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Chinese Java Games Up?

2006-10-17  Taylor

Ori Elraviv Updated by Ori Elraviv wed, 4th oct 2006 in Mobile Application Market in China

Analysys International, one of those inaccurate Chinese research companies, has posted its findings on the mobile java gaming market in China, claiming the market has seen 17% growth. They also mentioned the phenomenon of "self-consumption", which might have puzzled those who are not familiar with what’s going on with the Chinese market. This basically means companies that are buying their own products to increase their place in the rankings, but to some companies it also means increasing revenues to the bottom line (will explain this point soon). This makes a huge difference to those companies who were recently acquired (by the likes of Monstermob for example), as a significant part of the acquisition bottom line was based on hitting a revenue target...

So how do those companies actually make money from downloading their own content? Well, China Mobile has been promoting special prepaid cards to download mobile content. These cards (called "hong ka" - red cards) are sold mostly in second tier cities and give a 100rmb worth of mobile content for only 70rmb. China Mobile currently takes 15% cut from the selling price of a mobile game, so SP‘s (aggregators) that used the card to download their own content still kept 15% as revenues - not bad is it? As in many other aspects of China, relations worked their charms, and SP‘s were buying most of the "hong ka" that were offered to consumers (from other dubious distributors).

Analysys mentioned in their press release that the telcos are starting to crack down on this phenomenon, but the truth is they couldn‘t care less about companies downloading their own content, but woke up only after SP‘s started to use those "hong ka" for that – in their eyes basically stealing from them. For China Mobile, downloading ones own content does not create any complaints from subscribers, and even brings up revenues from content (at least in the short term) – so why would they even want to start dealing with the headache?

Is there really 17% growth which represents good consumer adoption of mobile game? I seriously doubt it – the truth is, mobile gaming companies in China are suffering big time.

Shortsighted is a dangerous play, and is going on in full steam in anything related to mobile applications in China these days…


Discussion

(add your comments here)
 
Commented by John Bridges wed, 4th oct 2006 | add your comments

John Bridges

So 17% growth means there are now 1.17 * 4million (yes million) players in the market. ;-) There might be 500m phones but there is only a tiny %age of the market buying gaming content atm - and tbh it will probably stay that way for a while. ... Join to Read More Executive Member

 
Commented by Ori Elraviv wed, 4th oct 2006 | add your comments

Ori Elraviv

Not sure how that 17% translates to number of users, but bare in mind that downloading a game in China costs only 5-8rmb so do the calculation accordingly. At the moment I would be very skeptical about any info like that coming from China, especiall... Join to Read More Executive Member

 
Commented by John Bridges wed, 4th oct 2006 | add your comments

John Bridges

That‘s about in line with our experience - we used Enorbus who will do the porting "for free" - of course this is absorbed into the rev share they take - but you have to bite your hand and hope that your code won‘t be ripped. Of course if you liv... Join to Read More Executive Member

 
Commented by Ori Elraviv wed, 4th oct 2006 | add your comments

Ori Elraviv

To be honest its not good revenue even if you live in China! Enorbus is a good company and probably one of the first I would choose between the mid-sized companies there. The issue with stealing a source code is a tricky one, and I personally do... Join to Read More Executive Member

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