Navigating the Chinese Mobile Game Market

The Chinese mobile game market has been evolving and growing exponentially, becoming the fastest growing market in the world. The Chinese mobile game industry is currently worth approximately $2.9B, second only to the USA at $3.2B. By 2015, the Chinese market is expected to exceed the worth of $3B. With a huge population on mobile phones interested in gaming, China seems like a logical next step for many games, but the market is a siren: it looks enticing, hiding the cacophony of roadblocks behind the allure of reach. The truth is, mobile games success in China requires heavy engagement at every step of the value chain. Many studios struggle to cater to Chinese gamers, not only because of cultural differences in gaming preferences, but also because a fragmented enough Android market that makes full market penetration difficult.

Over the past year, China’s mobile game market grew a staggering 280%, casting a shadow over the US’ growth rate of 81%. The growth spurt is no surprise – China has 600 million smartphone users, with 92% of all people aged 18 to 30 using them. Tencent, China’s largest internet company, launched a game center across their popular social platforms WeChat and QQ, gaining 570m users in 3 months. In an ecosystem that has such high mobile phone usage and the longest average commute times (Beijing being the worst offender at 97 minutes average), it makes sense that many consumers will turn to mobile gaming to pass the time. Nowadays, Chinese gamers spend an average of 32 minutes daily playing games. According to TalkingData, a Chinese data analysis firm, 15% of all Chinese mobile gamers spend more than 2 hours on games daily, and 48% spend half an hour to two hours.  But what to do with such a large user base? What kind of game would interest the largest chunk of such a huge demographic?

Out of all Android mobile gamers in China, approximately 35% play casual games, while 65% engage in more immersive games, ranging from mid to hardcore levels. Culturally, China is predisposed to midcore Action RPG games; on a PC, the genre dominates over every other alternative. However, because of sub-par hardware and slow connections prominent in many parts of China, ARPGs were too taxing to make it big on mobile devices. In Action RPGs’ stead, the biggest games on mobile were card games with RPG elements, which are easy on the graphics (limited 3D rendering) and the bandwith, even in PVP modes. With the advent of affordable and faster smart devices, users are transitioning into more technologically complex games. In fact, Biadu Mobile Game Platform observed that 80% of its users already use phones with midsize to large screens, proving how fast China has adapted new technology. As players upgrade their devices, expectations for game quality also grows. Other genres such as racing and battle arena games have also been gaining momentum, but nothing has seen the same growth as Action RPGs. Several app stores combined their data over the summer to compare notes on the most popular game genres. What they found was that China leaned most toward the following categories: card games, role-playing games (RPGs), action RPGs (ARPGs) and strategy games.

The distribution of types of games released per channel in July 2014

The surge of interest in ARPGs  may come from the introduction of sturdier social functions and monetization models. With stronger backbones for social features provided by major Chinese media conglomerates, social functions have become a necessity in games. Gifting other players in-game items and being able to message friends in-game become vital since Chinese users place such a high importance on sharing their gaming experience with their friends and family.

Even if a studio provides Action RPG that has potential, many major changes must be implemented in order to make the game palatable for the average Chinese consumer. Translating, localizing and culturalizing the game is vital, since Chinese audiences do not respond to the same gameplay mechanics and monetization frameworks as western, or even Korean or Japanese audiences. The localization of a game includes art and tutorial redesign, integrating a new payment channel, and overhauling the UI so that the consumers feel more comfortable with the intrinsic Chinese game model.

Distributing the game is equally difficult, since China’s mobile market functions entirely differently. Android dominates the Chinese market, with Android selling 4 phones to 1 iPhone. Google Play’s ban from China opens the market for a slew of third-party app stores. Over 200 app stores compete for business, some which target specific demographics, such as people in rural areas with slower connections. Android is still the priority for mobile game releases; Android users pay 25 times more than iOS users. However, the decentralization of this service takes a financial toll, as members of the distribution chain require a cut of a publisher’s revenue. At the end of the day, mobile game companies only net a portion of their gross sales due to transaction and channel fees. Third-party app stores remain highly competitive by maintaining a steady high-volume release schedule. Baidu’s Mobile Game Report has seen a 30% increase in games released from Q2 2014 to Q3 2014 alone.

While some game publishes aspire for mass availability, others release their games exclusively as part of a co-promotional deal. Publishers must be careful with which the distribution method they choose, since tight exclusivity leads to piracy of game IP, as other channels strive to offer similar, if not the same, games to remain competitive. Every publisher has to ensure that their IP is protected from the rampant piracy, and take down illegal ports of the game, usually with the help of telecom behemoths who have department specializing in the task.

With the steady flux of high volume game releases, it becomes easy to fade into the noise. Gaining traction in a fast-paced environment requires marketing the product in a way that is natively Chinese. Using China’s fascination with pop stars, shows and other televised media is vital to anchoring a game for the consumers. A game’s life cycle is shorter in China than in the US, especially if it gained no major traction upon release.

Western companies looking to expand into the Chinese market need a publishing partner to ease the transition and localization effort. Maneuvering China’s complex gaming market is taxing and intimidating, but with the right counsel and a well-thought out business strategy, success is attainable.

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