It's not easy marketing online cash bet casino games or sports books in the United States and China—two of the big potential markets by player volume. In the US, the Unlawful Internet Gaming Enforcement Act means online gambling executives—even foreign citizens with operations domiciled far offshore—risk arrest or worse (long prison terms) if they so much as change planes in the US.

The good news for anyone either brave or foolhardy enough to take that chance is that at least the US online gaming market uses a 'cash up front' model. In China, not only do operators run the risk of hostile regulatory action, such as having a site blocked, but they also have to give their customers credit to play. As Inside Asian Gaming reported in our September 2008 edition, in China up to 90% of an online operator's gross revenues can be swallowed up in commissions paid to a network of thousands of marketing foot soldiers employed to find players, distribute credit to them and collect their debts.

Alternatives

In this challenging trading environment, it's not surprising that more and more gaming entrepreneurs targeting China and the US appear to be looking at the potential of non-cash betting games sold on a subscription basis, or so-called 'soft' gaming, such as role playing video games.

Although such products typically offer lower turnover than cash bet online casino-style games, they do give operators and content providers opportunities to build stable margins through volume. And in China, player volume is certainly the name of the game. The government-funded China Internet Network Information Center (CNNIC) estimates in its most recent published survey, released in July 2008, that China has overtaken the US as the country with the most Internet users in the world.

China overtakes US

By the end of June, 2008, the amount of what CNNIC calls 'netizens' in China had reached 253 million, increasing by 91 million year-on-year.

The Center defines 'netizens' as any Chinese citizen aged six and above who has used the Internet in the past half a year. CNNIC says the number of 'netizens' in the United States was 218 million by the end of 2007. By the end of June 2008, the Internet penetration rate in China had reached 19.1%.

If one compares the percentage of Chinese households with access to online home computers to the percentage of US households with PCs, then the US scores much higher. According to Nielsen Online, a global Internet media and market research company, in November 2008 the total universe of users for household digital media in the US was 222.2 million people, of whom 155.6 million were active users, spending a monthly average of 37 hours, 33 minutes, online. According to the US Census Bureau in 2006 (the most recent available survey) there were 126.3 million housing units in the US, meaning the household digital media penetration rate is 176.3%.

The US also scores better for credit and debit card penetration—an important element in most global business models for online gaming.

If one looks at penetration of mobile phone handsets enabled with Internet browsers as a proportion of all digital users however, then China is very strong. CNNIC says as at June 2008, the amount of 'netizens' surfing the Internet with mobile phones had reached 73.05 million. A total of 28.9% of China's 253 million 'netizens' accessed the Internet with mobile phones in the six months to June 2008, said the report.

The other good piece of news from the perspective of soft gaming marketers is that these Chinese Internet users are overwhelmingly young. The CNNIC report says 68.6% of 'netizens' are under the age of 30. And 30.3% of all users are aged just 18-24 according to the survey.

The global revenues of the online gaming industry are growing rapidly according to Victor Tong, President and CEO of PacificNet, a listed company based in Macau, Shenzhen and Hong Kong, providing a range of gaming hardware and software services including e-commerce, Internet and mobile gaming for the Chinese market.

"Based on forecasts from Juniper Research, revenue of global mobile gaming services will expand to US$10.5 billion in 2009 from US$3 billion in 2006," says Victor Tong.

"User scale will continue to grow rapidly in developing countries. In the coming six years, cumulative revenue will reach nearly US$57 billion worldwide with the Asia-Pacific region accounting for a large share of this," he adds.

Mr Tong said that in the period of 2006 to 2011, cumulative revenue of the Asia- Pacific region is predicted to account for 38% of the global market share of mobile gaming revenue.

"We are excited about how rapidly mobile gaming is expanding and the huge market potential. Despite the worldwide economic slowdown, we are seeing impressive growth opportunities in China, Macau and Asia and steady demand for our products in mobile gaming, lottery and e-commerce." he added.

