The realities of virtual play: video games and their

industry in China
Yong Cao and John D.H. Downing
SOUTHERN ILLINOIS UNIVERSITY, USA

In this study, ‘video game’ is an umbrella term for arcade games, console
games, single PC games and online games. Video games have a 20-year his-
tory in China and continually impress us with their impressive statistics. With
over 20 million online gamers and the largest game population in the world,
China was predicted to be the largest online game market in 2007 (Game
Trust and Diffusion Group, 2004). In 2005 alone, video games generated 6.7
billion RMB (US $0.8 billion) of revenue in China (Popsoft, 2006).
Playing video games has displaced TV watching as a major leisure activity
among Chinese youth. A recent survey showed that 25.4 percent of urban
youth reported video games as the medium they most enjoyed, followed by
television (18.8%). Average playtime reached 0.98 hours a day (Yang et al.,
2004). As video gaming soared in popularity, it became recognized as an offi-
cial sport by the state.
Aside from being a huge economic and entertainment phenomenon, video
games have complex social and cultural impacts. Researchers suggest video
games are becoming a social location in which new social relations, com-
munity networks, and new life-styles are formed (e.g. Humphrey, 2005;
Whang, 2003). Furthermore, as a new and popular medium, video games
have significant ideological and cultural influences on young people. They
also function as a rich art form and a new venue for critical expression
(Jenkins and Squire, 2002).
Despite their cultural and social significance, rapid growth and widespread
appeal in China, video games – unlike traditional media – have received scant
attention from international communication researchers. This study is among
the first attempts to fill the void by providing an outline of video game devel-
opment in China, and develops game scholarship by providing research into

Media, Culture & Society © 2008 SAGE Publications (Los Angeles, London,
New Delhi and Singapore), Vol. 30(4): 515–529
[ISSN: 0163-4437 DOI: 10.1177/0163443708091180]

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516 Media, Culture & Society 30(4)

Chinese video games and video game industry, using political economy and
cultural studies perspectives.
In this study, we provide a history of video games in China and focus on
the rapid growth of online games, the most exciting feature in the Chinese
game market. We demonstrate how indigenous cultural elements, players’
preferences and globalization play out in two distinct game markets: single
PC games and online games. In analyzing the roles of market and state, two
pivotal influences over video games in China, we suggest that the non-state
sector has been playing a major role in strengthening the home-grown game
industry, and reveal three major strategies that the state adopts to cope with
this new social phenomenon, which is also a billion-dollar business: monitor-
ing and regulating the market, facilitating a domestic game industry and
incorporating video games into its own nation-building agenda.

The development of video games in China

Marked by the arrival of arcades and consoles, and followed by single PC

games, the formation of the Chinese video game industry and market dates
back to the early 1980s. We begin with a brief history of the three forms of
video games, including major players in the three distinct markets. We also
want to show that these markets gradually became insignificant.
Arcades arrived in China in the early 1980s after its post-Mao opening and
reform drive. The streets were flooded with privately owned and coin-operated
arcades featuring US and Japanese games. Soon street arcade machines earned a
negative reputation, arousing public concern regarding young people’s waste of
time and energy, and an increase in juvenile delinquency. The public became con-
cerned about gambling and illegal activities in the game rooms, with the result
that the rapid growth of arcade games was followed by a nationwide government-
led crackdown. In 2000, the government finally overhauled the arcade market
through a series of administrative measures. For example, arcade game rooms
could only admit teens during holiday periods, and their business hours were lim-
ited to a maximum 16-hour day (People’s Daily, 2000). Subjected to this policy
and its vigorous enforcement, arcade games and game rooms began to decline in
popularity, whereas other types of video games and internet cafes began to boom.
Home game consoles entered China about the same time as arcade games,
though they hold only a modest share of today’s video game market. The
early 8-bit home game consoles were very popular among urban children.
The hardware market was dominated by two local Chinese manufacturers, the
Little King (Xiao Ba Wang) and Yuxing. They named their products ‘study
consoles’, advertising them as educational aids for children. This strategy,
combined with low-priced products, was successful, as parents were willing
to pay to improve their children’s academic performance and keep them away
from game rooms.

