This document provides an overview of key considerations for mobile game developers looking to publish and monetize games in China. It discusses China's large mobile gaming market and Android dominance. It covers regulations around game licenses and restrictions on foreign games. Distribution requires working with a Chinese partner or using a Variable Interest Entity structure. Games need localization of language, graphics, and cultural references. Monetization relies on free-to-play with in-app purchases calibrated for China. Integration of Chinese social networks and payment services like Alipay and WeChat Pay is important for discovery and transactions. Publishing involves distributing on fragmented app stores in China like MyApp rather than Western stores. Ongoing brand protection is also a concern given piracy issues.
5. CHINA‟S INTERNET IS BIG
China: The World‟s largest online population
78.5% access the internet via mobile device
Sources: Tech in Asia, Internet World Stats
5
6. CHINA IS MOBILE
CHINA„S ONLINE
China: Over IS BIG
1.1 billion mobile subscribers
LANDSCAPE
Mobile subscribers in China by operator April 2013
Operator
Subscribers
3G users
China Mobile
750.4 million
158.7 million
China Unicom
269.5 million
107.8 million
China Telecom
178.6 million
93.4 million
Total
1,198.5 million
359.9 million
4G is on the way…
Sources: China Mobile, China Unicom, China Telecom, mobiThinking, China Daily
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7. CHINA IS ANDROID
Chinese Smartphone Shipments To Exceed 360
Million In 2013 - IDC
China Top Five Smartphone Vendors Q2 2013
Q1 2013
Market Share
Q2 2013
Market Share
Growth Rate
Q2 Vs Q1
18.5%
18.3%
-1.0%
Lenovo
9.8%
12.6%
28.6%
Coolpad
9.2%
11.0%
20.4%
ZTE
8.2%
8.8%
7.1%
Huawei
9.6%
8.7%
-8.5%
45.0%
41.0%
-8.9%
Vendor
Samsung
Others
China‟s top five vendors = 20% of the world‟s
Smartphone shipments
Source: idc.com, technode.com, canalys.com
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8. CHINA IS ANDROID
Umeng Sept 2013
Kantar Aug 2013
IDC Sept 2013
Enfodesk Nov 2012
Sources: umeng.com, kantarworldpanel.com, idc.com, enfodesk.com
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9. CHINA IS ANDROID
Why the discrepancy in figures?
•
Data gathered may be platform specific
•
Data may not include custom Android ROMs (e.g. MIUI & Baidu Yi)
•
Data collected via carriers may not account for dual SIMs (one
device 2 separate carrier SIMs, common in China)
•
Data assumes 3G subscriptions = Total “active” Smartphones. Many
Smartphones in China are 2.5G
•
Some reports counts sales within a period, some count “active
devices”, some count total devices, some mix smartphone and
tablet data.
Notwithstanding the discrepancies, Android is still King in China
Sources: Smartions’ Research
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10. A LITTLE APPLE BUT A LOT OF REVENUE
App revenue distribution by country
August 2013
China Ranks 5th
despite no Google
Play data
N.B. In China, only iPhone/iPad revenues counted.
Figures for RoW includes Google Play.
