There’s a new sheriff in town, and its name is China. After decades of dominance, the world’s leader in global games revenue has changed hands from the U.S. to China. According to data revealed by the Ministry of China, revenue in China’s games sector attained $22 billion in 2015 buoyed by the country’s 670 million internet users (almost half the population of China)—370 million of which were playing online games (larger than the U.S. population).
By 2019, games research and analytics firm Newzoo predicts gaming revenue in China to reach $28.9 billion, with mobile accounting for $13.9 billion. Seeing as more than half the country still yet to become internet users, the opportunity for growth is immeasurable. Now, more than ever, is the golden era of gaming in China.
Now, Chinese mobile game developers with strong domestic performance are looking westward to fuel growth. Tencent, China’s No. 1 mobile gaming company, bought a majority stake in Supercell—one of the most profitable western free-to-play game devs—from SoftBank for $8.6 billion in June 2016 (you can read more about the top 2016 Chinese acquisitions in this report). An acquisition such as this proved that the revenue potential in the West is undeniable. Asian games market researcher Niko Partners pegged Chinese game devs to generate $1.3 billion in revenue from foreign markets. By 2020, such revenue is projected to hit $2.1 billion.
China’s mobile game market is expected to reach $10 billion in 2016. That’s a 41 percent increase from 2015, and accounts for 27 percent of global mobile game revenue. The opportunity for profit makes China a tantalizing possibility for devs around the world, but most should tread carefully: China’s market, though influential, is unique. Today, China’s mobile game market remains unique—and complex. The country has hundreds of app stores, a variety of languages, stringent regulations and distinct genres.
Engagement, conversion and retention trends in China
1. Mobile users and gamers alike in China are engaging with mobile video ads. A Nielsen study in March 2015 found that 56 percent of internet users took action after viewing digital and mobile video ads.
2. eSports are popular and lucrative as market was worth $36.7 million in 2015. In China, 24 out of the 100 top grossing Android apps and 19 out of the 100 top grossing iOS apps are considered eSports games.
3.Online forums increase engagement and encourage feedbackю Joyme, one of the most successful combined online forum and distribution services in China, boasts 10 million active users. Combined online forum and distribution services are viable in China due to its fragmented mobile economy which allows for alternative marketplaces to exist outside of the App Store and Google Play.
4. Hyper-localized games are top performers. Games based on local myths or strong Chinese IPs are also more likely to attract interest (and user downloads) than those without.
Publishing mobile games in China requires developers to fill out paperwork with information about the mobile game, load each game onto a working smartphone and mail the phone to the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT). SAPPRFT is the regulatory agency responsible for administering and supervising entertainment in China, and now review every game before it can be placed on any one of China’s more than 200 app stores. They have to approve the game and provide you with a version number or publishing number—basically a code—which you then give to the app store. That will allow you to publish the game.
Facts and Fiction
Fact: The Android market is fragmented
Android app stores and distribution platforms that exist have long been a thorn in the sides of foreign devs. And according to Vincent Diao, vice president at Chinese publishing company Yodo1, the number of viable distribution platforms on Android is going up, not down.
Fiction: Monetization is low in China
Android marketplaces have begun to allow in-app ads. This will give struggling games that lack IAP function a fighting chance as in-app ads evolve in the Chinese market.
Fact: User acquisition is challenging
The dominant method of UA is based on store placement. In Android marketplaces, that tends to favor big sellers, while Apple tends promote a variety of critically acclaimed games—not just the top names.
Fiction: Successful western games translate well to China
The Chinese market’s reputation for copycat games may lead devs to believe games that perform well in the West can be just as big of a hit in China. But Burns and Diao agree that’s just not the case. The market today is incredibly competitive.
Fact: Localization matters
Chinese gamers do enjoy many of the genres popular in the West, such as RPGs. But, says Wang, they prefer content that is much more localized to their culture, such as being centered around the popular novel Three Kingdoms or Chinese medieval fantasy themes. Western devs should infuse Chinese culture into their games.
Fact: It’s possible with a partner
The complicated nature of the Chinese mobile game market may put devs off from considering China—but it shouldn’t.
China’s mobile game ecosystem is infamous for its culture of “copycatting” or “cloning.” While Western culture mostly acknowledges individual ownership over things like characters, art and game mechanics, in China ownership rights are a theoretical notion at best.
Launching a mobile game in China involves regulatory and business complexities, so western devs often delay a Chinese launch. The result? Chinese gamers are forced to wait for games they want to play, or don’t know that the original exists—and copycat developers happily exploit the temporary vacuum. That makes copycatting, first and foremost, a timing issue. If western developers launched their games immediately in China, in many cases those games wouldn’t be successfully cloned.