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In-Depth: China's Burgeoning Game Industry, Audiences
by Lisa Hanson [PC, Console/PC, Exclusive]
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September 11, 2009
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[In this Gamasutra-exclusive column, Niko Partners' Lisa Hanson offers an expert analysis of the rapid growth in the Chinese game market, following the firm's in-depth report on the region's developers, audience and industry.]
There’s no doubt that China is one of the fastest-growing markets for video games (primarily online games) worldwide. With more than 64.9 million online gamers predicted by the end of 2009, there are a lot of questions about Chinese gamers’ behavior and preferences, including how much time do they spend and where do they play games, what hardware do they use, and so on.
As a natural extension of the vast gamer base, China has also cultivated a talented game development force that has been honing its skills for the past few years, achieving a strong reputation globally for game development beyond just the art outsourcing that laid the groundwork for Chinese game development.
While the West has been playing console games for decades, and MMOs since the late 90’s, Chinese business models for games are different than we find here in the West. Subscriptions, as we know them for games like World of Warcraft, EverQuest, Age of Conan and others, are available for some AAA titles, but most games utilize the free-to-play (F2P) or item-based sales model instead.
Chinese gamers prefer F2P online games to subscription games and they want to play games on high-end PC hardware. In our most recent report, the 2009 Chinese Gamers Study, we actually had the opportunity to speak to more than 1,850 gamers and get their opinions about the games they play, why they play them, and what works for them as consumers. Nearly 50 percent of the 1,850 gamers surveyed said that they have been gamers for 3-5 years, and 20 percent are hardcore gamers, playing more than 22 hours per week.
Gamers have become choosier about the games they play, and the economics of the Chinese market have finally started to shift from supply-driven (pushed from the publishers) to demand-driven (pulled by the gamers), which is a normal course for a growth market. Chinese development studios have “box seats” to listen to the behavior and demands of Chinese gamers as they produce games for their domestic market, as well as games for export.
Chinese developers have traditionally been focused on one aspect of the supply chain for games. An art outsourcer would just handle art, and coders would program, but rarely would a complete Western game be created in China until just a few years ago.
According to our Chinese Game Development Studios Compensation & Benefits Analysis, domestic development of games is a segment of the market that is growing in demand, but there are still fewer experienced developers than needed by domestic studios.
We found that salaries are fairly competitive among studios, but there are key ways to recruit and retain talent in a market where the supply of talent lags demand – and one of those ways is to be sure to have a full development pipeline of interesting projects to work on.
Developers tend to have 2-4 years of professional experience on average, and while studios have been in business for several years, some even 13 years or more, the outsourcing studios are just starting to really consolidate, resulting in fewer but bigger and broader studios that can handle all aspects of game production, and online operators have been expanding their in-house development capacity.
To address the greater market in China, online game operators such as Tencent, Shanda, and Perfect World are not only publishers of licensed games but also developers of games for China and overseas. Each of these operators, plus many of the others, has a catalog of online games to appeal to different users, with monetization models ranging from micro-transactions to time cards, to advergaming. This gives gamers more choice in what and how they play.
Chinese gamers typically play one MMO at a time plus multiple casual games. While the leading cause of starting or leaving a game used to be that one’s friends were or were not playing it. Because of the strong social nature of Chinese gaming, today’s savvier gamers state that the main reason to play a certain game title is that it is the best one in its genre, and the main reason to abandon a game title is that they want to try other games.
These gamers are demanding higher quality, and while Chinese studios produce high quality titles much of the time, there is still room for growth to reach world class development studio status.
In China gaming remains the least expensive social activity, and the hotbed of social gaming is China’s 170,000 Internet cafes. However this is less true in the “smaller” cities than it is in the major metropolises (“smaller” in quotes because there are 90 Chinese cities with populations greater than 1 million, whereas there are only 10 in the United States).
Gamers in the major cities flock to cafes for social gaming with their friends. But with 84 percent of PC ownership among the 1,850 gamers surveyed online for Niko’s report, home usage has finally surpassed Internet cafe usage, though some online operators report that roughly 40-50 percent of their revenue comes through the Internet cafe channel.
There is lower usage in the smaller cities, probably because the cafes are not as swank and high tech as they are in places such as Shanghai and Beijing. Gamers would rather play at home where they enjoy their environment than go to cafes where the hardware and environment may not meet with their personal standards.
This will change as Internet cafes improve in those smaller cities, though, and that has started to happen now that the ban that had been put on new Internet cafe licenses has essentially been softened for new cafes to open in cities further afield at the discretion of the provincial government. As savvier gamers demand more from domestic development and game operators, they are also demanding more from their PC hardware and the environments within the Internet cafes.
There’s a lot to learn about China when it comes to games, and it’s impossible to put it all in a single article, but I invite anyone interested in finding out more to contact us. We’ve done a lot of research on the market over the past 7 years!
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I have a Blog on a Chinese site for cultural discussion, 90% of the visitors have some degree of English language skills. Almost all of them do not play MMO's, but prefer some sort of social interaction. Most of the time I get requests to join them on QQ (China's premier instant messenger), or visit there Blog. I have tried to bring up an online gaming discussions without any luck. The age range for my visitors are 20 - 30, while I have had a 50 year old visitor they are rare.