Soft Options

Alternatives to the traditional cash betting revenue model in the Asian online market

Gaming products broadly categorised as 'soft' currently come in five basic formats:

Subscription games of chance and/or skill

A common approach is for online service providers already providing real money betting on games such as baccarat, poker and mahjong, to offer subscription games or play for fun games in jurisdictions where online cash betting is illegal. This is the approach used by Mahjong Time, a leading provider of mahjong software and turnkey systems for companies wishing to place mahjong games on their website for commercial or advertising purposes.

The games on offer under the subscription format may be casino-style ones or traditional regional pastimes such as mahjong or choi dai di, a poker-style Chinese game also known as 'Big Two'. The structure of the subscription can vary depending on the service provider and the target market. For games such as poker or mahjong, players' subscriptions may be pooled together, with the house taking a rake for operational expenses and its own margin, and the rest of the money offered as prizes. In other subscription formats, the fee may entitle the player to a certain amount of 'virtual' cash for betting, or a certain number of games or certain predetermined amount of playing time. The essential point about the subscription model is that it automatically caps the spending of the player, discouraging the sort of compulsive betting behaviour that is likely to attract hostile regulatory action in some Asian jurisdictions.

Play for fun games

These services may include casino-style games, but no cash betting takes place. Only virtual bets are made. They typically rely on subscriptions paid by individuals for their betting model, but without the option of cash prizes. Alternatively the subscription for access to the game may be paid by a company in order to offer the game free to customers or would-be clients. An example of a supplier is the Canadian company DTI Software that provides in-flight gaming to 81 airlines, including In-Flight Hold'em Poker, on a play-for-fun basis. In live online versions of play for fun games, players can compete against either a random number generation program or may be offered peer-to-peer or peer-to-multi peer formats.

Games of skill

These include games such as bridge, chess or sudoku. An example of an online provider in Asia is T45ol.com, a sudoku site operated by Beijing-based Front Network Ltd. The company specialises in 'advergames'. Advergaming is the practice of using games, particularly computer games, to advertise or promote a product, organisation or viewpoint. Advergaming normally falls into one of two categories. In the first a company provides interactive games on its website in the hope that potential customers will be drawn to the game and spend more time on the website, or simply become more product aware. The games themselves usually feature the company's products prominently. In the second form games are published as standalone products in various media. The games themselves though relate to a product or subject designed to interest the player and get them to investigate further. The subjects may be commercial, political or educational. Regardless of the media platform on which the game is launched, they are often spread 'virally' from peer-to-peer.

Casual games

These are normally simple video-style games in 2-D that can be picked up quickly and played during work breaks or on portable systems on public transport. They are often offered in a free demo form, supported by advertising, but with options to purchase a more sophisticated version online.

Most casual games also have common features, including: simple game play that can be activated using a minimal number of keys or a one-button mouse; the ability to complete a cycle of the game without needing to save it to hard drive or memory card; and a demo mode.

PacNet is one example of a casual games provider to the Chinese and Asia Pacific markets. Another is Boonty, a privately held company based in Paris, France, but with offices in Singapore, Beijing in China, Seoul in South Korea and Tokyo, Japan. The company's casual game platform is utilised by over 100 partners worldwide, including Internet portals, ISPs, and mobile operators. Boonty.com is available in localised versions for a number of Asia Pacific markets including Hong Kong, Japan, Taiwan and Singapore.

In September 2006, Boonty launched Clickgames.com, a destination for 100% free, first-run casual games. The available portfolio features popular games including Zuma, Luxor, Diner Dash, Poker Superstars Invitational Tournament and Virtual Villagers. Free play is supported by advertising, which the company says ensures there is no spyware or adware imported with the program. In October 2006, Boonty announced the acquisition of Beijing-based casual game developer Gamehub, while in the following February Boonty launched Cafe.com for free multiplayer social casual games.

Massively multiplayer online role-playing games

This mouthful of a product name is mercifully abbreviated to MMORPG in most gaming industry literature. In some ways it is the spiritual computer-driven descendant of the progressive rock music and fantasy live gaming of the 1970s exemplified by such exponents as the rock band Yes and the International Fantasy Games Society.

