EA buys minority stake in Chinese game company

Electronic Arts is making another play in Asia.

The Redwood City video game publisher announced Monday that it is investing about $167 million in cash to buy a 15 percent stake in The9 Limited, a Chinese video game company. As part of the deal, The9 acquired an exclusive license to publish EA's "FIFA Online" soccer game in China.

The9 has a lot of experience in marketing online games to Chinese consumers, said Owen Mahoney, senior vice president of corporate development at EA. EA's agreement with the company will allow the game giant to tap into The9's expertise, he said.

"We've been thinking hard and working hard on China for several years now. It's a very foreign place. It's difficult for a foreigner to understand," Mahoney said, adding that The9 "really knows" its market.

The move follows a similar agreement EA announced in March, in which it bought a stake in Neowiz, a South Korean game company. EA teamed up with Neowiz to launch "FIFA Online" and, as part of its investment, announced plans to co-develop four additional online games with the company.

The Chinese market in particular and Asia in general have proved challenging for Western video game companies. Part of that has to do with taste in games, which varies considerably between Asia and Western countries. Games such as "Madden NFL," which are enormously popular in the United States, haven't found similar success overseas.

But part of it has to do with how people play games in the different countries. While gaming in the United States has largely focused on generally unconnected game consoles, in China, South Korea and other Asian countries, much of the game playing is done on broadband-connected PCs. Online gaming isn't a new trend there, it represents the bulk of the market.

EA has taken a number of stabs at trying to tap into the larger Asian market. In addition to its two latest investments, the company bought online game developer Mythic Entertainment last year, in a move company officials at the time expected to help EA compete better in China and the global online game market.

And in 2004, the company announced that it was establishing its own game studio in Shanghai, China. At the time, the company said the studio would initially focus on customizing some of EA's games for the Chinese market.

EA's investment in The9 doesn't affect its Shanghai studio, which is now focused on developing new games for the Chinese market, Mahoney said.

The video game giant is only the latest technology company to turn to a local company for help in the Chinese market. In the past two years, eBay and Yahoo have handed over control of their Chinese affiliates to local-run companies in which they have minority stakes.

EA's investment, which is subject to regulatory approval, had been rumored to be in the works since early last month. Despite the large stake it is taking in The9, EA will not be naming any directors to the Chinese company's board.