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Cao & Downing, The realities of virtual play 517

Local firms secured the hardware part of the low-end market but failed to
provide any content. As for the software, pirated Nintendo and Sega car-
tridges were popular and could be easily adapted to ‘study consoles’. Such
global industry giants as Nintendo, Sony and Sega were almost invisible in
China, except for their pirated twins. This rampant piracy was a major con-
cern for global game console manufacturers, since local manufacturers also
posed a great financial challenge to global manufacturers. In response, how-
ever, the major global game console players announced new plans for China,
particularly for the 32-bit high-end market (China Daily, 2004b).
Single PC games did not arrive in China until the early 1980s, and at that
time this insignificant market was dominated by pirated Japanese and
Taiwanese games. The diffusion and development of PC games was hindered
by the high cost of home computers. Yet the late 1990s and early 2000s saw
the rapid growth of PC games in China, which is primarily attributable to the
growth of domestic PC ownership. Between the late 1990s and early 2000s,
Taiwanese and Japanese games were no longer dominant, as games from the
US and Europe, always in pirated CD software, were equally popular.
However, in light of the sweeping success of online games, the single PC
game market shrank dramatically recently.
Out of the hundreds of game firms at home and abroad, the Taiwan firms,
in the form of joint ventures, assumed a key role in the Chinese single PC
market, seizing about 50 percent of the market (Popsoft, 2002). These firms
were also highly skillful in tapping Chinese culture and local talent.
According to Wang Chin-po, president of Soft-World – Taiwan’s largest game
company – Chinese culture is their major source of inspiration for the games
(South China Morning Post, 18 January 2002: 12).
In contrast, lacking capital and distribution capacity, most Chinese domes-
tic game firms opted for two risk strategies: (1) focusing on simple PC games
such as board and card games, which require minimum development cost, and
(2) becoming agents for foreign game firms. Only a couple of Chinese game
firms had the resources to venture into large games. Ironically, due to rampant
piracy, the overseas market became an important revenue source for these
Chinese flagship firms. For example, in March 2001, Fate of the Dragon, a
Chinese real-time strategy game (RTS) produced by Object Software, made a
debut in the global PC game market through Eidos Interactive of Japan. Over
250,000 copies were sold globally (Popsoft, 2002). The firm stated that, with-
out the international market, they simply couldn’t survive (South China
Morning Post, 18 June 2002).

Massive multiplayer online games (MMOGs)

Within the Chinese video game market, the most exciting feature is the explo-
sion of MMOGs. We first discuss the sweeping success of MMOGs and the

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reasons behind it, then focus on the two major players in the market – Korean
and Chinese firms – and see how Chinese firms are catching up and recoup-
ing the market.
MMOGs got their foothold in China around 2000, and they soon domi-
nated the market, dwarfing other forms of video games. Between 2002 and
2004, the market tripled from US $149 million to US $517 million (Ren and
Yang, 2004: 2). Several reasons exist for the instant success of MMOGs in
China. First, online gaming was fueled by the rapid progress of China’s
telecommunication infrastructure – the broadband penetration and thriving
internet cafés in particular. Second, online games are based on subscription,
with recurring revenue. Third, online games build lasting relationships with
their customers (gamers), and online games offer social interaction opportu-
nities to young people. In China, most urban youngsters have no siblings and
are thirsty for peer-to-peer interactions.
Unlike the single PC game market, products from the East Asian geo-
cultural region, especially Korea and China, dominated the online game
market. Korean firms particularly played a major role in China’s online game
market. In 2005, among 209 online games in China, 91 were from Korea and
109 from China (Popsoft, 2006). The success of Shanda1 illustrates the pop-
ularity of Korean online games. Shanda, the leading operator of online games
in China, earned sales revenue of 400 million RMB (US $48.2 million) in just
one year by operating a Korean online game, thereby exceeding the total sin-
gle PC market in China in 2003, amounting to about 300 million RMB (US
$36.6 million) (Popsoft, 2004).
Korean game firms, however, soon came to face heightened challenges
from local Chinese firms in the market, and their fortunes began to wane. In
2003, among the top ten online games in China, seven were from Korea, and
none from China. Only a year later, Chinese firms produced four out of the
ten top online games, leaving Korea with five and Japan with one (Business
China, 2005). There are two factors in the growth of Chinese firms in face of
stiff competition from Korea. First, the Chinese regulatory environment, pro-
tective in nature, puts Korean online game firms at a disadvantage. Korean
firms are not allowed any direct access to the market. They have to rely on
Chinese partners for marketing and operations (Lee and Kim, 2004). Second,
Chinese firms, equipped with 2D game technology and talent, are quickly
developing their own business strategy through these partnerships. Chinese
firms are not at ease with their roles as the sole marketing and operating
providers who have to carry the hefty licensing fees. This is best illustrated
by Shanda CEO Chen Tianqiao’s assertion: ‘Only those who develop their
own games will be successful in the future’ (Martinsons, 2005: 51).
The dizzying growth of Chinese online games is not without a price: a
shrinking single PC game sector and an overcrowded online game market
with poor quality and repetitive 2D games, the result of production at low cost
and high speed. Online games not only eat into the single PC game market