The most famous example of modern MMORPG is Blizzard Entertainment's World of Warcraft, the largest pay-to-play game of that type. In April 2008 World of Warcraft was estimated to account for 62% of the global market for MMORPG with 11 million monthly subscribers.

Free-to-play MMORPGs are also available, supported by advertising and purchases of in-game items. The free-to-play model is particularly common in Korean MMORPGs such as MapleStory and Rohan: Blood Feud.

MMORPGs are normally graphics-rich and use complex computer programs often in 3-D, normally making them unsuitable for delivery or download to mobile handsets. As far as content goes, they frequently use a story or narrative based on a fantasy adventure. Other common traits of MMORPGs are that they usually have the option of multiple skill levels and/or storylines. Their availability in live online format means they also offer players social interaction with their peers, as the name suggests. MMORPGs often have a sub-culture specific to the game, such as jargon or special names for objectives. In many games characters can be customised in terms of appearance and playing style.

One of the most interesting features of MMORPGs in terms of its financial model is that many feature the characteristics of 'real' economies. Virtual items and currency have to be gained through play and have definite value for players. Players can sell items to one another for in-game, virtual, currency or barter items of similar value. They can also purchase items for use in game, such as personalised avatars, using real-world currency.

The Three Graces

Factors in favour of soft gaming in China and Asia Pacific

There are at least three important virtues of subscription gaming and other soft gaming in the China and the Asia Pacific region. The first is the formats are generally free of hostile regulatory action by governments that ban gambling generally; ban online offshore gambling specifically; or want to tax it heavily.

The second is they offer the chance of secondary revenue streams through the sale of things such as avatars—on-screen icons or animated characters that can be used to represent the player in the game.

The third virtue is that because these games are deemed as 'safe' from government restriction, they offer their owners opportunities for strategic alliances with mobile communications networks or online social networking sites. Telecoms networks often have significant debt liabilities arising from the purchase of digital spectrum for 3G services and also face downward pressure on carriage costs because of lobbying by consumers and regulators. Any content that keeps people online for extended periods is going to be welcomed as a way of generating extra revenue.

Partners

PacificNet is working with Chinese telecom operators in the delivery of so-called casual games.

"We are a service provider and content provider for various mobile value added services for China Mobile, the biggest telecoms operator in the world, and the second largest, China Unicom," says Tony Tong, Chairman of PacNet.

Revenue model

Soft gaming content may also provide telecoms and networking operators new opportunities for revenue from advertising aimed at those soft gaming players.

"We're seeing advertising sponsorship in-game," said Ken Crouse, Senior Director, Product Strategy of CryptoLogic, an award winning provider of online gaming content, during a seminar for industry professionals at last year's Asian i-Gaming Conference & Expo in Macau.

"These are revenue models that the video game industry has been working on for a number of years and starting to put in place," he added.

Hard Road

The challenges of marketing online cash betting games in China and beyond

"If people want to promote traditional cash betting games online in China, they do it by word of mouth," says Tony Tong of PacificNet. Mr Tong was speaking at the Casino Affiliate Convention in Macau.

"If they try and promote a cash betting website and the domain gets popular, it gets blocked by the government. These websites often change their domain name or they may change their IP address a couple of times a week or even every day," adds Mr Tong.

Frank Yu is CEO of BaiduFirst, a company specialising in search engine marketing and search engine optimisation for the China market. Baidu.com is one of China's most popular Internet search engine websites. Mr Yu confirmed that any domain name with words such as 'casino', 'gambling', 'baccarat' or 'gaming' in Chinese was likely to be blocked at government request.

Internet filters

"If Baidu sees the word 'gambling' in Chinese on your site, you won't be on the search listing. The system will search for that key word and then kick you off," he says.

"Words like 'mahjong' are not however considered connected with gambling," he adds.

