easy to imitate in order to be successful in the Chinese video game market. This is, because the losing companies are not exactly taking part in the competition and products and business models can and are easily copied in China. In regard to some Chinese firms - they are copy cats from day one.

Institution-based considerations: Especially in developing countries the institutional framework is of great importance. Formal institutions like laws, regulations and rules are having decisive influence on a firms success.

Just as a reminder: China's government favors domestic games and international firms have to partner with a local company to do business. From an organizational perspective, being a domestic company in China is of great advantage, because the company has better relations with the government. Conclude that winning firms in the Chinese video game industry are first and foremost Chinese.