Chinese mobile gamers constitute the largest single national market worldwide, and some developers now look to capitalize on foreign markets too
App Annie’s new quarterly report for 2016 shows that the value of China’s iOS market has now surpassed that of the US, vaulting it to first place worldwide. The news is especially gratifying for Apple as it vies with Android for share of App Store users in the larger Asia-Pacific region: the two companies are neck and neck, with Android holding a significant lead, especially in games, which account for the bulk of both companies’ revenue streams in China.
In the larger picture, PC is still king. But the mobile gaming market in China is expected to account for 48% of total games revenue there by 2019, approaching $20 billion in value and driven by the urban under-35s demographic. (China has more mobile game users than any other market, but they do not spend as much per capita as in other countries, such as Japan.) Mobile already accounts for over half of the Chinese online gaming market, which is worth over $6 billion.
Larger companies like Tencent and Alibaba are also pursuing stakes in Western mobile gaming companies.
Mobile games prove transformative
The market growth is projected to continue even as Chinese regulators are changing the rules for approving games’ entry to the country, rules which are especially onerous for independent developers and may yet close down “loopholes” for the Apple App Store itself in order to favor joint partnerships between foreign content producers and Chinese publishers.
Though Chinese laws sometimes make market entry for foreign gaming apps difficult – each must be approved by regulators and there are strict language requirements – other laws have done wonders for mobile gaming. According to gamesindustry.biz, “due to the ban on consoles, smartphones were the first gaming technology to expose the stasis in PC gaming hardware,” which had long been the primary platform for gamers.
This, along with better and cheaper phones coming out in China’s domestic market, has changed consumer behavior significantly. In the case of major game developer NetEase, for instance, it took just two years for its PC and mobile revenue shares to flip around: mobile is now top dog for the company, while PC growth slows to a crawl.
Digital card and board games remain popular, though are also being challenged for audience attention by role-playing games, action-adventure entries, e-sports, and casual sims.
Non-gaming apps also growing in China
iOS App Store spending in China has quintupled since 2014. It has held the top spot for games since earlier this year. The recent surge is a combination of both further growth and the increased number of downloads for other categories – though these as of yet only account for about a quarter of the China market’s total iOS revenue.
Other downloads also greatly increased, including books, entertainment, social media, and media applications – though the latter category is still the smallest, the number of downloads is over 10 times higher now than last year. (Streaming is expected to increase rapidly in the next few years, with reality TV and film rights in the lead.)
China’s per capita is lower than some other countries, but the size of the market partly makes up for this. China had previously surpassed Japan in overall App Store revenue at the end of 2015, despite that difference in consumer behavior. The latter has retained its seat as the third-largest national market for iOS, according to App Annie. Soon, though, Japanese regulators may be setting up for a possible showdown with Apple, over the company’s 30% commissions policy for third party (in this case, Japanese-developed) apps in the store.
The App Annie report also highlighted that Pokémon Go was the App Store’s most successful rollout to date, even with growth now slowing down, and has brought a large number of totally new users into the App Store’s mobile gaming sphere.