Sources: distimo.com
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11. iPAD, KING OF TABLETS
CHINA„S ONLINE
LANDSCAPE IS BIG
The rise and fall(?) of the “Steak”
China Tablet Market Share Q2 2013
Vendor
Units Q2
Share
1
Apple
1,481,000
28%
2
Samsung
571,000
11%
3
Lenovo
413,000
8%
4
ASUS
65,000
1%
5
Acer
62,000
1%
Despite and increase in sales, Apple‟s tablet market share
plummeted 40% year-over-year in China in the second quarter of
2013
Sources: The Financial Times, brg.com
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12. CHINA„S SMART TV FUTURE IS BRIGHT
CHINA„S ONLINE
LANDSCAPE IS TV
China‟s SmartBIG Market is booming
Sources: thenextweb.com
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13. CHINA LOVES MOBILE GAMES
CHINA„S ONLINE
LANDSCAPE IS BIG
In 2012 the Chinese Games Market was worth
Mobile gaming = YoY growth rate of 50.7% in 2013
74% of Smartphone users download games
Sources: gamesindustry.biz, iresearchchina.com mobithinking.com, miit.gov.cn, ctia.org, AliResearch, Flurry
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14. CHINA LOVES MOBILE GAMES
CHINA„S ONLINE
LANDSCAPE Mobile
The Chinese IS BIG Gaming Market
Paid Mobile Gaming Market
Gross Merchandise Value
(GMV) U.S. $
China has more than
250+ Million Mobile
Gamers
(336 Million by 2015)
Sources: gamesindustry.biz, AliResearch, China Daily, pocketgamer.biz, researchandmarkets.com
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16. THE GAMING REGULATORS
More than 20 national level government agencies are
responsible for the control of the internet, many
regulating online games
Ministry
Area of control pertaining to Games
The General Administration of
Press and Publication (GAPP)
Regulation of games publishing and operation.
Enforcement of a ban on foreign games
Ministry of Culture (MoC)
Inspection of imported online video games and
issuing of game publishing licenses
State Administration of Radio,
Film, and Television
Enforcement of a ban on game advertising in the
state-run media
The Ministry of Industry and
Information technology (MIIT)
Province level ICP licenses & promoting the
development of domestic games
Ministry of Commerce (MOFCOM)
Control of payment operators and virtual currencies
Ministry of Public Security of the
People's Republic of China
Responsible for policing the great firewall of China
and the internet
Sources: gapp.gov.cn, mcprc.gov.cn, sarft.gov.cn, mps.gov.cn, miit.gov.cn, jdsupra.com
16
17. THE GAMING REGULATORS
Cultural regulators
set to be merged
“The merger is designed to
minimize the overlap of duties,
increase efficiency“
- Wang Feng (State Commission Office for
Public Sector Reform)
Sources: China Daily
17
18. THE GAMING REGULATIONS
• Games publishing license required which in turn requires 10
Million Yuan ($1.6 million U.S) of registered capital in a
Chinese company.
• “Online games” must have in-built “anti-fatigue/addiction”
mechanisms to discourage lengthy game-play
• Gambling (including online gambling) is illegal in China.
• Virtual currency is allowed in games, but virtual currency
that is freely tradable amongst players is not allowed.
Sources: gapp.gov.cn, mcprc.gov.cn, sarft.gov.cn, mps.gov.cn, miit.gov.cn, horacexiong.com
theregister.co.uk, latestcasinobonuses.com, wikipedia.com, baike.baidu.com
18
19. THE GAMING REGULATIONS
Oh… and foreign games are banned
(sort of) under “Notice 13” from the
GAPP
Sources: gapp.gov.cn, horacexiong.com, jdsupra.com
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21. THE DIY ROUTE
The problem:
“Foreign enterprises are not allowed to provide online game
operation in China market in forms of WFOE (Wholly ForeignOwned Enterprise), JV (Joint Venture)”
– Notice 13, GAPP October
2009
Remember: To obtain a Games publishing license requires a
wholly Chinese owned enterprise
Sources: gapp.gov.cn, mcprc.gov.cn, sarft.gov.cn, mps.gov.cn, miit.gov.cn
21
22. THE DIY ROUTE
A solution?
The “Sina-Model” /
Variable Interest Entity
(VIE)
“Chinese law has a very clear
provision. A contract written
to avoid the requirements of
Chinese law is void and the
court will not enforce it,”
– Steve Dickinson (China Law Blog)
Sources: stanford.edu, thenextweb.com, nytimes.com, China Business Law Journal, China Law Blog,
jdsupra.com
22
24. THE DIY ROUTE
Exceptions to the rule?
“Since 2010, Shanghai‟s arbitration board has
invalidated two Variable Interest Entities that had
been used by foreign companies to control onshore
businesses. In one case involving an online game
company”
-
Neil Gough (The New York Times)
Sources: stanford.edu, thenextweb.com, nytimes.com, China Business Law Journal, China Law Blog
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25. THE PARTNER ROUTE
Work with a China partner who knows the China
gaming, mobile, and social landscape as well as
the political macro environment!
