Asian Beat #4: 4 Chinese Mobile Games Market Insights All Publishers Need to Know

By Hayley Pearce | August 28th, 2014

>Welcome to Asian Beat #4! Having talked about winning moves in South Korea and cracking Japan, we now move to the Chinese mobile games market.It’s no secret that the China is emerging as one of the most important mobile games markets this year. The forecasted figure for the number of Chinese mobile gamers in 2014 is 288 million, and this is predicted to rise to 770 million by 2018. China is hot on North America’s heels; according to a SuperData Research report from May of this year, the Chinese mobile games market is set to overtake the US and Japan to become the largest mobile games market in the world in 2015. It’s many game publishers’ dream, then, to enter the Chinese market. However, it comes with its own unique specificities and is far removed from Western markets. That’s why so many foreign advertisers are joining hands with local distribution platforms to make a dent in the Chinese mobile games ecosystem (I refer to partnerships like King/WeChat, Kabam/Alibaba and Good Games Studio/Qihoo360).To help you gain a full understanding of this unfamiliar but promising market, we present user behavior insights, key statistics and current trends courtesy of industry-leading experts on Asia. Our data sources consist of AppLift’s Seoul office, games market research firm Newzoo and analytics and market intelligence whizzes App Annie, also drawing from Niko Partners and SuperData reports. For a general overview of the Chinese mobile games market and ecosystem, see Newzoo’s free report: Introduction to the Chinese Games Market.Here are the four top Chinese mobile games market insights that all publishers need to know before taking on the China challenge.

1. The Chinese mobile games market is a monster opportunity

Whatever the value of the Chinese mobile games market this year - and there is some disparity when it comes to estimates - it’s a big deal, both right now and moving forward. Market intelligence company Niko Partners predicts a 38 percent compound growth rate between 2013 and 2018 in their Chinese Mobile Games Market Report 2014, with the 2018 estimate sitting at a cool $7.4 billion.In its Global Games Market Report, Newzoo reported a comparable growth rate of 36.6 percent towards 2017, but at $3.7bn its take on this years’ revenues is significantly higher than the $2.9bn of Niko Partners which, according to Newzoo, could propel the Chinese mobile games market to almost $8bn in 2017.We asked Newzoo CEO Peter Warman how they arrived at this figure:

“We recently increased our estimate of the Chinese mobile games market based on fresh data from our local Chinese partners, global appstore data and financial company reports. Tencent for instance, reported around $300M mobile game revenue in Q1 and $500M in Q2. I would not be surprised if their mobile game revenues end up anywhere between $2.0 and $2.5bn this year. Another sign that the Chinese mobile games market will definitely be higher than $3bn this year is the fact that iOS game revenues, representing around 30 percent of the Chinese market, are generally acknowledged to surpass the $1bn mark in China this year. The 64 percent growth from 2012 to 2013 will slow down over time, but not this year.This year we estimated the mobile revenues in China for 2013 at $2.3 billion, based on transactional data of the Chinese iOS market and on our own model with all quarterly results of public companies. The Chinese mobile games market grew enormously from 2012 to 2013 and we expect this growth (64 percent year-on-year) will continue in 2014. Transactional data for the first 6 months of 2014 show that mobile revenues in China have already surpassed figures for the whole of last year, so $2.9bn is a much too modest figure.”

Online gaming is currently losing speed as mobile gaming gathers momentum. Social network games especially are competing with MMO games for user time, according to SIG analyst Zhao Chunming, and Shawn Luan of Howell International Trade Fair says that mobile gaming in China has risen in the last few years “due to the fast development of telecommunications and the development of new hardware – smartphones and so on… It’s a combined market here in China.” A combined market which may soon be heavily skewed towards mobile.

2. Positive mobile game ROI in China is more than a pipe dream for publishers

SuperData has found that conversions and average revenue per paying user (ARPPU) have jumped up in China when comparing Q1 2013 with Q1 2014, whereas the US conversation rate fell, and the ARPPU increased only a small amount. China apparently has a much faster growing mobile games market right now.

