VideoGames: China: Pirates bedevil legit game market, industry

WSJ China Realtime Report (Aud5,2k11)

Co-Opting China’s Online Game Pirates

Shanda Games

A screenshot shows the home page for “Juezhan Shuangcheng,” a multiplayer online game that mimics some of the characteristics of so-called “private server games” being developed by a partner of China’s Shanda Games.

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The underworld that is China’s pirated online-game sector is a big drag on the country’s legitimate game market, affecting top titles like World of Warcraft and many others in the popular swords-and-sorcery genre.

So how do you beat the pirates? Companies are generally aggressive about shutting down unlicensed versions of their games. But for China’s Shanda Games, the answer also includes efforts to win back users who have turned to unlicensed games – sometimes with help from former pirates themselves.

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The operators of pirated online games run them on what are called “private servers,” a term that simply refers to a privately-owned machine but which is common lingo for a server running an altered version of a proprietary online game. The pirates usually attract users both by offering the games free of charge and by changing the rules of the game. While someone playing the real World of Warcraft might have to grind for weeks to get their character up to the game’s highest level, the same feat may take just hours on a private server. Players can then dive right into the epic battles and treasure-hunting only available to top-level players.

Analysts say Legend of Mir, a popular martial-arts adventure game operated in China by Shanda, is among the games most widely run on Chinese private servers.

Shanda Games scans the Internet every day to find new private servers running its games and aims to shut them down, Chief Executive Alan Tan said in a recent interview. In rare cases, after a private server has been shut down, Shanda will set up its own server in the same geographical area in hopes of luring the private server’s users over to a legitimate Shanda game. Shanda may even rope the operator of the former private server into helping promote the licensed game.

The other prong of Shanda’s strategy against private servers acknowledges user demand for the sort of games they offer—where the rules can be changed and players can level up without weeks of effort.

For example, Shanda is developing a game platform called World Zero that will allow users to create their own game world and modify its rules, Tan said. A partner is also developing a game called “Jue Zhan Shuang Cheng” (roughly: “Decisive Battle of the Two Cities”) that imitates private server rules—allowing users to level up very quickly and engage in battles against other powered-up characters.

World Zero may be tested next year and Shuang Cheng may be available this year, Tan said.

Shanda’s strategy seems to have yet to catch on with the company’s biggest competitors in China. A spokesman for Netease.com said the Chinese online game company strictly combats private servers and won’t cooperate with their owners in any way. Netease operates the Chinese version of Activision Blizzard’s World of Warcraft through a licensing deal, but the company spokesman referred to Blizzard for questions about private servers running that game. Blizzard said in a statement it opposes the creation and use of unauthorized emulator servers.

The private server market is sizable. Yu Yi, an analyst at Beijing research firm Analysys International, estimates the value of the online-game private-server market will be around 5 billion yuan ($776 million) this year, about one-seventh the size of the likely 36 billion yuan ($5.6 billion) legitimate market for online games running on software programs.

The business can also be lucrative, as shown in a case last month in the western Chinese metropolis of Chongqing, where police said they broke up a circle called the “Knights Attack Group” that had distributed ads for private servers running a game called “Legend”—apparently referring to Legend of Mir.

The group of 19 people, most of them born in the 1980s and either middle-school or high-school graduates, had made at least 70 million yuan in illicit revenue in about two years, the Chongqing police said in a statement. Among the group’s assets seized by police were several cars, including two Audis, a Porsche and a BMW.

The Chongqing case also reflected how dirty competition can become in the private server business, where cyberattacks are common and victims are unlikely to seek police aid because their operations are illegal. The “Knights” group monopolized the market for Legend private-server ads because it disrupted rivals with cyberattacks, police alleged. At one point, all 20 of the top search results on Baidu for “Legend private server” were websites run by the group.

The Chongqing police said they handed off the case to local prosecutors in June for further handling.

The case was reminiscent of another in 2009, when police in Guangdong province said an attack launched by a private server operator escalated and, for unusual technical reasons, ultimately caused a brief Internet outage in areas of several Chinese provinces.

– Owen Fletcher.

— WSJ materials posted here by Owlb