Since the early 2010s, the mobile gaming market in China has exploded. Similar to the meteoric rise in mobile payment apps, the ubiquity of smartphones across the mainland has led to more netizens utilizing their personal devices for daily entertainment. In addition to their convenience and accessibility, many modern smartphones are now more powerful than the average video game console and bring much more utility to the table, further solidifying them as a competitive replacement to more traditional gaming machines.
China’s mobile gaming industry is one of the world’s most influential with a massive market of 682 million mobile gamers. As more companies seek to cash in on the various genres of internet games popular among Chinese netizens, the gaming industry is becoming more relevant and competitive to enter. In this article, we will explore the background of the Chinese mobile gaming market and how the industry has blossomed. In addition, we have invited Todd Kuhns, marketing manager at AppInChina – a firm that helps foreign developers bring their apps to the Chinese market, to discuss everything that prospective foreign entrants need to know when launching an app in the Chinese market.
China’s Lucrative Mobile Gaming Market
How Did Policy Shape China’s Gaming Industry?
Before the mobile gaming market in China had evolved into its current form, regulation played a significant role in developing the industry. In June 2000, concerns about video game addiction and the negative impact that gaming could have on the country’s youth led the Chinese State Council to pass a bill that regulated video game content published in China and imposed restrictions on internet cafes and arcades across the country. More importantly, however, this bill also banned the production, import, and sale of most consoles and arcade machines in mainland China. This ban on most personal consoles led to the popularization of PC gaming, which, in turn, further drove many Chinese children to internet cafes and arcades as the PC was still considered a luxury good in many Chinese households.
The next decade of gaming in China brought about further restrictions. In 2007, a government report claimed that 6% of the country’s teenage population was playing online video games for more than 40 hours a week. At this time, the Chinese video game market was estimated to be worth approximately US$1.7 billion with 42 million players. To counteract what was seen as an online gaming pandemic, the government launched regulation that limited the amount of time underaged players could spend on various games. In addition, the government also required player identification to play, which further limited access to video games.
Strict gaming restriction indirectly led to fiercer competition within the market. Many PC gamers accessed illegally downloaded games through pirated software websites in order to bypass the restrictions, which put a strain on the profitability of video game developers. In response, developers pioneered a new market of video games in order to boost their competitiveness while also remaining profitable. Many companies created games that were free or had low sticker prices to attract players and then turned to in-game microtransactions to turn a profit. These games were widely available at internet cafes, sparking a boom in massively multiplayer online games (MMOs) across the country. As they prospered, MMOs paved the way for the rapid rise in social network games which eventually found themselves adapted for mobile phones all across China.
The Rise of China’s Mobile Gaming Industry
Once social network games took off, developers began to find ways to put more games in more hands, the most popular of which became mobile gaming. In 2012, there were over one billion mobile phone subscriptions in China. This growth was mainly credited to the utility of smartphones, which were cheaper than gaming PCs and often provided Chinese citizens with their only form of internet access. Furthermore, mobile games also did not have restrictions placed upon them like other PC titles, which further boosted their popularity. Eventually, console bans were lifted in the late 2010s, but mobile gaming had already taken the lead as one of the largest and fastest growing internet sectors in the world.
The mobile gaming market in China is currently the most popular gaming market in the world, and is one of the most lucrative. In 2020, China’s mobile gaming revenues grew by 31% to just under US$30 billion. China’s developers are also influencing global gaming, as exported game revenues beat domestic market growth at 36.7%. However, the sheer depth of this industry makes market entry difficult for international developer studios, requiring specialized expertise from on-the-ground companies to establish a foothold. One such expert is Todd Kuhns, marketing manager for AppInChina, who provided valuable insight into China’s gaming app market and ways that foreign developers can publish their games locally.
Publishing Mobile Games in China – Q&A with Todd Kuhns
How big is China’s mobile gaming industry? Why do you recommend foreign developers consider launching their mobile gaming apps in China?
With over US$40 billion yearly in gaming revenue – over 60% being mobile games – China leads the world in size and speed of mobile game adoption. China has over 682 million gamers, and the number is growing every day. For many of our clients, just a small piece of this pie surpasses their total revenues in their home markets. And mobile gamers in China span a wide variety of age groups and genre preferences, so there is opportunity for anyone with a successful game outside of China to succeed inside the country.
Which gaming genres are successful in China?
Gamers in general remain pretty much the same across the world, although local tastes vary slightly from region to region. Worldwide, compared to console and PC gamers, mobile gamers in general tend to skew towards more casual games. In China specifically, casual and puzzle-based games remain the most popular overall, making up about 17% of the mobile game market and generating nearly US$4 billion in revenue. They also have the best retention rates and highest proportion of monthly active users (MAUs).
That said, Honor of Kings by Tencent – a role-playing game (RPG) – is currently the top-grossing mobile game in China according to App Annie, and has long been one of the most popular games in the country. It’s essentially a mobile interpretation of League of Legends, which began on PC. In China today, after RPGs, real-time strategy (RTS), first-person shooters (FPS), and card/chess/poker-style games follow in popularity.
