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Casual Connect Asia: China – A Market Big Enough For All Of Us

I was at the Casual Connect Asia game conference held in Singapore today and will go on for the next 2 days. I’ll be summarising the content of the sessions I’m attending.

I attended a session by Jeff Lyndon, EVP and co-founder from iDreamsky which is a mobile game publisher focused on the Chinese market.

China is a growing area in mobile game development, both in terms of the games coming from Chinese developers and the country as a market.

Here are some stats he cited for the rapid growth of gaming in China.

China game market 2013
Worth US$1.8 billion
Average revenue per user US$6
23% of gamers are mobile gamers
47.2% smartphones

China game market 2014
Worth US$4.1 billion
Average revenue per user US$10
45% of gamers are mobile gamer
60% use smartphones


China growth areas:
1) Migration of feature phone users to smartphones
2) Multi screen gaming across PCs, tablet, phone

From iDreamsky’s stats most Chinese players are still using dual core processor phones, with more potential presenting itself as they upgrade to quad core, octo core phones.


There is a growth in the mobile gaming ecosystem as seen in the following areas:

1) mobile payment
Wechat conducted a viral red packet campaign, generating US$100 million

2) The majority of phone data coverage is still mostly focused on 2G networks with expected growth in 3G and 4G network coverage.
growth from going to 3g, 4g

3) Growing sophistication of gamers.
With gamers typically in their 20s, having graduated from university, they would likely be used to making in-app purchases, especially since such purchase options have been present in MMOs since 2008.


“Time on screen” strategy
The key metric for iDreamsky is the amount of time users spend on its games, rather than ARPU figures.

Jeff mentioned the network’s strategy is not to focus on how much money it makes from user, but rather how much time it can capture from the user.
With time being a limited resource, it is seen as more valuable while money spent can shift easily to other apps.


The Chinese Opportunity
The following areas are growth areas in the Chinese market:
1) Genre defining game – A genre-defining game like an Angry Birds or Temple Run, can establish itself, define and grow a segment in the market

2) Multi screen – Smart TV, Tablet, Phone
Creating a multi screen experience enhances user engagement, although not many apps offer the experience now.
The smart TV market is potentially set to grow faster than other countries with offerings like the Xiaomi TV, a 4,999 RMB (S$1,000 or US$800) offering which boasts, 4k resolution (or ultra high definition TV), 49” TV.


3) Increasing mobile broadband penetration.
With an expanding rollout in faster data networks, mobile gaming are set to exceed the current benchmarks.

iDreamsky select user stats:

On average an iPhone user 125mb of 3G data
and more than 3gb on wifi data

While an android user uses about
80-90mb of 3G data and more than
3GB on wifi

With high data transfer rates available on 4G networks there are opportunities to create bigger apps in the region of 200 megabytes or more, as well as richer graphics, more complex game physics.

This also opens possibilities for persistent games which require players to be online all the time, which becomes easier when they are not limited to small mobile broadband quota.

——
The challenge facing developers

“The Window is closing (for western developers)”.

2011-2013 was the window for Western developers to come into China, primarily due to the lower barriers to entry.
Since mid-2013 – the number of foreign games in China that have hit blockbuster status has decreased dramatically.

In Q1/2014 iDreamsky’s operation guys saw fewer games being ported to their platform from the US. Instead more games from Japan and Korea which require less localization and less reskin have been introduced on the iDreamsky platform.

Jeff’s advice if you want to go into China, you have to go this year. Unless you have a groundbreaking game like Candy Crush or Clash of Clans


China: A gaming market like a “World War”
While Korea and Japan have gaming markets with content and games developed primarily by local developers, China presents a different picture.
A highly competitive market with at least 8 different countries jostling for market share, developers from the US, Europe, Japan and Korea are fighting for a slice of the China gaming pie.

China developers in particular have an innate advantage with their deeper understanding of developing compelling concept, smoother monetization funnels and a deeper understanding of the market

During the short question and answer section, Jeff said that roleplaying games (RPG) and trading card games (TCG) are highly competitive categories and it would be difficult to establish a foothold.

Instead newer entrants can spot market gaps and go for games categories like racing titles, for which there is no major leader in the market now.


Trademarks are another major area of contention.

If someone had already registered the trademark, for example Angry Birds, before Rovio decided to enter the market, and they had also made an Angry Birds clone and launched it, then it would be seen as the legitimate trademark owner by the Chinese government. Additionally, the recommendation is to trademark the Chinese version of your title.

The maxim for the Chinese mobile gaming market according to Jeff is very Darwinian. There is no middle ground. You either make a lot or you make little/nothing.


PS: I also had a question for Jeff about the difference in in-app purchasing behaviour between Chinese gamers and other gamers. His answers were very insightful and will follow in a later blog post.

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