Winnings roll in a gaming story

Global mobile games business closing in on PC sector as mainland market sees $5.5b bumper harvest

Defying the dispiriting economic data worldwide, the gaming industry, it seems, has never failed to offer a respite from the current global economic woes.

The sector itself, whose software revenue is projected by market researcher Digi-Capital to grow from last year's $88 billion to $110 billion by 2018 at an annual 8-percent growth rate, is believed to be recession-proof in some ways.

"Playing the games is like taking alcohol. It's a relatively cheap form of entertainment allowing people to escape from the gloomy economic reality," says Robby Yung, chief executive officer of Hong Kong-based mobile games developer Animoca Brands.

"After all, where else can you find entertainment for just five dollars in Hong Kong?"

The mobile gaming market, in particular, stands as the dynamic industry's poster child, evolving from a fledgling upstart into a mature market.

While online personal-computer (PC) gaming remains the industry's indisputable giant, taking the lion's share of up to 56 percent of the world's total digital games revenue in 2015, mobile games currently account for nearly 40 percent, emerging as the largest games platform in terms of market share across the globe, says the latest report from market-intelligence firm SuperData.

The mobile gaming story for the Chinese mainland may sound even more exhilarating, according to data from analyst firm Niko Partners, which showed that 2015 was a bumper year, with revenue from the country's mobile games market surpassing that of the US to hit $5.5 billion domestically, and was on track to shoot up to $11.1 billion by 2019.

"Two years ago, the Chinese mainland was not even a relevant market, frankly, in the mobile games industry," Yung says. "Now, with almost $6 billion estimated to have been spent at app stores last year, the domestic market is roughly on par with the other two largest markets in the world - the US and Japan - and is expected to grow by another 50 percent next year."

Unlike the saturated online PC gaming segment in which a dominant stake at home has been claimed by key players like Tencent, NetEase and Perfect World, the yet-to-saturate mobile gaming market is still awaiting newcomers to join the fray, says Yung.

However, since the Google Play app store is currently blocked on the Chinese mainland, games developers like Animoca have to work with at least five to 10 out of approximately 2,000 Android app stores in the country to distribute their products among virtually millions of mobile games, which could translate into tons of work.

Last year, the Australia-listed company partnered with Tencent to publish its popular "Armies of Dragons" mobile games across the WeChat social messaging service in Hong Kong, Singapore, Indonesia, Malaysia and Thailand.

The mobile gaming market's immature nature makes Yung believe that payment infrastructure really has a lot to do with the success of mobile games in the country, where customers can opt for a handful of available payment methods, including credit card, Alibaba's Alipay and Tencent's WePay.

"The problem is for content providers. Every time we have to embed an extra payment service in the games, it cuts into revenues," he says. "It could be hard to figure out that consumers love our products simply due to the game content or just because they happen to have the available means of settlement."

Typically, if developers work with Apple app store and customers pay with credit cards - the most widespread payment instrument in Western markets - Apple would take a 30-percent platform fee and developers could keep 70 percent, according to Yung.

"However, when you deal with Android app stores on the Chinese mainland, what developers get is much less than 70 percent in all cases."

"The fragmentation of the Android market and infrastructure just lifts the cost of making mobile games on the mainland. If we want to focus our business only on the Chinese mainland, which now ranks as the fourth or fifth-largest market for Animoca, then I need to hire another hundred people at least," says Yung.

Google is said to be planning to launch the mainland version of its Google Play smartphone app store this year after having largely pulled its services out of the country back in 2010.

If it comes back to an open app store on the mainland, Yung believes Google stands to enjoy a bigger advantage as it is comparatively more straight-forward to work with, and a good many international mobile games developers would come along with it.

sophia@chinadailyhk.com

(HK Edition 04/21/2016 page9)