But as Marc Lesnick, the organiser of the Casino Affiliate Convention, points out, some mahjong websites do have cash betting available. Mr Yu says though that the system doesn't just rely on automated screening.

"On Baidu if they have concerns about your website they will have a human eye looking at it," he says.

"If you were doing gambling on your site you wouldn't call it 'gambling'. You would call it 'adult gaming entertainment' or 'multi purpose entertainment centre'.

"The thing to bear in mind is that search engines are constantly changing, and so are attitudes of governments," adds Mr Yu.

Policy change

Even where formal Internet gaming licences have been granted in China, they have sometimes been withdrawn at short notice, says Tony Tong of PacNet.

"We have a permit from the China Welfare Lottery to provide Internet-based lottery sales in three provinces of China. However even with the permit, a few months ago the Ministry of Finance said it was not recognising the permits given by China Welfare Lottery and they were going to have to reissue the licence under the Ministry of Finance," explains Mr Tong.

"As a result all the Internet-based lottery providers had to suspend their services. Prior to January 2008 it was legal, popular and licensed under the China Welfare Lottery or the China Sports Lottery. Some companies were turning over RMB40 million a month or more on lottery sales. Even with a small commission for the online operator, that's a very profitable business," he adds.

Justification

Mr Tong explains that the reason for the central government's action was the disease constantly overshadowing Chinese business—fraud.

"The problem came about because some of the online lottery providers were becoming aggregators of lottery tickets, rather than just purchasing lottery tickets for each customer online," explains Mr Tong.

"This pooling has been ruled illegal by the government, because there have been cases of players winning, but online lottery providers being unable to pay out. Some of the online providers were simply disappearing with the money.

"As a result the government said 'We're going to regulate it'. The draft I've seen of the new regulation has levels of required registered capital, rather like multi-level marketing," says Mr Tong.

Soft Gaming, Hard Choices

Operators and marketers in Asia still face the problem of how to get their money

Even if soft online gaming avoids some of the legal pitfalls of 'hard' gaming, suppliers still face the issue of making sure they get paid by the players. In China and some other Asian markets, the local currency is non-convertible and credit and debit card use may not be widespread. Under those circumstances, even soft gaming providers may need to rely on agents to collect their cash.

Another issue in China is that many online soft gaming platforms aimed at Chinese consumers are actually domiciled within the country. This can make it hard for content owners outside China to be sure whether they are being paid fairly by the platform owners. It can also make it difficult for marketing affiliates driving traffic to the site to be sure they are being properly rewarded for their efforts.

"Affiliate marketing is thriving in China," says Nick Yang, President and Co-Founder of Kongzhong Corporation, a Beijing-based company listed on Nasdaq since 2004 and specialising in wireless value-added services and wireless Internet services.

Challenges

"A lot of sites are making a living off the affiliate market. I have personally invested in many sites that purposely do business and make money from affiliates," Mr Yang told the Casino Affiliate Convention at The Venetian Macao.

He did however have stark warnings for newcomers to the market.

"Affiliate marketing in China is pretty dark. There's a lot of fraud. A lot of people get cheated—mostly in terms of not getting paid. A lot of [domestic] sites themselves are also doing fraud to try and get money from foreign affiliates or domestic affiliates," explains Mr Yang.

"It's a question of whether you can catch these guys who try to cheat you."

"The principle marketing method of affiliate programmes right now is the cost per click [CPC] model. No one does the CPM [cost per thousand] because it's too easily defrauded," suggests Mr Yang.

Beware the cheats

"Even with the CPC model it's still pretty hard to track down fraud, because you get a lot of traffic tricks. It appears it [the traffic] comes from real users, but it's actually a virus software that's opening up these locations, or something that's defrauding the system," he explains.

"More and more people are moving toward the cost per action model. For example with registration," he adds.

An important disadvantage with the cost per action system is that the costs are typically higher than CPC and there is still no guarantee of avoiding fraud says Mr Yang.

"For example, filling out a registration form or filling out a form—something that requires human action that you can track—even that has a lot of fraud.