The Hong Kong gamers, on the other hand, prefer much more arcadey types of games. If there's one thing I love about Hong Kong it is that arcade gaming is still popular and often packed with people on a daily basis. The other thing about Hong Kong gamers is that they really love their portable games, especially the girls. I've rarely seen a girl who has a boytoy who won't play Monster Hunter with her boytoy during my time in Hong Kong; play as in the girl has Monster Hunter on her PSP as well.
As for piracy, that is hard to gauge. Both PSP and DS owners in Hong Kong admit to some level of piracy but PSP owners tend to buy more games, at least from my observations. Piracy on the 360 is pretty rampant, but most of the pirated games are titles that have heavy emphasis on single-player or local multi-player. I've actually been around to witness the Customs (Anti-Piracy) Police come out in full force to shut down the bootlegging stores in Shenshui Po; this has happened 3 times already. On the other hand, piracy on the PS3 is pretty much nonexistent even though the games on the PS3 are pretty popular. None of the bootlegging shops I went to had anything to offer for the PS3.
The Chinese market is CUTTHROAT to say the least, most of the games here have been copied soo many times with afew cosmetic changes and re released under a different title, it's a joke!
As gamers in China will tell you most of the games are very similar, with no real outstanding differences. But if it's there they will play it.
The main revenue comes in from the net bars over here, these netbars are operating 24/7 ALWAYS full, developers usually compete and try to offer the netbar money, commission to install their games on their PC's.
This is where it gets dirty. It's soo cutthroat and cunning you wouldn't believe it!
Main audience is teenagers to young 20's, depending on what areas the netbars are, usually more vibrant out in the country areas near the factories, this is where they can be entertained for little money.
Average cost of a netbar per hour is about 2RMB (CNY).
As the article points out, these games are client based, F2P MMO's.
The other popular trend is webgames (browser based games) This has only really developed within the last 2 years and is growing at a cancerous rate. This is the particular industry I am in.
These a MASSIVE difference in the audience for these two game models.
In China, in the big cities, vast amount of young office workers own their own laptops, prices have dropped dramatically over the last couple of years.
The trend is that these people prefer to play webgames with their laptops, from data gathered, compared with the people at netbars who rather play client based games.
The players who play these games are usually the only child, not really used to socializing, rather play their own way not really cooperate or communicate that much in game, usually PVE models are popular.
I have worked with a number of web game promoters who usually promote and host webgames on their portals then get a slice of revenue from the developer.
One portal site I witnessed had over 1 million hits in 24 hours but with a high bounce rate.
One client based game I have worked on was about 8 years old when we had it, it took us 18 months to modify it, then the lead programmer left with it and you guessed it re badged it and relaunched it. For such a old game it did very well. In fact I am still apart of that team now in a consulting role.
Cultural differences: Yes there are cultural differences in China, you may notice when playing a Chinese game, it's very complex, a lot of features a lot of functions, small buttons, icons, nothing really flows that well, they tend to forget the core game play and the feel of the game, graphics are not as advanced, thus they make up for it with all these little features and functions that you can click to your hearts content.
When foreign developers come over here, they think just translation and SOME localization will do the trick, but unfortunately this doesn't work!
The game really needs to be customized to the current market, if you have a game that's too different from the mainstream stuff, then it's not going to go far here, as I said most games are VERY similar to each other, just a few changes.
Most of the projects come from copying other successful games the changing the UI and story, pack it up and relaunch that's the norm around here.
Remember since games in China are proving a popular profit raiser, this has lead to fierce competition a flood of developers in the past year, out to earn a buck. usually bringing with them the code from their past company. This has included many many Chinese businessmen getting into the industry throwing their wads of red cash in.
it's becoming more and more harder to really push your game and get results, this had lead to chinese developers pushing out overseas into new markets, Vietnam, Thailand, Malaysia are VERY profitable markets and little competition.
To actually operate a studio is cheap, depending on which city you plan on developing your game in, for example Shanghai is not an ideal spot because of the overly expensive consumption levels and high overheads.
Remember there's A VAST amount of talent out there, millions and millions of high trained and experience people all across China willing to relocate where the money is. Try and offer a commission based package to your employee's this will keep them in the project and stop them from jumping ship 2 months in (quite common now) offer health plans, make them feel happy and let them know the game will MAKE MONEY, another China do.
The only popular foreign based game that's made a REAL impact and really set the (copying) oops sorry standard is WOW,
To conclude:
Audience: Young males teen, early 20's
Demographics: Students, players from more remote parts of China, working in remote places who cannot socialize in big cities.
Games: Client based MMO and web based (RPG)
Business model: F2P (EVERY SINGLE GAME here is F2P going from the micotransaction business model)
Promotion: Client based games: netbatrs
Web based games: Portals
Tip: To really get anywhere in the China market you have to be WELL CONNECTED, know the RIGHT people, without this you'll get no where fast.
It's not about what you know but who you know.
If you would like to know more about the China gaming market, just send me a message and I am more than happy to talk more.
Remember keep mainly everything INHOUSE.
Thank you.
Jason Richards.