Parks Associates Blog

Tuesday, September 16, 2008

China Telecom, an 800 Pound Gorilla, Just Landed in Virtual World

According to 17173, a Chinese technology news website, and several other Chinese websites, Hurricane Ike just landed on China's 3D virtual world market. China Telecom, the largest telecom operator in China, with more than 40 millon broadband subscribers and more than 210 million local access lines, announced that it will collaborate with Shenzhou Hengji (a fully-owned subsidiary of Enreach Technology) and build a 3D virtual world called ChinaQ. This is significant news, especially since I'm wrapping up a report on 3D virtual worlds, with a section dedicated to the Chinese market. After spending a couple of nights talking to CEOs of HiPiHi, Novoking, UOneNet, and iLemon, some of the leading companies in the space, how did I miss this?

Very intrigued, I put aside the report and spent some time digging through ChinaQ's website. First a little bit of background on Enreach Technology, its parent company. Headquartered in San Jose California, Enreach was established 10 years ago as a global provider of digital video entertainment systems for broadband IP networks. According to the company, it develops complete broadband-ready entertainment systems that enable operators to deliver revenue-generating services such as: VOD, TV over IP, DVR, Internet and E-mail. The company also developed the popular real estates website focus.cn, which it sold to Sohu.com in 2004.

While looking through the website and recent press coverage posted, I became confused. First of all, it seems the world has been under-development for a while and it already has virtual islands and spaces branded by BMW, Cisco, Dell, IBM, Nokia, Sony Ericsson, Sony, and Huawei. China Telecom seems to be another brand that has established a virtual presence in its world. This impression was confirmed by the first article covering this event. However, several other articles did make it sound like China Telecom is different from other brand partners and has deeper involvement with ChinaQ. In fact, China Telecom was the only brand featured on the homepage, making it look like ChinaQ is owned by China Telecom. Nevertheless, none of the articles mentioned whether China Telecom had made financial investment into the technology and platform. It could be just a co-promotion. Glancing through the website, it seems ChinaQ's main focus is on social networking. It also has many organized activities to engage users, including several that are game like. Since it's still under closed beta, it's hard to tell how popular it is. The company said it would release 200 accounts and if you know Chinese, you can try your luck by sending an email to master@chinaq.com.

My initial investigation created more questions than answers. I'll surely try to approach the company in the next couple of days and see whether I can find more information. Assuming China Telecom is seriously interested in this, I can see several interesting possibilities. China Telecom, which has a very popular value-added service portal called vnet.com can potentially integrate 3D virtual worlds into its offerings. It could establish a community/social network for its service subscribers and increase customer satisfaction and retention. It can reward loyal customers with virtual goods and loyal virtual world residents with real-world services. It can also provide VoIP services in the world. Assuming it is serious, with the large subscriber base and deep pocket of China Telecom, ChinaQ can pose serious threats for HiPiHi, Novoking, and UOneNet, the three aspiring virtual worlds companies. (Of course, let's not forget CRD, the juggernaut backed by the Beijing Municipal Government) None of them has launched to the public yet so ChinaQ may not be far behind.

Stay tuned. I'll come back with more information if my inquiry goes through...

Feel free to submit your questions through the comments section.

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