Affiliate farming

"There is a huge disparity in wages among people in different parts of China. So these guys hire a bunch of people from a remote part of China, then put some money 'behind the bar' of an Internet café, then get the local people to download and fill out forms all day.

"When you track them, sure they're real users. But they're definitely not users that you want. These are guys who are earning a very low wage. They don't have the money to pay for services on your site. It's fraud," says Mr Yang.

The best solution and the one least vulnerable to abuse is probably the revenue sharing model, says Nick Yang.

"Right now a lot of people want to do the revenue sharing model. So if you bring in someone who pays for services on my site, I give you a cut. It's only this way that you can truly avoid someone defrauding the system."

Even the mighty search engine Baidu.com was publicly accused last November by China Central Television, the country's state-owned broadcaster, of bending the rules on its search engine results in favour of companies that had paid for adverts on its site.

On 17th November 2008, Baidu appeared to admit the claims, issuing an apology which stated: "We put too much effort in competing technically with Google, and in doing so overlooked our advertising system and its management."

Alternatives to China

Online gaming companies may be better to look at markets with fewer barriers

"A lot of online companies come to Asia and all they want to do is to get into China. But that's probably the most difficult place to do online marketing right now," Chris Sanderson, Managing Director of Affilitude, told the Casino Affiliate Convention held recently in Macau.

Affilitude is an affiliate management and marketing firm, focused on four core areas of business: sports books, foreign currency exchange, casinos and poker in the South East Asian, Australian and Indian markets.

"The markets in Southeast Asia are smaller, but that's relative," says Mr Sanderson.

"There are 72 million people in Thailand. Vietnam also has a large population.

New opportunities

"Depending on what games you've got, I would certainly look at countries like Thailand, Malaysia and Vietnam, which are grossly overlooked by a lot of online gaming suppliers," adds Mr Sanderson.

"They are actually probably the easiest ones to get into in terms of the size of the population and the growth of the Internet. You've also got less risk of running foul of the government, or less risk of being unable to persuade them you should stay open."

As well as the size of their populations, there is considerable use of English online, states Mr Sanderson.

"In Thailand for example, anyone who's educated and online will be able to read and write English. It's the same in Malaysia, the same in Vietnam. There is also a growing understanding and ease of affiliate marketing in those countries."

Soft Target

Media companies are keen to capitalise on America's online betting ban

In the United States there are media companies targeting soft gaming products at the ethnic Asian population, which currently stands at around 13.5 million people, or 4.43% of the total, according to the CIA World Factbook.

Any US-delivered content would need to avoid falling foul of the federal government's ban on Internet gambling. Nonetheless a business model adopting subscription-based games or play for fun with advertising and aimed at Asian players could be an interesting alternative to offshore online gaming products.

Target business

In August last year the Indian media business Reliance Entertainment reported it was trying to buy a US company specialising in mobile phone-delivered game content.

Reliance, part of the Reliance Group headed by the Indian entrepreneur Anil Ambani, said it was tracking the target company via Reliance's US vehicle Jump Games, based in Chicago.

A company spokesman said the idea was to provide content including animated games, to US telecoms companies, with a particular focus on appealing to non-resident Indians and Asians living in the US.

The Middle Way

Mahjong and other traditional Asian games offer a half way house between 'hard' and 'soft' gaming

For those content providers or site operators determined to target the China market, there are distinctively Chinese pastimes such as mahjong that occupy the middle ground between hard and soft gaming.

There are already tens of millions of people playing mahjong offline in China either betting among themselves in small private games at home, or playing for fun in organised associations across China.

Last year CryptoLogic invested in the online games company Mahjong Time.

"We're very excited about the Mahjong Time deal for several reasons," says Ken Crouse.

Convergence

"One is that mahjong might be the ultimate game for convergence. We've all been waiting for the mahjong market to take off for a number of years and we all hear about the hundreds of millions of players that love to play the game in China. It's a national pastime for a variety of reasons. Some people bet on it for cash like a poker game, and other people play for the community experience.

