How Western Mobile Gaming Companies Succeed in China
Note: This article was originally written for and published in Sootoo, a Chinese publication in September 2015
The mobile gaming market currently represents the largest gaming category with opportunity for growth right on the horizon. Surely there is VR/AR, which has yet to gain the traction needed to be a platform that is as widely available as the mobile phone. In China alone, the mobile gaming revenue has exceeded expectations to surpass US Revenues in 2016 with $7.7Billion USD (Newzoo) and is expected to make up at least 20% of the mobile game revenue worldwide (Venturebeat). China cannot and will not be ignored.
Many mobile gaming companies, both Chinese and non-Chinese, are trying to figure out how to be a part of this opportunity. Two great examples of successful entry into the Chinese Mobile Gaming markets by non-Chinese companies include Supercell with Clash of Clans and Boom Beach. The second example is 植物大战僵尸2 (Plants vs. Zombies 2) from the U.S. gaming company Electronic Arts (EA). Both were successful and took various strategies to succeed.
Supercell has released two hits — Clash of Clans and Boom Beach — in China. Just focusing on Clash of Clans, it was first released in 2012 with barely any localization. Many Chinese players go as far to recall that the game wasn’t even in Chinese. However, their game released a new kind of game genre in China called “CoC,” which refers to the real-time tower defense/strategy that Clash of Clans offers. For Boom Beach, Supercell decided to partner with Kunlun on marketing and distribution in China, but did not change too much of the gameplay (Pocket Gamer). Boom Beach has surpassed Clash of Clans on revenue and downloads — Clash of Clans is at #17 and Boom Beach is at #11 of the top 20 Grossing iOS Apps in China (Think Gaming). This is a testament to having a strong local distribution partner can really move the needle.
Plants vs. Zombies 2 launched in China in 2013. They took a purely localization path to this game, and deeply culturalizing the game. First they had content that was familiar to China. Within a few months after the release, they released a whole new world Kung-Fu World (功夫世界), that would be much more familiar to China (Wikia). Secondly, they added content that would be recognizable to any Chinese person as part of the main gameplay: a peach plant, a kung fu master zombie, and the drunken monk zombie. They went as far as changing the systems design, creating certain items that you can buy with hard currency, more so than the Western version (Polygon). They also set up the business model to be free-to-play rather than premium paid download. Furthermore, they moved in the pay wall in the first 3 days, something Westerners may think is aggressive, but not too aggressive by Chinese standards. As a result, their revenue increased by 32% (Polygon). Within a year of its release, it had reached the fourth highest source of revenue in micro-transactions for EA (Polygon) — and that was just China alone. It also became the top download and grossing mobile game in China (Polygon). Clearly, this strategy works as well.
However, it is now 2015 and the landscape in China has changed from the time when these games were released. Three things in the China market have changed: (1) The number of game developers have increased. (2) Channels are consolidating, making it harder for one single game to distribute. (3) Product quality is getting better and better. Each one of these has its implications on what it will take to succeed in the Chinese market today.
Game Developers Increasing
Happy Universe, a Chinese Publishing Company, has estimated that there are about 14,000 game developers in China, which is about 10,000 more developers than just one year before. This means the competition is very high for local Chinese and foreign mobile gaming companies. Any game developer will currently be competing with beloved Chinese PC-franchises such as 梦幻西游 , as well as non-Chinese games such as Clash of Clans and Plants vs. Zombies 2 (植物大战僵尸2). To stand out from all this competition would be to look at the source of IP as a differentiator. This is why many Chinese companies will look internally such as 花千骨 (which is based off of a popular TV show), beloved Chinese PC-franchises梦幻西游 mentioned above, or they will look to Hollywood with 功夫熊猫. For Western game developers, this may be an area that is more accessible as a source of IP. There are many games that have been based off of Hollywood IP — Kung Fu Panda and NetEase, Minions with Gameloft, and Marvel with Kabam. This allows game developers to benefit from not just creative IP, but also helps make distribution easier and economical due to brand recognition.
Channel Consolidation Leads to Partnerships
When it comes to distribution, it is very important for game developers to partner with someone. While there is only one store for iOS, there are hundreds of app stores for Android. Because most channels are consolidating, it is even more important for game developers to find a partner to push past all the game developers and get the attention of the top five distribution channels. That is just happening with local developers. Therefore, for non-Chinese companies, it is critical to get a local partner to make sure your game can get the distribution. Also, partners can help you navigate the local customs and infrastructure by helping to publish it. For example, when Clash of Clans was first released, it was integrated with the Google payments system, which is banned in China, leaving no way to collect revenue (Tech In Asia). A partner can help to avoid these issues as well as help integrate more popular systems such as Alipay or Tencent. Later when releasing Boom Beach, Supercell decided to work with Kunlun. While we do not know the exact reason for them to decide to get a partner for their Boom Beach release, we can only suspect it was to help to navigate these local customs and infrastructure. Other game developers, such as Kabam, who is partnering with Longtu, decided to partner early on before their Marvel Contest of Champions game was released to get their best opportunity to distribute their game.
AAA Product Quality
The best long-term strategy to thrive in this environment is to have an amazing high-quality game. What does “AAA quality” mean in the mobile world? Traditionally in the West, a “AAA quality” game meant amazing graphics, larger than life fidelity, and life-like animation. Hence, the need for a dedicated console machine to play these games. Today the processing speed of the mobile phone is equivalent to that of the earliest model of the xBOX, a machine dedicated to playing games of the highest quality — AAA quality. This will cause the players to expect more from the game from a graphics level. This has happened with 梦幻西游with the introduction of 3D graphics as the top grossing game in China right now has raised the bar. In addition to great graphics, you need great gameplay that has a systems design that you can play over and over. A great game will play like chess — a timeless game that no matter how many times you play, it is a different game for you. And finally something that is not new to Chinese game developers or its gamers is that games are a service. This is something that many Western game developers are learning and can stand to learn from many Chinese developers. As the top games continue to be a business model that is Freemium, rather than a paid download, the need to provide top quality service to your players and customers also contiues — giving them compelling content and game play that will systematically raise the core value of your game.
The Final Piece
The final piece of the puzzle that is necessary for success in China, and is not realized by many people in the beginning, is commitment. This takes time and usually eventually requires a team. It requires support from the highest levels of leadership in the organization. Many Western companies partner with someone as their first step of commitment. And that is usually a very good first step. Eventually, to have long-term commitment, having a local team will prove to be helpful. Kabam executed on a rare strategy of first building a team and office in 2010 to yield best-in-market products. This strategy can work if you build the right team and can pay off in spades as many things that take time on a team, such as trust, as well as operating in China. Both take time to build and time is not something that you can shortcut.
Conclusion
Regardless of what strategy you choose in entering into Chinese markets, it takes a great partner, a great product and a great team to help make sure that you are on the path to success. This advice can be the same for both Western and Chinese companies as we have the same goal — to create an amazing game that appeals globally!