Watch out for dispute resolution/choice of law
clauses
Sources: China Law Blog
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27. LOCALIZATION
• Over 200 million Chinese
can read some English words,
less than 1% can speak English
• Chinese people are very proud of
their language and culture
• For software, localization is a legal
requirment (GB18030 certification)
Sources: mcprc.gov.cn, CESI (CHINA Electronics Standardization Institute), intersolinc.com, wikipedia.com
27
28. LOCALIZATION
• For your game to be
successful in China
quality localization is a
must
• Watch out for
encodings! ANSI and
ASCII are dead, long
live UNICODE!
• When drawing fonts remember there are 6,500
simplified Chinese characters used in computerized
fonts
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29. TRANSCREATION
• Most people in
China have never
heard of Hansel and
Gretel, Goldilocks
and the three bears,
or know the story of
Robin Hood
• In-game references to Western history, mythology,
and popular culture will need to be reviewed and may
need to be adapted
Sources: Smartions’ Research
29
30. TRANSCREATION
• Graphics may need to be adapted to be be more
farmiliar and engaging to a Chinese audience
• “Harmonization“ of any violent content is important
and can be subject to review and regulation in
China.
• Be mindful of geo-political issues and the meaning
of symbols etc.
Sources: Smartions’ Research
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32. MONETIZATION
Forget Pay to Play. China is Free to Play
• IAP Prices must be calibrated to acceptable Chinese standards
– Entry level IAP on Android should be circa 2 to 3 RMB (€0.24 to
€0.36)
– A new virtual currency pack may be required to accomodate a lower
entry level IAP without impacting other monetization mechanics
• What is lost in premium is gained in volume
China Mobile Games
Freemium Revenue as a
Percentage of Total
Revenue
Sources: pocketgamer.biz, Smartions’ Research, tech.163.com
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34. SOCIAL MEDIA
Google+, Facebook,
Twitter & YouTube
are just some of the
services not available
in China due to
government control
Sources: Smartions’ Research
34
35. SOCIAL MEDIA
“Social media is huge
in China - bigger than
anything I've seen
in the west.”
– Hugo Barra @ Xiaomi
(Former Android VP @ Google)
China represents the
world‟s most active
social-media population
Sources: ciccorporate.com blog, Hugo Barra’s blog
35
36. SOCIAL MEDIA
7 major social networks
In China each with
over 100 million
users
Sources: socialtimes.com, gamasutra.com, mckinseyquarterly.com
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37. SOCIAL MEDIA
Make sure your Game allows for sharing via China SNS
“Chinese gamers boast about game
upgrades they've purchased, and enjoy
showing them off whenever they can.”
- gamasutra.com
WeChat
Sina Weibo
Tencent Weibo
RenRen
400+ Million users
503 Million users
540 Million users
184 Million users
236 Million MAU
150 Million MAU
200 Million MAU
46 Million MAU
Sources: socialtimes.com, gamasutra.com, mckinseyquarterly.com
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39. PAYMENT INTEGRATION
• In China there are multiple
mobile payment solutions
Independent Payment Services
(Independent, Carrier, App Store)
• Online payment services
are required to be
“Chinese-owned”
Carrier Payment Services
App Store Payment Services
Sources: Smartions’ Research, contextchina.com
39
42. PAYMENT INTEGRATION
China 3rd Party Mobile Payment Services - Q2 2013
Mobile Internet
Payment
Sources: iresearchchina.com
42
43. PAYMENT INTEGRATION
137+ Million
Registered Accounts
800+ Million
Registered Accounts
• Alipay is King, but carrier billing offers customer
convenience
• Native app atore payment integraiton is often
essential
• For broad reach your game should provide for or
integrate with several payment methods
Sources: paypal.com, reuters.com
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44. PAYMENT INTEGRATION
+
+
• Baidu has aquired 91.com and HiAPK
• Baidu has entered the mobile payment
services arena with its Baidu Wallet
solution
Sources: The Financial Times, pehub.com, technode.com
44
45. A NOTE ON INTEGRATIONS
•
As part of the API key application process for many 3rd party
China social and payment services, a “demo” integration via
your Game‟s Chinese website is required.
