China’s Online Gaming Operators Heavily Subsidised
Shanda Interactive Entertainment Ltd (NASDAQ:SNDA), China’s largest Internet gaming operator, booked 313 million yuan in net profit the first quarter, of which 33.2 million yuan was government subsidies.
Shenzhen Zhongqingbao Interaction Network Co (SZSE: 300052), listed in China’s start-up board ChiNext in February 2010, booked 35.5 million yuan in net profit last year, half of which was accounted for by subsidies.
Shenzhen Zhongqingbao, a unit under the Communist Youth League of China, is known for developing patriotism-themed online gaming.
Shanda’s subsidies have decreased somewhat, but official support for the firm may extend beyond the financial. Last year, Global Voices Online quoted Shanghai blogger Ruan Yifeng’s reaction to heavy prison sentences imposed on a pair of “gold farmers”:
It’s loathsome to see the state judiciary serve to protect the interests of a company in such a way, and to issue a judicial interpretation which benefits Capital and sends those who haven’t committed any crime to prison.
Now, with this judicial precedent, it’ll be far easier for Internet game companies to profit as anyone who dares use a mod can be sent straight to jail! Faced with such roaring profits, who will care about the rights of the little people?
For more on gold farming, see our recent post on prisoners reportedly forced to play online games to earn money for their guards.
Evgeny Morozov’s TED talk, “How the Net aids dictatorships” sheds some light on possible motives for the subsidies.
We often hear about cyber activism, how people are getting more active because of the internet. Rarely hear about cyber hedonism, for example, how people are becoming passive. Why? Because they somehow assume that the Internet is going to be the catalyst of change that will push young people into the streets, while in fact it may actually be the new opium for the masses which will keep the same people in their rooms downloading pornography. That’s not a option being considered too strongly.
So for every digital renegade that is revolting in the streets of Tehran, there may as well be two digital captives who are actually rebelling only in the World of Warcraft. And this is realistic.