The Dutch Spill Group's Asian soft gaming operation is going from strength to strength in a market with huge potenial, according to Spill Group Asia's CEO, Marc van der Chijs, who also co-founded video sharing Web site Tudou.com.
 
Interviewed this week by China Interfax, van der Chijs said that despite regulatory challenges the huge potential of China's game industry has attracted many foreign companies.
 
China had 120 million online gamers as of the end of 2007 with online gaming industry revenues reaching RMB 9.36 billion ($1.29 billion) that year, up 57 percent on an annual basis, according to a CNNIC report. The report predicted that revenues of China's game industry will hit RMB 13.02 billion ($1.79 billion) in 2008 and RMB 17.03 billion ($2.3 billion) in 2009.
 
Government policy requires that overseas online games sites be operated in partnership with Chinese companies. However, there is no such stipulation for overseas-operated portals, which are simply required to register a company in China and apply for an Internet Content Provider (ICP) licence.
 
Van der Chijs's Spill Group, a Dutch company that owns Flash game portals in around 20 countries, was one of the earliest foreign game portals to enter China. In January 2006, it opened its Chinese office in Shanghai and, six months later, started to develop games for the local market.
 
These have been picked up by two Chinese portals and have also been translated into other languages for use by Spill Group's portals in other countries. Currently, Spill Group has two game portals in China: Game.com.cn was established in 2006, while Xiaoyouxi.com was acquired from a Chinese company in 2007.
 
"When we make a purchase, we take into account the person that manages the website, as well as its traffic," van der Chijs told Interfax. "A talented and professional manager is one of the main reasons we will choose to acquire a company."
 
Currently, Xiaoyouxi.com's average daily concurrent user number exceeds 1 million, and is rising by 15 percent to 20 percent per month. Game.com.cn's average daily concurrent user number, currently at 800 000, is also on the rise.
 
Though the purchase of Xiaoyouxi.com has been a success, van der Chijs said Spill Group has no further acquisition plans in China for this year. "Instead, we plan to cooperate with some mobile game companies and launch mobile games in China," he said.
 
The company will continue to focus on Web games this year. "Web games are one of the most interesting parts of Internet and growing very fast with much potential. They are the perfect kind of game for those wishing to relax but who have limited time."
 
The two main user groups that Spill Group targets in China are students and women over 30.
 
"There is a global trend that sees women playing more games. They are also a key target for advertisers," van der Chijs said.
 
Most of Spill Group's revenues in China come from advertising. Van der Chijs is positive about the country's online advertising sector, although it currently lags behind television and other forms of advertising. In 2007, television ads accounted for over 70 percent of the advertising sector's market share, while online advertising accounted for just 3 percent, according to figures from CTR Market Research provided by Interfax.
 
"It won't take long for online ads to surpass TV ads in China. The current problem is that most people in China's advertising industry are not familiar with Internet ads, but are familiar with TV ads. The same thing happened in the United States and the United Kingdom five or six years ago," van der Chijs said. "It's getting easier to make advertisers use the Internet in China. There is a lot of potential," he added. He said most of those advertising via Spill Group's China Web sites are electronics producers, games companies and cosmetics companies.
 
As well as earning money through advertising, he said games should look to selling virtual items to generate revenue, rather than charging users to enter games.
 
The popularity of Web games has also attracted Internet companies from other sectors. In April this year, China's largest search engine, Baidu, launched Youxi.baidu.com, a Web site dedicated to Web games, in partnership with Shanda, Gogo.net and 51wan.
 
Spill Group was founded by Dutch entrepreneurs Peter Driessen and Bennie Eeftink, and has become a major player in the soft games business, operating 30 game portals in 20 countries worldwide. It generates around 75 million visitors a month on a games inventory that contains 3 500 online games of all genres; casual games, skill games and download games.
 
Spill’s games are non-gambling, online games that can be downloaded to own for payment. Genres include puzzle, sport, racing, shooting, action and strategy games, which can be played alone or with several players.