gaming in china the new realm for big business

Gaming in China: The New Realm for Big Business

6 Minutes Read

The rapidly growing Chinese gaming market is attracting attention from Western businesses. However, to successfully enter the Chinese market, foreign companies must understand some key differences and build partnerships with trusted, local partners.

The Chinese gaming market is now the largest in the world – and big business is paying attention.

According to the 2016 Global Games Market Report, PC and online gaming captures 59 percent of China’s $24.4 billion market, with mobile gaming representing around 41 percent market share.

Mobile games are the fastest growing segment in China. Forecasts predict that by 2019 mobile games will represent 48 percent of China’s total gaming market, which is expected to be worth $28.9 billion in 2019.

Rapid increases in China’s internet access through Wi-Fi networks – the country has more than 620,000 Wi-Fi hotspots and counting – is powering the online gaming juggernaut, along with widespread adoption of 4G service which is quickly bringing China to the top of global internet access rates.

There are also socioeconomic forces behind China’s gaming explosion. Its emerging middle class is now estimated to be half a billion strong, and that means more disposable income to spend on entertainment (consumer spending grew by 6.9 percent in 2015).

Chinese gaming experts Zixue Tai and Fengbin Hu also note that China is following in the footsteps of other mature gaming markets in the region, as gaming expands beyond traditional demographics in China.

“Although current mobile game play is predominantly male-oriented (close to 70 percent), all industry reports have noted an accelerated rise in the proportion of female players in the past three years,” they write in Mobile Gaming in Asia. “Meanwhile, there has also been a steady upsurge in the 25+ demographics in the mobile player statistics in recent years.”

East versus West: Market Differences

While Western businesses are eager to carve out a slice of China’s gaming pie, there are several important market differences that foreign companies must account for before trying to enter China’s gaming market.

Android devices capture 73 percent of the Chinese market, with iOS devices falling well behind at 27 percent. Unlike Western markets where Android games are mostly limited to a small number of major marketplaces, there are approximately 400 distribution channels for China’s Android games.

SMS payments are favored by Chinese gamers over credit card payments which dominate gaming transactions in the West. Chinese gamers also use China-based third-party payment services, such as Alipay which boasts around 450 million users.

Chinese prefer free-to-play models for both mobile and PC games. In-game advertising is less accepted than in Western countries, but Chinese gamers are more open to pay-to-win models.

Entering the Market: Key Partnerships

It’s essential that foreign companies seeking to enter China’s gaming market create partnerships with some key local players.

China’s law stipulates that foreign companies must use a local partner to publish a game in any Android marketplace. Tencent, iDreamSky and NetEase are among the best-performing game publishers in China.

While there are around 400 Android distributors in China, the top 10 capture 80 to 90 percent of the total gaming revenue. Myapp, MIUI App Store and 360 Mobile Assistant are the three largest Android distributors.

While China’s growing 4G network is beginning to handle credit card payments, partnering with one of China’s telecommunications operators remains vital to managing the preferred SMS payments.

It’s important to note that on-net – or on-network – experience is key in this market. Working directly with a trusted telecommunications provider on its network is better than working with a wholesale provider that leases its connections and provides slower service. For example, China Telecom offers global customers access to the ChinaNet internet network. ChinaNet owns more than 70 percent of Chinese internet content resources and provides global customers with many resources including information, video, real-time chatting tools, online trading, games, search engine and information services.

Tapping into a local, trusted partner will also give you a clear competitive advantage, connecting you to the relationships you need and powering your technology and tools.

To streamline and simplify your transition into the Chinese market, find out more about the trusted telecommunications partner you need.