Conversions and ARPPU for USA and Chinese mobile games market

Additionally, CPIs are shown to have fallen considerably in China in recent months, and lie well below the ARPPU figure. It seems that China can be a profitable market after all, despite not being renowned for having the wealthiest players.

CPI and ARPU for USA and Chinese mobile games market

As SuperData CEO Joost van Dreunen puts it,

“There is an increasing saturation of the US market, forcing publishers to look for opportunities elsewhere, and China is one of the key growth markets for mobile currently. As the only market where iOS does not dominate, China presents a tremendous opportunity for next-gen mobile game companies to capitalize on the size of this market and the, still relatively low, CPIs. Whether this will shift the current power balance in the worldwide mobile market is unclear, but any ambitious mobile game publisher should be looking at China if they're serious about their global strategy.”

3. Android is top dog in China, Tencent rules the publishing roost

The iOS/Android market share split in China is the polar opposite of the USA’s. While 68 percent of the market share goes to iOS in the states, the same percentage belongs to Android in China, with iOS owning around 32 percent of the market share, according to Newzoo’s Global Games Market Report.Newzoo is pairing up with TalkingData, a local mobile internet data service platform, to reveal the top 10 Android app stores in China each quarter and China’s top 20 Android games each month. Both lists are defined by install count on over 700 million mobile devices tracked, and games are also ranked on active use.There are several Chinese app stores for the Android platform which are taking bigger shares than Google Play. As of June 2014, 360 Mobile Assistant and Myapp are currently the strong leaders (with 29 and 24 percent of the coverage respectively), while Google Play is floundering in comparison, with just 12 percent of the install share.

Top 10 Chinese app stores - Android

In July, seven of the top 10 Android games come from market dominator Tencent, who are beating their profit estimates with flying colors and can boast that 88 percent of their games have stood in the #1 position of the Chinese iOS App Store. This may have something to do with their WeChat and QQ messaging platforms, which have a combined total of 600 million game players onboard. There’s a rising star in the rankings though; three of the top 20 Android games are from mobile games publishing platform iDreamsky, highlighting them as one to watch out for.

4. User retention and engagement strategies should complement Chinese player behavior

The Newzoo Data Explorer drills into the gaming habits of players in China, audience demographics and their reasons to start playing, and paying, for games. They perform primary consumer research in China once per year, using a representative sample of 2,000 Chinese respondents aged 10 to 50. More information about their methodology can be found here.The top six genres, in terms of player numbers, in China are Race, Strategy, Role Playing Games, Poker, Brain-training and Shooter. Interestingly, Race, Poker and Shooter games are significantly more popular in China, with 31 percent, 19 percent and 18 percent reportedly playing these games, than they are in Japan and the US, with the numbers sitting between 3 and 16 percent. When zooming in on paying gamers, the RPG genre jumps up in popularity.

Top six app genres in USA, Japanese and Chinese mobile games market

In terms of user engagement and retention, the reasons to start playing a game and start paying in a game were also surveyed. When it comes to motivations behind playing a game, the biggest difference between Chinese and US mobile gamers is that Chinese players are more likely to rely on the recommendations of friends and family (48 percent versus 38 percent). Recommendations from friends or family (48 percent). Good reviews are also important for Chinese gamers and sequels have less influence than in the US.

Reasons to play mobile games in China, USA and Japan

When it comes to why players decide to start paying to play, the top three reasons are: to make the gaming experience more fun (37 percent of players), to gain a competitive advantage (28 percent) and to unlock extra levels (20 percent).

Reasons to pay for mobile games in China

The Chinese mobile games market is formidable, but understanding it is key to successful entry. What strategies would you employ when trying to penetrate the Chinese mobile games market?

Hayley Pearce

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