Mobile gaming majors ride localization train for continued success in China

Slingshotting angry birds to kill pigs, slicing and dicing oranges and watermelons or shooting colored balls to make sets of three from the mouth of a stone frog idol may not exactly be what the doctor ordered to keep yourself engaged on long commutes.

But on any given day, one can find many like Zhang Hui, a 25-year-old freelance columnist from Shanghai, tapping away furiously on their smartphones in subways, buses or cabs and giving a new impetus to the mobile Internet gaming market as well as offering sound growth prospects for international gaming majors like Roxio, PopCap and Halfbrick in China.

According to data provided by Analysys International, a Beijing-based consultancy, the total value of the mobile Internet market in China last year was 86.2 billion yuan ($13.67 billion, 10.5 billion euros), a 35.3 percent growth over 2010.

Out of this, mobile applications accounted for nearly 42.4 percent of the total, with mobile games, music players and e-reading the most promising sectors for app developers.

Zhang herself is a case study in point. Though she takes pains to admit that she is not a gaming fan, she says that is what keeps her engaged during the long commute of nearly one and a half hours on the subway.

"I get bored when commuting. But the mobile games keep me engaged and help me pass the time," Zhang says. "There is also the added attraction of trying out various games at various app stores, like the Plants vs Zombies, Flipboard and Angry Birds."

Many international app developing companies are now making new apps or tweaking their existing apps to incorporate more Chinese features, in what promises to be a fierce battle for marketshare and profits.

Much of the popularity for mobile Internet gaming in China came after the advent of smartphones. The China Academy of Telecommunication Research, a think tank under the Ministry of Industry and Information Technology, said in a recent report that smartphone sales in China exceeded 118 million units, and accounted for 26 percent of the 455 million mobile phones sold in China last year.

Though the smartphone market appears to be evenly divided among the big three Internet players, phones using Google's Android system dominate in China with over 51 percent of the market. Close behind are Apple's iOS with a 24 percent share and Nokia's Symbian with 11 percent.

US-based gaming developer PopCap Games Inc was one of the early movers that set up an office in Shanghai in 2008 to tap into the mobile gaming market. The company's products like Plants vs Zombies, Zuma and Bejeweled already enjoy immense popularity with Chinese gamers.

"China has always been an important market for us and the mobile Internet gives us an additional opportunity to reach out to more users," says Liu Kun, country manager of PopCap Greater China.

The US company will partner with Chinese Internet giant Tencent to launch two new mobile games, Plants vs Zombies Great Wall edition and Plant vs Zombies Kingdoms, on Android platform for Tencent's QQ Game Center.

The new edition will not happen in the backyard of a Westerner's house, but rather on the Great Wall. The zombies in the game will be Chinese zombies wearing traditional official robes, Liu says.

The Great Wall edition will be launched on May 18 and the Plants vs Zombies Kingdoms, a free mobile social game, is expected to launch later this year. The company will also launch a Chinese version of its popular tile-matching puzzle game Bejeweled.

Halfbrick Studio, a video game developer from Queensland, Australia, is also adding more Chinese features in its products to attract users in China, even though it still does not have a local office.

Halfbrick's popular game Fruit Ninja has seen 40 million downloads in China, accounting for than 30 percent of the total downloads worldwide. So far the company has made nearly $6 million from China since September when the game was launched.

"The Chinese market is our second biggest market after the United States and we are now planning to localize Fruit Ninja in China," says Shainiel Deo, CEO of Halfbrick.

Deo says the company is planning many updates of Fruit Ninja for Chinese consumers, such as adding more unique fruits or some special swords with typical Chinese cultural features to connect with more users.

For most of the global app developers on the iOS or Android platforms, China, with its more than 431 million mobile Internet users, is undoubtedly a huge market that cannot be ignored.

"Unlike most of the Asian countries like Japan, China has embraced mobile technology right from the beginning," says Egidio Zarrella, partner at KPMG China. "Chinese mobile users are more sophisticated. You cannot just attract them with cheap and easy products. ... That's also why more international companies are looking to be in China, with an eye on providing better services for local customers."

Though most of the companies are banking on the early mover advantage to stay ahead of the game, there has also been a growing trend of seeking growth through effective local partnerships.

The Palo Alto, California-based Flipboard Inc, which develops the popular app Flipboard, has come out with a Chinese version of the app for the iPhone and iPad. Flipboard is essentially a magazine based on the social networking service (SNS) platform and the company says nearly 40 percent of the downloads have been from outside the US.

"We see a lot of growth in China. There are several things that are contributing to that growth. Making available the Flipboard for iPhone in China saw a fivefold rise in our user numbers in just one week," says Christel van der Boom, the public relations director of Flipboard.

The company expects downloads from China to surpass 5 million this year. Its current downloads worldwide are estimated at around 8.4 million.

Unlike other gaming applications, Flipboard runs on a social platform and as such considers local partnership an integral tool for its success in China. The company has about 75 different publications and publishers and keeps on adding more every week.

"The support we get from local partners like Sina and Renren has also been integral part of our growth strategy and desire to develop locally relevant content for Chinese readers," says Van der Boom.

Though the prospects are numerous, there are also several hurdles for continued success of international gaming companies in China.

Competition is becoming fiercer and also factors like intellectual property infringements and jail breaking of smartphones.

Liu from PopCap, however, does not consider intellectual property infringement a major hurdle. "There are many copycats of Plants vs Zombies on the Internet. Most of them are free, while we charge 18 yuan for the game on the iPhone. The copycats are an indication of the popularity we enjoy with Chinese customers.

"To get around the IPR issue, PopCap has also adjusted its policy after entering China. The company has shifted from download payment to in-apps purchase," Liu says.

In-apps purchase means users can download the apps for free but can pay extra for additional features.

Tian Xingzhi, general manager of Zynga China, also has similar views. Zynga is a social network game development company headquartered in San Francisco. It set up its Beijing office by acquiring XPD Media, a local SNS company in May 2010.

"The Chinese market is growing quickly with fierce competition, but the quality of games is the major opponent, not the culture or the language," says Tian.

The company's China office serves as a studio producing products for the global and China markets.

However, there are still concerns about the popularity of such apps in China as most Chinese users are not keen on paying for these services.

According to a recent report from the Netherlands-based application store analytic company Distimo, the United States remains the best destination for mobile Internet gaming companies. China, does not even figure in the top five grossing markets.

The report further suggests that developers should focus on markets like the United Kingdom, Australia and Canada if they have a one-off or in-app strategy for growth.

Contact the writers at suzhou@chinadaily.com.cn and linjingcd@chinadaily.com.cn

(China Daily 05/11/2012 page10)