"One of our bets on mahjong is not that it's going to be the game of choice for gamblers, but that it might be so popular with community play that it then creates a space for all the other products."

Higher Plane

Avatar sales are an online gaming phenomenon in Korea

Sales of avatars as a secondary form of soft gaming revenue have proved particularly popular in the Korean market and at least one online content provider there is on record saying it makes a better margin on sales of avatars than it does on its online subscription poker.

"Avatar sales are a distinctive feature of the Korean market," says Shailesh Naik, Managing Director of CryptoLogic Asia Pacific.

"We make a better margin on avatar sales than we do on the game play."

"Poker margins are becoming increasingly complicated and competitive," adds his colleague Ken Crouse.

"In Korea players are also dressing up their avatars—buying a hat, or even buying an avatar girlfriend or boyfriend. All these little things are generating revenue for the site."

Diversify to Accumulate

Providers of services for hard gaming are turning soft

An increasing number of gaming service providers in Asia are expanding their services and content to meet the demand for soft gaming coming from the China market. PacNet for example is developing role-playing games for delivery to PCs to complement its existing mobile value added services such as casual gaming and its online lottery software.

The advantage of subscription and soft gaming formats for companies that have traditionally offered casino or other gambling games is that although they typically offer smaller margins, they appear to attract less regulatory heat from governments than 'hard' gaming products.

Acceptance

Shailesh Naik, of CryptoLogic, makes this point explicitly.

"We have now the ability to deliver in China games that would be recognised as gambling games in Europe or elsewhere, but are actually legal in China," Mr Naik told an industry audience at the Asian i-Gaming Conference & Expo in Macau last year.

His colleague Ken Crouse, Senior Director, Product Strategy, pointed out at the same event that there is also typically a distinction between margins on role playing games and games of chance, even when the latter is played in subscription format.

"Margins on games of chance are typically high," says Mr Crouse.

"Margins on games of skill and role-playing are not so high, so we would like some of those skill game and RPG customers to come over to games of chance. That latter market in itself is so large that we think this will be as big, if not bigger from a revenue standpoint than our traditional online gaming markets."

Numbers Game

Asia has millions of gamers

One of the great appeals of the soft gaming model, especially in Asia, is the sheer size of the market. There are tens of millions of young people with increasing levels of disposable income. CryptoLogic's Shailesh Naik reckons there are 100 million people in Asia alone with access to either a PC, an Internet enabled mobile phone or both.

In July Taiwan's GigaMedia, which already operates Everest Poker, one of the most commercially successful online poker rooms in the world in revenue terms, announced it had acquired an exclusive three-year licence for Web distribution in China of Electronic Arts Inc's basketball game NBA STREET Online. 'NBA' is consistently the most searched sports term on Baidu.com, the top search engine in China.

Social networking

In China one of the potential ways of contacting these young consumers is Tencent QQ. This instant messaging and networking site, with its winking cartoon penguin icon, is little known outside China, as its platform program is only available for download domestically.

Yet for its third quarter results in 2008, Tencent QQ's Hong Kong-listed parent Tencent Holdings, claimed the total number of Instant Messaging (IM) user accounts registered within China amounted to a mind boggling 856.2 million, though the number of active IM accounts were a more modest but still huge 355.1 million. Tencent claimed the number of peak simultaneous online user accounts for IM services amounted to 45.3 million, a growth of 7.9% quarter on quarter.

More significant from the perspective of online gaming service providers, is the number of peak simultaneous users of QQ Game portal playing mini casual games. This stood at 4.4 million, the equivalent of almost the entire population of Singapore, and represented an 11.2% growth quarter on quarter. The company said the total number of people paying subscriptions for Internet Value Added Services was 30.3 million, an increase of 16.1% quarter on quarter. Total sign ups for Mobile Value Added Services were 14.8 million, an increase of 10.4% quarter on quarter.

