China is going to spend more billions of dollars in its gaming industry. The country’s huge population gives it a spending capacity that will shortly overtop even the consumers in the United States in certain sectors, such as mobile gaming.
According to a new report from Asia market-intelligence firm Niko Partners, smartphone and tablet games are expected to generate more than $5.5 billion towards the end of 2015. Around the globe, people spend around $30 billion on mobile gaming last year, so the gaming sector in China makes up a huge percentage of it. This makes China an even bigger spender on mobile gaming than the US, making China attractive to game developers around the world.
The CEO of Niko, a leading games market intelligence agency, believes that the Chinese culture plays an important part in the market of games in China. She said in a statement that games fill the void within gamers. She then added that it is important evaluate the voids in the Chinese culture and match them with the game development, as well as to the behavior of gamers and characteristics of a good mobile game in popular genre.
Investment and Development Plans
Local governments have taken advantage of the central government’s attention on the gaming industry, creating jobs by innovation and creative thinking with focus on domestic consumption.
By definition, the creative industry is the overall definition in Chinese policy, and it includes animation. The gaming business is part of animation. Many of the creative industry parks are being developed mostly around big cities.
The China Gaming Industrial Association (CGIA), part of the China Software Industrial Association, is in charge of the overall administration of the gaming industry on mainland China. It coordinates and communicates with the Chinese government. Its regional branches have given CGIA the advantage on regional fact-finding and information gathering.
Free-to-play PC games that sell extra content like characters, tools or capabilities comprise the majority of the Chinese game market. The gaming industry offers outsourcing opportunities of software produced for the local market.
Investment Challenges in China
In its 12th Five Year Plan, the Chinese government has included the gaming sector as one of its key sectors, and it also ensured support for the development of the creative industry.
Console gaming and online gaming make up the gaming market. The online gaming is relatively a big market, with speeding expansion. However, legal restrictions for foreign companies tamper their operations. It is especially difficult for foreign companies, such as from the US and France to obtain the right license for expanding their activities.
There are way too many barriers in the Chinese market, so most developers will find more success in the US market. Also, an international title presented to a Chinese publisher for localization is still considered ineffective.
In China, it is almost impossible to find success without a local publishing partner. For instance, Google’s Play Store does not have a significant presence in the Chinese market despite the fact that Android is far more popular than iOS. Dozens of companies run their own app-distribution channels, and game developers would need the help of publishing partners to forge deals to get into those stores.
When developers are able to find a publisher, they have to sacrifice a far bigger split of the revenues than is customary in the West. In China, mobile developers will have to give 30 per cent of the revenues to the publisher and another 30 per cent to the distributors. In the US, game developers often give a 30 percent cut to Apple or Google.
Another factor to be considered is the average revenue per player (ARPU). Although the projected $5.5 billion for 2015 is much a bigger number than the $4.5 billion that mobile gamers will spend this year,, this is largely due to the 420 million gamers in China. The number of gamers is 100 million more than the population in the United States.
Gaming History in China
While western game makers paved the way in terms of technology, production value, polished graphics and data analytics, Chinese game companies are considered more advanced in game monetization, with its understanding of users and their changing tastes and preferences. It is for this reason that people in the game industry often say that Chinese game companies are five years ahead of their western counterparts.
Console and PC games have been popular in the West for decades. The industry has a much longer history in the West than in China. Together with the exponential improvement of hardware specs is the improvement of technology, graphics, and production value of western games at almost the same rate.
On the other hand the gaming industry in China is relatively young, starting at the dawn of the millennium. Previously, consoles were banned in China, but there were already many computers in Chinese homes, so PC became popular.
In order to address the notoriously rampant piracy in China, game developers have gone for online games that required connections to the game companies’ servers. Single player and story-driven games were just too easy to copy and sold on a disc. The connection online allows multiplayer games, focusing on the interactions among players.