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Cao & Downing, The realities of virtual play 519

but, more importantly, they also drain the limited resources for game devel-
opment for single PC games (talent and capital in particular). The single PC
game market dwindled to almost nothing over 2004–5 through the impact of
MMOGs. In 2005, the market size plummeted to about US $8.7 million, a
400 percent decrease from US $37 million in 2003 (Xin, 2006).
For most Chinese game firms, such a sharp switch from single PC games to
online games is only a simple matter of a changing business model, rather than
any breakthrough in design and technology (Pacific Epoch, 2006). Most firms
do not have the financial and talent capacity to develop expensive and complex
3D games. The handful of existing Chinese 3D games have to rely on 3D engine
technology licensed from overseas game developers. While Korean and Western
online games are moving to next-generation 3D games, most Chinese online
game developers lag behind and cling to 2D games (Pacific Epoch, 2006).

Globalization and regional geo-cultural markets

We have discussed video game development in China, and traced the rise and
fall of certain game markets. The audience preferences noted call our atten-
tion to the discussion of globalization and geo-cultural markets. We will now
explore how globalization and geo-cultural markets play out differently in the
single PC and online game markets.
In discussing trade in cultural products, scholars argue that countries and
regions with shared cultural connections develop regional geo-cultural mar-
kets, where dynamic intraregional media flows are generated (e.g. Iwabuchi,
2002; Straubhaar, 1991). It is often observed that global video game corpora-
tions such as Sony and Microsoft are not active in China’s video game mar-
ket, whereas firms from mainland China, Taiwan and Korea are highly
visible. The active intraregional flow of games between mainland China,
Korea and Taiwan suggests a geo-cultural market paradigm. However, if we
take a closer look at the single PC game market, we may find a more com-
plicated picture. Although global giants have not generated significant
revenue in China, their products, which are always available in pirated ver-
sions, are well received among Chinese players and just as popular as their
geo-cultural regional counterparts.
Single PC games and online games have different player constituencies,
and audience preferences vary greatly. We should be cautious about any over-
arching generalization about audience preference in China’s overall game
market. Therefore, we would like to make a tentative distinction. For single
PC games, our findings reveal a mixed picture: the strong presence of popu-
lar Western (American) products, but also of products from this particular cul-
turally proximate region. For the current online game market, however, the
geo-cultural market may capture the picture, though in the rapidly changing
game market, the landscape may soon turn out to be different again.

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To further explore this distinction, we start with the single PC game market
in China, where the market is characterized by a wide range of audience pref-
erences. Global hits and geo-cultural products claim different terrains. Western
games dominate first-person shooter (FPS), RTS, and racing and sports games.
Role-play games (RPG), with a storyline from ancient Kung Fu romances, are
the particular stronghold of mainland and Taiwanese games. In a national sur-
vey among 180,000 players, seven out of ten of the most popular single PC
games were such popular Western games as Counter-Strike (No. 1). The three
non-Western games were from Taiwanese and local firms (Chinese Game
Publisher Association, 2005), and all three of the games were Kung Fu
romance role-playing games.
The case of Taiwan-made Chinese Paladin (Xian Jian Qi Xia Zhaun), a mon-
umental Kung Fu romance RPG, best illustrates how local cultural elements can
be selling points. The game was highly praised for its graphic narrative, story-
line and poems, which were all strongly influenced by traditional Chinese arts.
It was the number one game for more than three years between 1996 and 1998,
facing down challenges from global best-selling games. The game became a
legend, and a TV series based on Chinese Paladin became a hit. It was the first
game-based TV drama in Chinese TV history (Popsoft, 2004).
The online game market exhibits a rather different picture in terms of audi-
ence preferences, as opposed to the single PC game market. Korean and
Chinese MMOGs have prevailed over popular global online games such as
Sony’s flagship online game EverQuest. The only exception is the recent suc-
cess of World of Warcraft (WoW) in China.2 Chinese online games are usu-
ally PvP (player versus player)-oriented, characterized by graceful
movements and community interactions, and they encourage role players to
‘take roles within a social hierarchy and engage in coordinated strategies or
other collective activity’ (Martinsons, 2005: 51). In contrast, Western online
games are PvE (player versus environment-oriented). EverQuest, for exam-
ple, is a typical PvE-oriented online game, emphasizing competition and
character development with exploration elements. It is based on Norse
mythology, whereas popular Chinese online games are typically based more
on Chinese legend and dynastic history. It is hard for Chinese gamers to iden-
tify themselves with the characters and the overall Western story theme, and
to assume life in a virtual society embedded with Norse mythology, which is
so foreign to them.
The complexity of game players’ preferences may direct us to re-examine
how global pop cultural and cultural proximity are articulated in China.
China’s case suggests a significant level of agency among players. In the case
of video gaming, playing is a process of creating the textual narrative, and dif-
ferent game forms involve different text constructions. Any attempts to reduce
the players’ active role in constructing the text should be avoided, following
Iwabuchi: ‘We should also carefully examine ways in which audiences iden-
tify with different texts’ (2002: 134).

