China has more smartphone users than the United States, Brazil and Indonesia combined. At the same time, this also means more people are burying their heads into their laps and ignoring the people around them. So, what are Chinese consumers doing on their phones? Gaming!
There is a huge demand for mobile gaming in the Asian economic powerhouse. The mobile gaming market in China is worth close to $8 billion. With technology and creative minds driving the industry’s immense success, consumers are spending more of their leisure time playing games on their smartphones and tablets. And the data suggest there’s no slow down in sight.
Last summer, TalkingData, a data analytics firm, released a comprehensive report on the mobile gaming market in China entitled “China’s Mobile Gaming Market: A Quantitative Deep Dive: The Gaming Republic.” Here are some of the few interesting findings from the report:
Half of all games downloaded are casual games.
Half of consumers install six to 20 games a month.
Players spend around half-an-hour per day playing mobile games.
Card battle, turn-based RPG and MMORPG account for 70 percent of revenues.
82 percent of players play multiple games per day as opposed to just one.
Moving forward, consumers’ tastes in mobile games will mature, while the iOS market will maintain a significant share in this niche. Overall, the mobile gaming market in China is healthy…for now.
The Crusader in Mobile Gaming: iDreamSky
What brand is facilitating consumers’ appetites for mobile games? Truth be told, there are many publishers competing for market share in China. However, there is one specific company that is turning heads, releasing numerous games and satisfying the consumer, and even perhaps making a play in the North American market: iDreamSky Technology Ltd (NASDAQ:DSKY).
Although the Chinese marketplace has known iDreamSky for a while now, it wasn’t until last summer that Americans realized just how powerful the company is. The publicly-traded mobile gaming titan purchased a 50.1 percent stake in Rumble Entertainment, a successful Silicon Valley creator of mobile and social games. The deal was worth $10 million, and provided a glimpse of how lucrative not only the mobile gaming market is but also iDreamSky.
In 2014, the company filed for an initial public offering (IPO), much like many other Chinese tech firms. The IPO raised $115 million and hit a market valuation of nearly $700 million. The stock has been trading around the $13 and $14 mark, and year-to-date, the stock is trading in positive territory by three percent. The company focuses more on long-term growth as opposed to the IPO because it simply provides a starting point for any firm.
With China’s economy unfolding from nearly two decades of endless growth, could the mobile gaming market be one of the victims of the business cycle?
Despite fears of a mobile gaming bubble ballooning from iDreamSky co-founder, Jeff Lyndon, he isn’t frightened of the sky falling. Lyndon understands the business cycle, but he just doesn’t exactly know when and how the bubble will eventually burst, particularly in a nation that is witnessing the end of numerous bubbles all over its economy.
Speaking in an interview with VentureBeat a couple of years ago, Lyndon explained that if the bubble happens sooner than the collapse will be small, but if it happens later then the burst will be huge.
“The land grab is ending,” said Lyndon. “The part that’s scary, if you drill down, is that normally when you have a decrease in user growth rate, you have another way to support a game in the average revenue per paying user [ARPPU]. In general, ARPPU and conversion rate go up. But the decrease in one and the growth in the other aren’t matching. That’s why the bubble can’t be sustained. It’s a matter of time.”
Ostensibly, Lyndon’s fears are being realized: the bubble is continuing to grow. But for how much longer? Nobody knows at this point.
Lyndon and iDreamSky to Weather the Storm
In any case, iDreamSky could weather the storm because it’s the only game publisher that is invested by Tencent, the nation’s largest and most used Internet service portal. And, if China’s mobile gaming market deflates, then it could still flourish on the global market. In recent years, iDreamSky has landed partnerships with the likes of Disney, Ubisoft, Halfbrick, Devisisters and Miniclip as part of an initiative to touch ground in the United States.
The company has produced numerous smash hit games in China, such as “Fruit Ninja,” “Monument Valley,” “Inside Out,” Temple Run 2″ and “Subway Surfers.” These are titles that have sustained revenues and maintained healthy user growth levels. Because of its latest agreement with Tencent, iDreamSky was able to launch special versions of games like “Fruit Ninja” and “Cookie Run” for WeChat and QQ Mobile – it also supports WeChat payment.
As part of its continued 2016 international strategy push, iDreamSky released “Buddyman: Shoot & Run.” This is a new shoot and run action-runner game that features high-quality super-optimized graphics, Apple game center integration, seven unique characters, 10 main obstacles and 10 hours of non-repetitive gameplay.
In order to succeed in any market, you have to try and new things. Lyndon says, according to TechNode, iDreamSky is currently taking a wait-and-see approach for now, but it could soon move into the area of data analytics services.
“As a company focused on mobile games, we are also interested in backend or data analytic services,” said Lyndon. “We hold a wait-and-see attitude towards game content providers and do not roll out the possibility in helping innovative early-stage game startups as a supporting platform.”
If iDreamSky goes through with this then the brand itself will persist in thriving.
Chinese mobile games are competitive, not cooperative. Chinese mobile games are compact in size, not immense to wipe out your smartphone data. Chinese mobile games remain ultra popular, not causing consumers to yawn and become bored with the massive selection out there.
Mobile gaming firms in Shanghai, Beijing and Shenzhen are all competing for market share by unleashing annual lineups of new games. But is it a matter of quantity over quality? If you take a look at Lyndon’s mindset, mobile games are all about competition and size. Once you’ve mastered those elements in each game then it may not matter how many you release in a year.
On-the-go players in China have experienced first-hand the rise of mobile gaming and their high-quality products. Soon, Chinese publishers will crack the U.S. market, and iDreamSky may be the one company to accomplish such a feat.