Early Days

Asia's lack of online rules isn't necessarily a good thing for investors

From an investors' perspective, one of the key challenges in expanding the subscription and role playing game model is the lack of a regulatory framework in most Asian markets. This creates uncertainty, because without clear online gaming regulation what's legal today could suddenly become illegal tomorrow.

In countries that do have clear rules, such as Korea, it allows investors and operators to plan ahead.

Korea opportunities

Korea, where CryptoLogic last year launched an online poker room, was chosen as an important target market because of its combination of high broadband penetration, clear regulation and opportunities to operate a new revenue model.

"Korea's rules are very specific," says Ken Crouse.

"You are allowed to have an online poker tournament, but you are not allowed to have a winner. You are though allowed a final table payout to the top three players. You can give them a prize such as a trip to Las Vegas, but you can't announce in advance what the prize will be. The reality is that once you've given out prizes of a trip to Vegas the first time, players know what to expect."

Other content providers have also noticed Korea's structural strengths, such as its high level of 3G mobile telephone ownership.

International attention

In December, New York-listed Electronic Arts Inc., the developer and licence holder for popular game franchises such as Fifa Soccer and NBA Street, announced the acquisition of J2MSoft Inc. a Korean developer of PC online games.

J2M develops free-to-play online games with a revenue model based on micro-transactions for products such as on-screen avatars for players and advertising. Online games created and wholly owned by J2M include RayCity, TAAN, and Debut.

"This is a significant step in EA's strategic plan for developing and publishing online games in Asia," said Jon Niermann, President, EA Asia in a prepared statement.

"J2M is an experienced team of developers and we can't wait to have them start creating online games based on new properties and powerful EA franchises," he added.

Flash Point

Gaming content convergence could lead to an ethical debate about compulsive behaviour

The emergence of soft gaming as a business model potentially creates exciting new opportunities for gaming product providers to sell services, but it also presents new challenges and ethical questions for governments and regulators.

The scientific community is far from united on the topic of alleged 'gaming addiction' in relation to casual and role-play games, but the topic received major publicity in China in 2007. The local media reported that a young and overweight Internet user from northern China collapsed and died after spending the entire lunar new year holiday playing computer games.

Game over

The man, identified as Zhang and whose age was given as 26, was said to have spent almost all the seven-day holiday in front of the computer screen, leaving it only for toilet breaks and to snatch a few hours sleep on the bed next to it.

During the AiG conference Shailesh Naik of CryptoLogic quoted a newspaper report from southern China about a woman who spent the equivalent of around US$7,000 at current exchange rates on an online subscription-based role-play game.

"She spent many many thousands of hours playing this game until she got to the level of the queen. She had spent about 50,000 yuan on it. The fundamental trigger here is what she called a chest. She said: 'Paying to open a treasure chest on this game was like a casino slot machine. All kinds of material and equipment spin inside the chest like the drum on a slot machine.'

"During a crazy period she said for her it was like gambling in a casino," adds Mr Naik.

Behaviour issues

Common factors in the success or failure of all games appear to be the degree to which they stimulate or interact with underlying traits of human behaviour, including risk taking and compulsive behaviour. It may be inevitable therefore that over time there will be convergence between elements of hard and soft gaming in terms of the way consumers seek to access and play them.

The cases mentioned above are extreme examples, and it would probably be dangerous to draw any specific conclusions from them. It's likely though that if more and more young people start accessing games online, where regulation of game content may be beyond the immediate reach of the national regulatory authorities, it will have the potential to bring service providers into conflict over issues already familiar to the land-based casino industry—namely the emergence of obsessive or compulsive behaviour in play or spending.

Macau had been tipped during 2008 to publish a new set of rules to regulate online gaming. It's understood that a draft document has already been prepared, but so far the government has made no announcement on its future. Singapore is another jurisdiction expected to enact specific online gaming regulations in the next year. In the absence of such regulation, the emergence in Asia of voluntary industry codes outlining the rights and responsibilities of players and service providers in online gaming may be the best way to protect the image of soft gaming, protect it from hostile attention by governments and ultimately allow the sector to blossom.