Cartoon Network's Chinese Dream

With over half of the traffic generated on its websites in Asia generated from its online games, it’s no surprise that Cartoon Network sees games as a way to unlock greater advertising revenue from mainland China.

The Turner-owned kids brand has commissioned SinoTech, a Beijing-based firm, to create online casual games based on Cartoon Network's own characters as well as cartoon characters owned by SinoTech. The deal also gives SinoTech exclusive rights to sell ads around the games, with a focus on tapping new advertisers from China.

“Our focus for most of the year has been looking at South Asia, because our business there is quite strong,” says Benjamin Grubbs, regional director of interactive media for Cartoon Network’s parent, Turner Entertainment Networks Asia. “In the year to date, we haven’t had any focus on the mainland China market – this is more of an initial step to start entertaining advertising from marketers in mainland China that are interested in the kids online media space.”

SinoTech will develop two games each month aimed at Cartoon Network’s regional site and its localized site in Taiwan, with games placed on either or both sites as part of a move by Cartoon Network to create different game portfolios attuned to local tastes. In the future SinoTech-developed games could also end up on Cartoon Network’s other localized sites in North Asia, such as Japan and Korea, as well as on a mooted localized site for mainland China. 

Formidable competition
The games face formidable competition in China itself, home to Asia-Pacific’s most visited online gaming site QQ.com Games, which focuses on casual games, the same area as Cartoon Network. SinoTech COO Mike Perreira aknowledges the competition from QQ.com Games, which hosted 44 mil. visitors in August according to digital ratings agency comScore, but says Cartoon Network’s clearly defined kids audience will provide a valuable focus when selling the site to advertisers. 

SinoTech plans to develop a range of advertising opportunities around its games such as banner advertising and search engine marketing, with revenues from social media, organic and viral marketing expected to build in the medium term.  China’s online ad market will grow 50% this year to US$1.44 bil., according to JP Morgan. 

This tie-up could present other future opportunities; about 25% of internet users in China play casual games, followed closely by 22.3% who play massively multiplayer online role-playing games (MMORPG). One option is to go after the MMORPG market in China, as Cartoon Network is doing in the US with Korean developer Grigon Entertainment.  Others include testing the waters in the pay-to-play market. This tie-up opens many doors, but doesn’t hold any guarantees.