Business Model analysis
In my opinion, this business model could be successful in China. During the recent years, the web-based services have showed great potential to further development, especially the online gaming business which is doing very well in countries like China and South Korea. The game industry had surpassed the movie industry and become the No. 1 global NDP Group. The East Asia have already become the advanced region in the development of online gaming. After the rapid growth in 2002, China has been promoted to the core market.
The favor of games is human’s nature. There is no limitation between sexes and nationalities. Online gaming is regarded as one of the most attractive entertainments suitable for everybody. Compared with e-commerce businesses, the virtual world provided by the game is a relatively low-risk venture, since it doesn’t physically manufacture anything. Therefore it’s more flexible to increase the popular items and reduce the unpopular ones. It’s a more different, interactive medium.
Firstly, it delivers advertising to its visitors by offering the brand-name accessories, evaluating the effectiveness of campaigns and planning new ways to aim the next ads. Secondly, it’s a means of doing the market research, the items that sell well in the virtual market
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First of all, the investor should try to establish a more effective industrial value chain with good cooperation and coordination between the sectors. For example, some game operators have revenue sharing agreements with telecom operators in which they receive a percentage of the revenues from traffic generated by their online gamers. Good cooperation could create a win-win situation. While the traditional games have suffered from the serious piracy problem in China, the online games would avoid such problems to some extent, as most of the online games are based on the massive online communities.
Besides, most of the Chinese online gamers are used to the free access. How much profit could online games bring if they are not free to the users? That’s a main problem which should be considered carefully. Therefore, the operators should consider the situation and strengthen the extra functions or services to the payers. There are other issues which should also be taken into account, such as the product design, the users’ classification, and so on.