Sega sets camp in Shanghai and poises to conquer China

Sega has come under much criticism in the last few years for adopting business strategies that have simply failed to provide sufficient returns in a competitive industry. Following the announcement of Shenmue Online, however, Sega has added substance to its new, re-aligned global strategy.

Looking towards the biggest emerging economy in the world, Sega has made clear its intentions to capitalise on the potentially huge Chinese gaming community. Home to over 10 million online gamers, China is already a massive market, and it’s sure to keep growing for the foreseeable future. Now that Sega has established a branch office in Shanghai, it is ideally poised to take advantage of this enticing business opportunity.

The new emphasis on the Chinese market also reinforces “Sega’s global strategy to become a market-leader in the online [and PC] game business segment.” The sheer scale of the number of online gamers in China means that certain projects could prove economically viable without ever being released elsewhere. The possibilities for online subscriptions would also help Sega avoid falling victim to China’s notoriously efficient software piracy scene.

However, this is not to say that Sega is concentrating its efforts solely on China. The longer term strategy, according to Sega’s official PR release, is to provide “great multiplayer online game content designed to appeal to market-specific tastes and demand.” Whilst the only new title intended for western audiences is The Matrix Online, Sega has lined up three titles specifically for PC gamers in China: Shenmue Online, Phantasy Star Online: Blue Burst and CTRacer - an online racing game for up to 5,000 players).

If Sega approaches this new strategy sensibly, it will provide a vital resurgence to its business. If provided with a solid, steady stream of revenue it would be able to complete potentially profitable projects such as Warhammer Online without running into problematic cashflow issues. Conversely, if Sega spends all of its resources creating and pioneering expensive MMORPG titles in China, and the Chinese market doesn’t respond as hoped, the future could be rather bleak.

Meanwhile, back in Europe, Sega's proposed output is slightly less dramatic. The PC gaming drive consists of Tilted Mill Entertainment’s classical city-building sim, Immortal Cities: Children of the Nile, and that’s about it. It may be a fairly modest offering, but in terms of basic book-balancing, the limited investment in the congested and competitive western games market is probably a sensible one, which will allow Sega to concentrate resources on its Shanghai push.