Brief Intro to China's Mobile Gaming Market

A brief intro on China's Mobile Gaming Market, a comparison of the different gaming platforms in China

September 20, 2016

6 Min Read

Some key stats China’s Mobile Gamers (2016)

84% of mobile games require connection to internet
63% play games after dinner & before sleep
49% installed some sort of mobile game
32 Minutes, average daily game time
11% of players give up specific games as a result of friends quitting

Why should you be interested in China’s mobile gaming market?
China has had one of the fastest mobile phone adoption rates in the world, with mobile phone subscribers tripling from around 400 million to over 1.3 billion, and smart phone subscribers from virtually nonexistent to over 900 million in a decade (since the modern day smartphone didn’t really come out until the first iPhone was released in 2007), and still growing! Overall, Asia-Pacific was the world's largest mobile gaming region in 2015 in terms of revenue, accounting for about 56% of the global revenue, majority of which was accounted for by China (approximately USD $6.5 billion)

A Brief Comparison of Different Gaming Platforms in China
Note, this is simply just my opinion and is likely to be biased towards mobile, if you think differently, I would love to hear about the other side of the story as well.

Video game consoles vs. Mobile

History – Video consoles have long been banned in China, until it was lifted in July 2015. Despite this though, growth has been slow as mobile games have had a huge head start, and many people bypassed the console gaming phase.
Necessity vs. want – On top of that, video game consoles and its games are somewhat expensive and mainly serve 1 broad function, ‘entertainment’, whether it is gaming, videos, or whatever. On the other hand, mobile games can do much more than that, which makes the mobile phone a ‘necessity’ and the video game console only a ‘want’.
Culture – Together with a large portion of Chinese parents’ take on education, 99.99999% (ok I am exaggerating) of Chinese parents will not buy a video game console for their kids, I have heard a lot of stories about parents not letting their kids date until after high school and even university because it will distract them from their studies, so you get the point.
Money – yes, the Chinese middle class is growing and the average income is rising. Can they afford a console; yes. Will they buy it; maybe. Is it on the top of the wish list for Chinese gamers in general; my opinion is no, at least not yet.

Summary: I don’t think consoles will be completely replaced by mobile gaming, because it still offers a superior gaming experience, but it is fighting an uphill battle in the Chinese market.

Computer vs. Mobile
These are two very different markets, and at this point in time, I don’t think it is possible for either one to really eat into the others market share.
Mobile > computer, try playing a first person shooter game on your mobile without aim-assist, or something like StarCraft. It’s essentially impossible to enjoy it; the operating mechanics for these games are just so much more complex on the computer
Computer < Mobile, try playing a game anywhere outside of your home, hotel or wherever you are staying, such as in a cab, in the washroom, or move around every 10mins etc. Even a laptop won’t make your gaming experience an enjoyable one in such situations. For the sake of preventing disagreements, I am going to include Microsoft surface and other detachable laptop devices into the mobile device category, included as part of mobile games, because they were designed to mimic the advantages of a tablet!

In regards to China, many middle class families can now afford a home computer, which is supported by the slowly declining market of internet cafes. Many internet bars used to thrive back in the day when people did not have laptops or home computers; this was their only channel to access the internet and computer games. However as more people owned their own computers and mobile phones eat away into some of the benefits that internet bars can offer, an increasing number of internet bars have closed down or have rebranded themselves to attract new customers. This shift itself does not change the balance between computer games vs. mobile games, but it does have a certain effect on the gamer’s mentality, especially when the average PC game costs 200-300 RMB, while essentially all the top mobile games are free-to-play. So unless it’s a game like Overwatch with a huge brand backing it, PC games in general need to adopt a better model to remain competitive.

Summary: Overall, I think that these are two separate markets, one for in-the-house the other for out-of-the-house and will not completely replace one another. However I also believe that the computer games business models will need an overhaul in the near future in order to remain competitive against the improving mobile game experience and its freemium business model.

AR/VR vs. Mobile
This is an area with a lot of hype and potential, especially with the success of Pokemon GO sweeping across the world. This technology has the potential to be the next big thing in gaming industry, if done right and with a bit of luck, it even has the potential to completely replace mobile phones. However as of now, this technology is still in its infancy. As it took almost 100 years to get from the first telephone to the first mobile phone and another 33 years to reach where it is today, even with the rapid progression of today’s technology, it is still likely to be years if not decades before this technology will become completely mainstream. There are still many hurdles that this technology needs to overcome:

Technology – Hardware & Software still in infancy, from creation to display, throughout the entire value chain
Pricing – new technologies are expensive and need time achieve certain levels of economies of scale to be affordable for the mass population
Regulations – when something gets big, regulations follow. For example, GTA has been criticized for its violent gameplay that spurred real life violence, imagine how much more real VR experience would be.

Summary: AR/VR holds a lot of potential, but until the technology becomes affordable to the general population and approved by the government, I don’t think it will be the mainstream gaming platform in the next decade.

All-in-all, the mobile gaming market is still one of the most accessible, affordable, and lucrative gaming market in China. AR/VR has the potential to take a large chunk of share from this and other gaming markets, but this is still in its infancy and may be many years before it will become mainstream and a key gaming platform. Which one do you think has the most potential?

Data from Changyou Shidai article, Wikipedia and various online articles

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If the China mobile gaming market may be something of interest to you, whether you are a developer, in operations, marketing etc. join the LinkedIn Group "Mobile Gaming - China" for more relevant posts in the future

http://www.linkedin.com/groups/10314358