SEEING THE FUTURE

As a child, Chen Tianqiao's greatest dream was to fulfill his parents' expectations and become a government official. After graduation he joined a state-owned enterprise for four years--but then jumped into private business. Now he's one of China's most successful entrepreneurs. Chen's company, Shanda Interactive Entertainment, has become the biggest online-gaming firm in the world. The company's stock, which trades on NASDAQ, has doubled in the past six months. Shares owned by Chen and his relatives are now worth more than $1 billion, making him China's wealthiest person.

That's hardly the end of the story. Online gaming has reached only a fraction of the potential audience in Asia, and it's only started to catch on in the West. Chen, 31, is leading the way. Back in 1999, when most new IT companies in China were copying Western dot-com businesses, Chen and a few friends came up with an original business model. A fee-per-minute gaming service, they reasoned, would be impervious to videogame piracy, which is rampant in China. In fact, Chen initially distributed the company's first game--The Legend of Mir II, a fantasy game licensed from a Korean firm--by giving it away, then charging interactive gamers to play more sophisticated versions in Internet cafes, which were booming. Now more than 2 million users play Shanda games at one time, most paying with prepaid scratch cards that cost $3 for 20 hours. An average user plays 10 hours a week.

Next year Shanda plans to expand its market beyond Internet cafes and into Chinese living rooms, which are fast being equipped with broadband Internet access. The company plans to introduce current and new games using its Shanda Operation Console as the gaming platform. In 2005 "we announced to our shareholders that we'll start a home-user-oriented strategy," Chen says. "Shanda is indisputably No. 1 [in China]. With the help of TV and the Internet we have an advantage in exploring the home-user market."

Chen's challenge will be to stay ahead of the big gaming companies intent on following his lead. Shanda's IPO in May was "a global wake-up call for all the big players," says Ted Dean, managing director of BDA China, a telecom and technology consultancy. Now Sony, Electronic Arts and other top names are looking for partners in China. Chen says he's looking to hit back by eventually marketing Shanda games to the West "modified for English-language users." Says the young CEO, "In the next three to five years, the U.S. will be one of the biggest online-gaming markets in the world--and I hope to be there." That doesn't sounds like the ambition of a bureaucrat.

Join the Discussion