Over the past few years, the Chinese mobile games has been attracting a lot of attention from game publishers and mobile industry experts and there are several reason why YOU should pay attention.
In 2014, there were over 288 million Chinese mobile gamers and it is predicted to grow to over 770 million by 2018. In an earlier report, by SuperData Research the Chinese mobile games market is set to overtake the US and Japan to become the largest mobile games market in the world in by the end of this year.
While it might seem like a no-brainer to jump straight into the Chinese Market, there are several things that one needs to take into account. The market comes with its own unique challenges and it is far removed from Western markets. This is why we see foreign advertisers collaborating with local distribution platforms to make an entrance into the Chinese mobile games ecosystem (in reference to partnerships like King/WeChat, Kabam/Alibaba and Good Games Studio/Qihoo360).
To help you gain a full understanding of this unfamiliar but lucrative market, we would like to present you with a complete picture through key statistics, user behavior insights, 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 top 4 Chinese mobile games market insights that all publishers need to know before jumping into this market blind-sided.
1. China Has a Large Piece of the Mobile Gaming Market Pie
When it comes to evaluating the Chinese mobile games market this year – there is often some disparity– it’s a big deal, both right now and moving forward. Market intelligence company Niko Partners predicts a 38 % compound growth rate between 2013 and 2018 in their Chinese Mobile Games Market Report 2014, with the 2018 estimate sitting at a staggering $7.4 billion.
In its Global Games Market Report, Newzoo reported a comparable growth rate of 36.6% percent towards 2017, while in 2014 the revenue was measured at $3.7bn which is significantly higher than the estimated $2.9bn predicted by Niko Partners. Newzoo, believes that the Chinese mobile games market could reach up to $8bn by 2017.
Peter Warman, CEO of Newzoo, explains how he 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 trailing behind as mobile gaming is gaining momentum. There is larger competition among social networking games, especially 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.” This combined market is heavily leaning towards mobile.
2.Positive mobile game ROI in China Has Exploded
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. We can see now that China has a much faster growing mobile games market right now.
Moreover, 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.
Joost van Dreunen, CEO of SuperData, explain that:
“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 and Tencent dominate in China
Unlike in the west for iOS primarily rules the market this is the complete opposite for China, In 2014, 68 % of the market share in the states went to iOS while this was the same percentage that was dominated by Android in China that same year.
Newzoo paired 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.
With several local players, there are several Chinese app stores for the Android platform which are taking bigger shares than Google Play. Last year, 360 Mobile Assistant and Myapp were the strongest leaders (with 29 and 24 percent of the coverage respectively), while Google Play is lagging behind in comparison, with only 12% percent of the install share.
In April 2015, half of the top 10 Android games come from market dominator Tencent, who are beating their profit estimates with flying colors and can boast that the majority 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.
Screenshot: top 20 (5/10= tencent) http://www.newzoo.com/free/rankings/top-20-android-games-in-china/
4. Understand the Chinese player before developing user retention and engagement strategies
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. Once a year, they initiate primary consumer research in China, using a representative sample of 2,000 Chinese respondents aged 10 to 50. For more details in their methodology, review the all explanation here.
The top six genres, in terms of popularity, 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. Focusing on paying gamers, the RPG genre jumps up in players.
The study also looks at user engagement and retention, focusing on why gamers start to play and why decided to start paying in the game. The biggest difference between Chinese and US mobile gamers is the motivation behind playing a game. As Chinese players are more likely to rely on the recommendations of friends and family, 48% versus 38% in the USA. Positive reviews are also important for Chinese gamers and sequels have less influence than in the US.
There are 3 main reasons why Chinese gamers decide to pay: 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).
The Chinese mobile games market is still growing, but understanding it is key to successful entry. What strategies would you employ when trying to penetrate the Chinese mobile games market?
A version of this article was originally posted on the AppLift Blog and can be found here.
AppLift is a global comprehensive mobile app marketing platform that empowers mobile app advertisers to acquire and re-engage quality users at scale.