Study Of The Profitability Of China's Online Game Industry

Online game has been developed in China for 8 years. Although it is not a long period of time, it grows strongly. Because of the grand payoff of online games, lots of companies keep joining in this market. Without any experience, enterprises in China bravely keep trying different ways to make money, and improve their profitability. Finally, they found a successful way for the development of online games in China, and consequently promoted the blossom of the market.Although it is a great achievement for the development of online game industry in China, it also shows some drawbacks. To get large profit, some companies keep chasing the 'free' agent operation pattern, which results in weak independent innovation, and serious limitation by the companies overseas, stemming from no self-owned intellectual property rights. This not only slows the development for profit, but also obstructs the self-development of online game industry.Considering the characteristics of industrial chain, this work analyzes the roles of various enterprises in the online game industry, and found out the key chain part: online game companies. Starting from the profit patterns of these online game companies, this work also investigates the difference of companies' profitability between the self-development pattern and agent operation pattern. According to the analysis shown in this work, it can be concluded that: among the industrial chain of online game industry in China, the online game companies become the key part and are capable of getting grand payoff by managing the online games' content and operation method. Due to the characteristics of product configuration and life cycle of online games, these companies chose virtual product and value-added patterns, which is so-called 'free' pattern, as the key profit pattern. In a short period of time, compared to those self-development companies, the online gain e companies in China using agent operation pattern has complete advantages in nonprofit risk management and quick payoff. However in the long run, these companies have a big limitation of profitability, and can not have various profit patterns in a long-termSupplement to the drawbacks of 'free' profit pattern and agent operation method in the online game industry in China, this work proposed two principles. First, developing innovation of profit patterns, such as developing embedded advertisement, selling relative products, can promote multiple developments of enterprises. Second, enhancing the independent innovation ability can improve the key competitive power by, make self-owned intellectual property rights a powerful tool in online game enterprises, and consequently enlarge companies' profit. Hopefully, the proposed two policies can help online game industry developing based on rationalization.