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Cao & Downing, The realities of virtual play 521

Globalization and cultural proximity have strong implications for game

development, giving rise to hybrid cultural products. Researchers suggest that
transnational media flows may actually lead to increased cultural differentia-
tion and creative forms of hybridization, where indigenous cultural elements
and identities are strengthened (Ang, 1996; Shim, 2006). Indeed, Chinese
game developers often attempt to incorporate Western elements. An example
would be Object Software’s successful historical simulation games Fate of the
Dragon and Prince of Qing. Both of these real-time strategy games (RTG)
masterfully combine Western game structure and flow with Chinese cultural
and historical settings. Fate of the Dragon added many Chinese cultural ele-
ments to the genre of civilization RTG, a globally popular theme, such as a
Chinese voiceover, superb Chinese-style graphics and giant kites as siege
tools. According to Gamezone, the game ‘introduced new elements to the civ-
ilization genre and received critical acclaim’ (Lafferty, 2003).
Meanwhile, major global players are also attempting to ‘glocalize’ their
online games. Rather than simply translating its games, for example, Sony is
now ‘culturalizing’ its products for China. It would take Sony six months to
remodel EverQuest II and adapt it for the Chinese market ‘with more than 1.5
million words to be translated and other content and characters to be changed’
(Nuttall and Dickie, 2005). Chinese culture has not been wiped out as an
indigenous element in the video games. On the contrary, it has been strength-
ened and increased precisely because of the globalization process, making
them ‘glocalized’ products. As evidenced here, global homogenization and
local differentiation are not mutually exclusive but are two aspects of the
same development (Price, 1995).
The dynamic cultural traffic in this geo-cultural region, as well as this vis-
ibly emergent local industry, may even suggest a scenario that it is freeing
itself from Western power, but this is not the case. Theories of dependency
and cultural imperialism, in spite of being under heavy attack, still have some
explanatory power, through their pinpointing of the clear dependency of
China’s video game industry regarding capital, distribution and technology
transfer. For instance, Object Software, a leading single PC game firm, totally
depended on a major global game publisher for the global distribution of its
games. Even Shanda’s rise and expansion heavily depended on its capacity to
raise finance, mainly via NASDAQ. Successful global financing enabled
Shanda to engage in a series of acquisitions, including its acquisition of 29
percent (US $91.7 million) of stocks of ACTOZ, one of Korea’s largest online
game companies (Sohu.com, 2004). NetEase, another leading online game
operator and developer, relies on the technology licensed from an Australian
MMOG developer, Big World, for its 3D engine (Pacific Epoch, 2006).
China’s video game industry may never depend on the West for content,
but the success of Chinese firms is increasingly dependent on or integrated into
a system of transnational commerce, such as foreign capital, distribution
channels, management expertise and technology. In this sense, China’s game

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industry can never be free from the global trade and finance system, where
Western economies and transnational corporations constitute the fundamental
structure (Kotz, 2002).