•
To have a website in China with a publically accessible IP, an
ICP (Internet Content Provider) license is required.
•
To obtain a China ICP license a business registered in China
is required.
•
3rd party social and payment SDK documentation may only
be avialable in Chinese
•
Testing of China social and payment integrations may be
“virtually impossible” outside of China
Sources: Smartions’ Research
45
49. APP STORE PUBLISHING
iiMedia Q3 2012 China
App Store Rankings
Rank
App Store
1
myapp.com
2
91.com
3
mm.10086.cn*
4
hiapk.com
5
360.cn
6
189store.com**
7
anzhi.com
8
appchina.com
9
gfan.com
10
nduoa.com
The Top 10 app stores
only account for half
of the total app
downloads in China
Wandoujia has made
massive gains in the
last year
* Carrier Store: China Mobile
** Carrier Store: China Telecom
Sources: umeng.com, Smartions’ research, chinainternetwatch.com, iiMedia Research
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50. APP STORE PUBLISHING
China App Store Market Fragmentation
• App stores can be unprofessional,
unstructured, & arbitrary in their approach
• Some may insist on your game using
their payment integration, which creates the need
to develop app store specific versions of your game
• None of the China app stores provide developers
with rich ecosystems similar to those offered by
Google Play (“decoupling“ required)
50
51. APP STORE PUBLISHING
Caution!
If dealing with app stores directly…
• Never sign extended exclusivity with a
single app store
• Remember app stores will not invest time in
optimizing your game in-market
• Always define the scope and level of agreed
promotion (marketplace app, mobile website, PC browser, download
“assistant“ application)
51
52. APP STORE PUBLISHING
What about Apple„s China App store?
• Apple„s App Store servers not in Mainland China
(Hong Kong, Macao, Taiwan)
• Apple app store claimed to be 10x faster after CDN
deployment in mainland China in March 2013
• Apple is currently building a new data
center in Hong Kong (ETA 2015)
Sources: thenextweb.com, chinabyte.com
52
53. APP STORE PUBLISHING
Are there 3rd party iOS app stores in China?
• Yes, but you cannot distribute apps to them
without being in breach of your iOS Developer
Program License Agreement
Sources: Smartions’ Research, kuaiyong.com, extremetech.com, apple.com
53
55. BRAND/IP PROTECTION
Dealing with piracy
• Make sure your game uses a solid F2P model
• Calibrate entry level IAP pricing to Chinese
levels
• Use traction gained by pirated or unofficial
versions of your game.
– App store marketplace notifications to push upgrade
to the official release (Requires close cooperation with app stores)
55
56. BRAND/IP PROTECTION
Dealing with piracy
• Reclaim your brand and ensure differentiation
through rebranding where necessary
(distinguish from previous pirate/unofficial releases)
• Create engaging content targeted towards your
Chinese audience and plan seasonal updates
(to coincide with Chinese public holidays)
• Work with a China partner with app store
connections who will continually monitor all
app stores for pirated versions
56
59. CONCLUSION
Summary of recommendations
Work with a trusted China partner who will:
•
•
•
•
•
•
Provide the necessary structure & deal with all approvals
Preform cultural adaption and “transcreation“ of content
Develop deep China SNS integration & sharing
Optimize and calibrate the F2P model for China
Develop rich IAP interfaces & multiple payment options
Decouple from Google & other services not available in
China & implement native solutions for China
• Publish to multiple China app stores for broad reach
• Actively manage app store relations/promotional deals,
SNS & player community, brand/IP protection, and
maintain and optimize your game in-market
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60. CONTACT US
Thank you for your attention!
Questions?
Patrick Wheeler
CEO at Smartions EU
www.smartions.net
@PatrickJWheeler
www.linkedin.com/in/patrickwheeler
patrick.wheeler@smartions.net
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