China's legal music downloads account for only about one per cent of the region's online music download volume, reflecting the severity of piracy threats, Frost says. Online gaming has fared better to some extent as players need to be a registered with the game provider to participate in multiplayer community games.
In a bid to shake-off the ghosts of piracy, stakeholders are grappling to find the right business model to monetise content, Kalwar says. For selected content, particularly online video and music streaming services, the ad-sponsored revenue model has been widely used.
He adds that game providers have adopted the FTP (free-to-play) revenue model where gamers are not charged an upfront fee to play online. Instead, the game's basic version is provided free to encourage sampling, while a fee is charged for advanced game features when users demand for them. In-game advertising provides another source of revenue as well.
Such FTP billing models, richer and wider offerings, and rising demand for massively multiplayer online role-playing games, will drive the online gaming segment's growth, Frost says.
Favourable market outlook
Overall, the future looks bright for APEJ's paid online content services market, which Frost estimates will register a CAGR of 15.6 per cent between 2007 and 2013. The research firm expects the market's value to hit US$9.2 billion by end-2013.
Online gaming should post a 14 per cent CAGR during the forecast period, and account for 75.1 per cent, or US$6.9 billion, of the market value in 2013, Frost says.
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