The state and the game industry in China

So far, we have discussed culture and gamers’ preferences in the market, and
proposed that they play a very important part in the development of video
games in China. To understand the game industry fully, we also seek to place
the industry in its political and economic framework, and examine the market
and the state, the two major defining forces that shape China’s video game
industry.
We use the term ‘state’ to refer to China’s government and party organs.
Contemporary China has experienced a major departure from a monolithic
totalitarian party-state system, with its centralized command economy. The
opening up and reform policy has allowed local authorities larger discre-
tionary power in policy implementation. By focusing on a single dimension
of state power – the central level – we may save ourselves from the complex-
ity of central–local dynamics and regional variations. However, the video
game industry is not thereby freed from such complexity. How the state actu-
ally affects the industry may depend on the interactions between the central,
province and local authorities, and may be further moderated by the relation-
ship between local authorities and the game firms.
When investigating cultural industries in China, many media researchers fol-
low the market–state tension approach as a major point of departure (Chan,
2003: 161). In particular, some forms of globalization theory have generated
arguments that the state is obsolescent, and thus no longer central to media stud-
ies in the global era (e.g. Featherstone, 1990). However, a significant number of
scholars provide evidence that the state is still a crucial force (Morris and
Waisbord, 2001), and that different states adopt a variety of strategies to
respond to the globalization process. The state remains a ‘fundamental point of
reference at individual, national, and supranational levels’ (2001: x).
Contemporary China, with its distinctive political and economic system,
lends itself very well to the argument for the persistence of state power. Chan
(2003: 173) stated in his analysis of media markets that the ‘market and state
tension is fundamental to the understanding of media development in China’.
There, the state still exerts a tremendous influence through policies, import
quotas and other administrative measures. In addition to explicit and direct
intervention, the state’s influence in the domain of cultural industries can sub-
tly operate through the market itself:

It [the state of China] has rejuvenated its capacity, via the market, to affect the
agenda of popular culture … the state’s rediscovery of culture as a site where new

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Cao & Downing, The realities of virtual play 523

ruling technologies can be deployed … constitutes one of its most innovative

strategies of statecraft. (Wang, 2001: 71)

We will return to this argument by examining how the state encourages

domestic firms to develop ‘healthy’ online games sponsored by the state,
which are part of the state’s ongoing efforts to shape cultural industries to
embrace state-socialist ideology, to resist foreign content and influence mass
cultural consumption (particularly among young people).
Significantly, the video game industry in China was born marketized rather
than state owned. Domestic private capital and non-state enterprises were the
major players. The most prominent feature in the development of the game
industry has been the leading role and the ongoing strengthening of non-state
firms. This clearly reflects China’s ongoing shift from heavy reliance on state-
owned and collective enterprises to a mixed structure where the private sec-
tor plays a strong role. This shift was finally acknowledged in the revised
Constitution of 1999. The success and development of the video game indus-
try in China is organized around such non-state sectors as private investment,
rather than as offshoots of giant state-owned media conglomerates. The video
game case may also signal a departure for China’s traditional administration
and management of the cultural economy, which to date had usually been an
in-house function of state media companies.
Video games, as opposed to other traditional media such as press and TV,
are not seen as central and indispensable to its priorities by the party-state’s
ideological apparatus. This has allowed great room for maneuver for the mar-
ket and private capital. When studying the internet in China, researchers have
noted that the interactive entertainment market, equipped with new technol-
ogy, can become a strong market force that the state finds very hard to con-
fine within the existing parameters (Chan, 2003: 173). Likewise, we may
propose a parallel argument that the magnitude of the video game market
force is becoming stronger, with a tendency to circumvent geographical and
administrative boundaries.
After the market, however, the state is the next most important force shaping
the industry. The state in China keeps repositioning itself to cope with video
games. At an early stage, the state behaved more like a regulator, policing arcade
games and pirated games in response to negative public responses towards the
video game. When online games became a billion-dollar business with cultural
and social significance, the state began to shift its position from that of regulator
to a more complex role. We focus here on three aspects of the state’s efforts:
monitoring and regulating the market; facilitating the domestic game industry;
and incorporating video games into its own nation-building agenda.
The censorship mechanism in China has evolved into a combination of
state and market procedures (Bai, 2005). The state remains active in policing,
licensing and putting restrictions on game content. For example, an imported
game censorship committee has been set up under the Ministry of Culture

