For Immediate Release

Games market in China forecasted to exceed $1.3 billion in 2008 - Game development outsourcing continues to grow with savings of 20% to 40%

San Francisco, CA, January 22, 2007 – Pearl Research forecasts the games market in China, inclusive of online, packaged PC and video games will exceed $1.3 billion in 2008. These findings are contained in the 120-page “Games Market in China” study which analyzes both the domestic games market and the market for game development and outsourcing in China.

Pearl Research’s key findings:
- Online casual games continue to gain traction and are expected to constitute 30% of the online games market by 2008. The popularity of casual games is expanding the online gaming culture beyond Internet cafes and into the homes of users. While casual games continue to grow, massively multiplayer online role-playing games (MMORPGs) still constitute the largest online gaming segment in China. Top MMORPGs can generate $80 million annually in China.

- Compelling and diverse game content, the low cost of playing games at an average of $0.05 per hour, and the lack of entertainment options in China drove growth in the online games market. A strong consumer culture, with rising demand for leisure and technology products, also contributed to the burgeoning games market.

- China will continue to flourish as a game development and outsourcing destination due to its low cost structure, large labor force and robust infrastructure. Companies can increase their production capabilities and achieve cost savings of 20% to 40% by outsourcing disciplines such as art creation. However, the captured savings from outsourcing to China is often less than companies expect. Other cost drivers such as travel, training and project management can erode the cost savings derived from outsourcing.

- Outsourcing to China comes with significant challenges. These challenges include concerns over product quality and intellectual property protection, cultural differences and the competition for skilled employees. As game developers in China accumulate experience and develop best practices, Pearl Research believes product quality will improve in the long-term.

Pearl Research’s “Games Market in China” study provides an in-depth analysis of the Chinese games market. The report contains 2006 to 2010 forecasts for the online, console (Sony PS3, Nintendo Wii, Microsoft Xbox 360), packaged PC gaming market; inhibitors and drivers to growth; deep marketplace analysis; profiles of key market players; and strategic conclusions.

The “Games Market in China” study also contains a special section on game development and outsourcing in China. This section analyzes the strengths and weaknesses of outsourcing to China, actual captured savings, current outsourcing conditions and provides strategies in selecting an outsourcing provider. Please call (+1) 415-566-8509 or email research@pearlresearch.com to inquire about this report.

About Pearl Research
Pearl Research, a business intelligence and consulting firm, specializes in the interactive entertainment and games market with a special focus on emerging markets and platforms. Based in San Francisco, Pearl Research publishes in-depth research reports and provides customized research and consulting services. For more information, please visit http://ww.pearlresearch.com.

Contact
Allison Luong
Pearl Research
research (at) pearlresearch.com
(+1) 510-205-1050