The game market in China is vastly different from the market in the US, and most Western countries. China has never particularly had a console or packaged game business - it's always been free to play, in one way or another.
In his talk at GDC China, Rety Chen, CEO and CPO of Mokylin Technology discussed how the business model that's appropriate for a company in the Chinese market depends both on where the market is for your platform, and where your company is in its lifecycle. He also says that it's a good time to be making mobile games in China.
Overall, Chen urges that "you can't build a model for a business model's sake. It's systemic." A game is a balance, he says - on the one end there's fun, and on the other end, there's profit and benefits for the company. Unless they're even, the whole thing falls. He's aware that most projects start with gameplay in mind, but "if you have only playability, and no business model, it's just charity," he says. "But at the same time, we have to make sure that when we introduce new business models, we don't disrupt existing gameplay."
Chen outlined the four major stages he sees across platforms in China.
Stage 1: Unique products make an impact. A few years ago, mobile games weren't that popular yet on the development side, so if you launched a game players didn't have a lot of choices. At the time, no matter how you designed your business model you would pretty much succeed.
Stage 2: Many companies have now developed similar products, and only those outstanding products can succeed to win new players. During this stage, you need to pay more attention to the quality of the game itself in order to stand out and succeed.
Stage 3: At this point in the platform's maturity, everyone can develop a really good product. But since a lot of companies now have very good products, it's harder for players to choose. At this stage, the cheaper you are, the more players you can get. Quality is a tougher differentiation here, but in terms of payment, you still can differentiate yourself. Eventually, when everything gets really cheap, we reach the 4th stage.
Stage 4: Now everything is very cheap, so profitability is difficult across the board. This is where most mature markets are now - you need to transition to different, more innovative models, and the client-side web games, Mokylin's main market, are already in this 4th stage. Now, you might need more platform support, and to start focusing further on retention and the long-term lifecycle.
Chen says that mobile games are still in the 2nd stage in China, so developers should aim toward quality. "If you're a mobile game developer, it's not necessary to make your price really cheap," he says. "We have hundreds of mobile game developers making very bad-quality games. As long as you can make good-quality games, you can make good money."
And the more mature your company is, the more you need to focus on a long-term relationship with customers, versus innovation and disruptive models, he says. "Only when you care about what stage you're in, can you determine what your business model should be," Chen concludes.