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(MOC) to target foreign games featuring violence, sex, superstition, and those
thought to threaten national unity, sovereignty and territorial integrity (China
Daily, 2004a). Market censorship, more subtly, functions very well through
the self-censorship of local game firms. Game firms, non-state in most cases,
have to make games commercially viable and avoid any political content. For
instance, in Self-Regulation of Chinese Game Publishing Industry, article six
explicitly states that the guiding principle is ‘to promote … the socialist spiri-
tual [cultural] civilization’3 (Chinese Game Publisher Association, 2003).
Thus many firms may seek a ‘closer embeddedness’ with China’s party-state
system to ‘maximize their leverage’ in this market (Dickson, 2003: 19), which
runs contrary to the sometimes hopeful view that private investment in the
cultural sector may be conducive to content industries with a degree of polit-
ical independence.
In addition to censorship, the state shows an increasing regulatory interest
in online game business by intervening in online game operations rather than
simply policing game content. Between 2005 and early 2006, the state experi-
mented with a couple of regulatory policy proposals such as an anti-addiction
system that would impose a standard aimed at limiting players’ gaming time
to five hours a day. There was also a real-name registration requirement for
online gamers in order to monitor young gamers under the age of 18.
These policy proposals suggest that the state keeps adjusting to cope with
new forms of mass entertainment and mounting public concerns regarding
online-game addiction. However, in China, the General Administration of
Press and Publication (GAPP), the Ministry of Culture, the Ministry of
Information Industry and the Ministry of Public Security all have specific
jurisdictions over online games, reflecting different priorities. Regulatory
interests may also be partially a result of certain regulatory bodies’ attempts
to extract economic rents from this lucrative business. In any case, the
heavy reliance on regulatory policies, rather than industrial self-regulation
or the market, reflects a long-held regulatory philosophy and tradition of
direct state control over any mass-consumption cultural items, as well as the
state’s distrust of industrial self-regulation, given the fact that the industry
is composed of non-state capital and players. However, following its recent
attempts at intervention, technical difficulties and discontentment from
online gamers have made GAPP back off from its implementation of an
anti-addiction standard (China Daily, 2006). This process questions the
notion that the state can freely impose its will on this mass-consumption
cultural zone.
Aside from being a monitor and regulator, the state also plays a proactive
role in facilitating the domestic game industry to develop indigenous content.
First, the state protects it through a set of regulations restricting foreign firms’
direct access to the market, and foreign ownership. Second, the state takes
concrete measures to back the Chinese industry. For example, the online
game industry has been listed as part of the national science and technology

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Cao & Downing, The realities of virtual play 525

project 863 Program, granted the same status as the high-tech sector, and so
enjoys tax breaks (XinhuaNet, 2003).
The state’s support for the indigenous game industry is not an isolated
effort but a part of ongoing state-initiated reform to build strong cultural
industries. Since the 1990s, the state has engaged in a series of measures to
reform its cultural industries (Lee et al., 2006). Moreover, with its pro-private
sector stance, the state manages to create a congenial, capital-friendly envi-
ronment for cultural industries (Bai, 2005).
Third, a largely unnoticed role of the state is its ongoing endeavor to integrate
video games into its nation-building agenda by capitalizing on the propaganda
capacities of the new medium (Zhong, 2002). As is the case with such cultural
products as TV and movies, video games are a site of political and ideological
struggle so far as the state is concerned, given the fact that video games have
strong appeal to young people. Currently, the state is promoting its China
National Online Game Publishing Project to encourage the development of
domestic online games bonded to traditional culture. According to SAPP, the
aim of the 100 state-sponsored domestic online games between 2004 and 2008
is to ‘strengthen … moral and ethical education’ and ‘cultivate healthy con-
sumption’ among young people (State Administration of Press and Publication,
2004).
Through the officially sponsored Chinese games, guided by the propa-
ganda principle ‘educating youth through entertaining them’ (Zhong, 2002),
the state strives both to educate young people to resist increasing foreign con-
tent in cultural industries and to cultivate a generation that identifies with the
state’s ideology. However, the state’s dominant ideology regarding video
games may also be negotiated by gamers. Game culture, a social form cur-
rently void of covert state involvement, may introduce an alternative outlet for
critical expression; gamers not only interpret the text through their interactive
playing, but also in the form of a fan-based game culture, which involves real-
world activities and challenges the state’s preferred priorities (Jenkins and
Squire, 2002).