According to Tencent, RPG and RTS games drive the most installs, while RPG and racing games (such as QQ Speed Mobile) tend to generate the most money overall. Consistently high-earners include Honor of Kings, Onmyoji, QQ Speed Mobile, Clash of Clans, and PUBG (Player Unknown Battlegrounds).
So clearly, no matter the genre of your mobile game, there is high potential for it to find success in the Chinese market.
China has a myriad of app stores. Can you tell us a bit more about them?
It’s important to understand that Android is the dominant mobile platform in China, comprising more than 70% market share over iOS. But because Google Play is blocked by the Great Firewall of China, more than 400+ Android app stores have sprung up in its place, making it more challenging to publish an Android game or app in this country.
Many of these stores are small operations that do little more than scrape APKs off of other more popular app stores to populate their own. However, the top app stores in China have their own particular strengths and audiences. Many of them – such as the Huawei or Oppo app stores – are operated by phone manufacturers and come pre-installed on their devices. Others, such as Tencent’s App Store, are run by large companies that develop and publish software themselves.
China also has many game-only app stores which specialize in publishing games and provide special features to their users, such as social features, game discussion forums, reviews, and a more robust, game-focused review system than your typical app store.
Which Chinese app stores should foreign developers consider?
Because each of China’s many app and game stores have different focuses, strengths and user base, it’s impossible to give a one-size-fits-all answer to this. When our company onboards a new client, we analyze their game or app, considering its likely users, type, and a host of other factors to recommend a particular app or game store for their app. We are always trying to maximize visibility, downloads and user engagement.
Since a game must be submitted to each app or game store individually, and many stores require their own ad and/or payments SDK to be used, you’ll often need a different APK of your game for each store you publish on, making it not very practical or manageable to submit to too many stores. Usually about 10-15 are sufficient, and our company can help you select the right ones.
Can developers succeed without boots on the ground in China?
The regulatory environment for games in China changes on an almost monthly basis. For this reason alone, it is becoming more difficult for foreign competitors to enter this market without an experienced China-based advisor or partner who is abreast of the latest laws and legal requirements.
Just last month, three of the top app stores announced they would be enforcing a rule that any app published on their platforms must obtain an ICP Filing, which is impossible for a non-Chinese company to apply for. We expect other app stores to follow suit, which is just one of the latest barriers for foreign companies to directly participate in the lucrative China games market.
Even after you have successfully navigated the legal requirements and published your game, you will immediately face the challenge of user acquisition and marketing. Because China’s app stores, media landscape, and social media environment are unique, your app will become more successful if you find a reliable, experienced partner to help design and manage your advertising, social media, and Key Influencer campaigns to grow your user base as quickly as possible in this highly competitive market.
What are the legal or regulatory hurdles that developers may face when approaching the Chinese market?
The list of legal and regulatory hurdles for any game to be published in China is long – for both Chinese and foreign developers. At minimum, you must apply for a Software Copyright Certificate (SCC), ICP Filing, and fill out a Security Assessment Form. Your game must comply with real name verification requirements and restrict access to minors as required by law.
All paid games and games with in-app purchases must apply for a game license (ISBN) from the National Print and Publications Administration (NPPA). Authorities will review the game’s script, artwork, gameplay, access scheme and other elements for compliance with Chinese laws. This process can take up to a full year.
The catch is that only 100% Chinese-owned companies can receive a game license – so if your game requires one, you must find a trusted Chinese partner to publish your game on your behalf. But don’t worry – this can be done without giving up your copyrights, trademarks, and other IP.
So far, games that are free or only ad-supported seem to be exempt from this requirement, but that could change at any time. We have a full guide online that details the entire process.
What kind of partnerships are required to publish a game in China?
As previously mentioned, it’s nearly impossible to market a game in China without a 100% Chinese-owned partner to publish the game on your behalf. Even free or ad-supported games from foreign companies will have increasingly limited access to the top app and game stores in the market, which severely limits their chances of exposure and, therefore, success.
This is why AppInChina exists. We have been the most trusted partner for publishing foreign games and apps in China since 2013, and our international, English-speaking staff works with companies daily to make their China dreams a reality.
Is there anything else developers should know before approaching China?
There seems to be a general wariness today towards doing business in China that, I feel, is a bit misguided. Most people in the corporate world have heard a horror story or two of a company that worked hard to enter the Chinese market, only to have their IP stolen and their business partners run off with copies of their business model.
Thankfully, these stories are old and outdated. Through increasing government regulation, strengthening of IP law, and more aggressive legal enforcement, China has become a much friendlier place for foreign businesses to enter and find success.
Although these licenses, certifications and compliance reviews may seem daunting, the rewards are worth the extra effort it takes to get there. Those who dismiss the Chinese market and choose to ignore it leave more opportunity for those who embrace it. And the gaming world cannot afford to ignore Chinese gamers any longer.
Todd Kuhns is a marketing manager for AppInChina, a leading platform for international companies to do business in China. AppInChina provides services ranging from app and game publishing to e-commerce, legal compliance to cloud hosting, and everything in-between.