Conclusion

We began with a historical account of the video game industry and markets in
China, and sketched out the leading players in the different markets, emphasiz-
ing their degree of agency. Our analysis has demonstrated the presence of the
geo-cultural paradigm in the online game market, and the hybridization of video
games in China. We have explored the video game industry in China along the
dual axes of state and market, with a focus on the state and private sectors, and
to a lesser extent on transnational financial systems. In our analysis, China pres-
ents a unique feature: active state involvement in video game development along
with a growing domestic game industry dominated by non-state players.

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526 Media, Culture & Society 30(4)

We conclude our discussions with two trends arising from recent observa-
tions of online games in China. One is what we may call ‘recentering’ of
online games in the geo-cultural market of East Asia. The online game center
in Asia is shifting from Korea, standing by itself, to a possible ‘Twin Towers’:
Korea and China. Within a short period, the Chinese home-grown online
game industry has recouped domestic market share and further expanded into
Southeast Asia. Chinese online games have not only entered Korea’s market,
but now also outflank their Korean rivals by sweeping Vietnam’s market. Is
this a one-off phenomenon or the beginning of the spread of Chinese digital
culture products – in the form of online games – across the region? Future
research, based on cross-country analyses, is needed to examine this question.
In addition to vibrant regional expansion, another observed trend is the
ambitious expansion of Chinese online game giants into traditional domestic
media sectors. Our previous discussion outlined the ongoing friendly envi-
ronment for private investment in media sectors. Chinese online game giants
such as Shanda seem to take full advantage of the environment and seek
cross-media expansion. In 2005, Shanda announced a bold strategy with EZ
Station, a Shanda-branded TV set-top box offering a wide range of content
and other services (Dickie, 2005). With over 460 million registered accounts
and cutting-edge technology backed by global finance, Shanda has become a
formidable force in China’s mediascape. Its ambition cannot be lightly dis-
missed by anyone, even the state.
Future research may take a closer look at how the state may seek to tame
this ambitious giant and collide with the ever-growing non-state players in
the online game sector. The game industry’s development shows that in a
globalizing context the state plays a considerable role, ironically combined
with a strong private sector presence. A strong state provides a competitive
advantage and encourages domestic production to compete with foreign
companies. Meanwhile, flourishing private business in mass media and
entertainment, coupled with potential media outlets independent of the
state, may challenge the authoritarian party-state, which the central state
would not be glad to see.
Another potential research area is to examine how increased local auton-
omy, and interactions among the central government, local authorities and
the industry affect China’s landscape of video games. Take Guangzhou for
example, a leading city in economic experimentation, and adjacent to Hong
Kong. Researchers have noted that its practices of content production have
to be ‘considered in relation to the semi-transnational frame of references’
and politics specific to this region (Latham, 2000: 636). These variations in
central policy implementation and specific local context may actually
define the outcomes of state interventions (Chung, 1995). Little literature is
available that deals with China’s digital media and their specific local con-
text. The complexity and impacts demand empirical investigation, not
abstract projections.

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Cao & Downing, The realities of virtual play 527

Notes

1. Shanda Interactive Entertainment Limited (NASDAQ: SNDA), founded in

December 1999, is the largest online game operator and leading online game devel-
oper in China. It claims to have approximately 460 million registered accounts
(www.shanda.com.en/about/overview.htm).
2. The success of WoW may have little to do with its Western cultural appeal. A
survey among Chinese online game players found that players cared little about the
cultural elements and were attracted to WoW because of its superior technical quality
and PvP (hack-and-slash) style of play, rather than the exploratory style common in
PvE games like EverQuest (Pacific Epoch, 2006). WoW’s other selling point is that it
lends itself well to highly valued game items acquisition, an important venue for the
game item trade. Game item trade is a major motivation among Chinese online
gamers.
3. ‘Spiritual civilization’ (Jingsheng Wenming) is the official English translation in
China (see A Chinese–English Dictionary, Beijing Foreign Studies University, 1995:
634), but we believe ‘cultural civilization’ may reflect the meaning more accurately.

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Yong Cao is a doctoral student at the College of Mass Communication and

Media Arts, Southern Illinois University, Carbondale. He received his
Masters in Public Affairs from the University of Texas at Austin. His research
interests include new media, intercultural communication, international com-
munication and advertising. The paper won the Top Paper Award in the Game
Studies Interest Group, ICA, 2007.

John Downing directs the Global Media Research Center at Southern Illinois
University Carbondale. His most recent book is Representing ‘Race’:
Racisms, Ethnicities and Media, SAGE, 2005 (co-author Charles Husband).
He is currently editing a one-volume encyclopedia of social movement media.

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