Looking out for new marts

Mobile gaming developers look to the West, as competition heats up in the East

Fierce competition in the Chinese mobile gaming market has prompted several international game developers to scale back their aggressive China expansion plans and forced some domestic developers to set their sights overseas.

Thanks to the nation's wider adoption of smartphones, the country has seen rapid growth in mobile gaming in recent years. However, a mere two out of every 10 mobile application developers in the country actually made profits, said a report published by consulting firm iResearch.

A majority of the game developers are losing money and only a very small share of mobile games, such as Fishing Joy, become the lucky ones in terms of popularity and profits, analysts said.

"Capital and software development teams have thronged the mobile gaming field, leading to chaos and overheating," said Wang Ying, an analyst with the Beijing-based research firm Analysys International.

There were 220 million smartphone game players in China by 2012, a year-on-year increase of 31.8 percent, statistics from Analysys International showed.

The market volume of China's smartphone gaming industry reached 6 billion yuan ($963 million) in 2012 and the figure is expected to grow to more than 20 billion yuan over the next three years, Wang said.

However, foreign gaming developers are now having second thoughts on China and have tended to cool their urge to expand in the market aggressively.

"The Chinese mobile gaming industry is very competitive," said Kevin Chou, co-founder and chief executive officer of Kabam, a US-based free-to-play game provider.

"Kabam has decided not to expand to the Chinese market right now but instead focus more on introducing good Chinese web and mobile games to the Western world," Chou said.

Headquartered in San Francisco, California, Chou's company is one of the fastest-growing in the world's free-to-play market. Kabam currently has seven games that gross more than $1 million a month.

Kingdoms of Camelot, a popular mobile game from Kabam, was the top-grossing application for Apple Inc's iOS platform for all of 2012 and is the seventh highest grossing strategy franchise of all time.

Chou with Kabam said more than half of its revenues come from the North American market, but the company does not have any revenues from Asia yet.

Meanwhile, the rampant piracy in China has also posed a big challenge for international game companies. PopCap, a game developer and maker of popular games such as Plants vs Zombies, did not realize profits in China until it turned the game into a free-to-play model and produced peripheral items such as clothes and dolls.

Facing fierce competition at home, Chinese mobile game developers, on the other hand, have shown a strong willingness to tap into the lucrative developed country market, where the competition is less intensified.

"We believe Chinese developers are the best in the world," Chou said. But there are several major difficulties for them to gain success in overseas markets. First, there are more than 700,000 applications on major mobile operating systems like Android and Apple's iOS. "It is very hard for overseas players to find a certain game out of the pool," he said.

Second, if a Chinese game is not properly translated into the languages as well as culturalized the right way for the Western market, people in the West will not pay for these games, Chou said.

So Kabam announced in mid-April the establishment of a $50 million fund that will enable the best Chinese games to take advantage of Kabam's resources in marketing and distribution to expand to North American and European markets.

"No one needs to give Chinese developers lessons on how to create great gaming experiences, but they do need help in localizing and marketing their games to the Western world," Chou said.

One of the first Chinese games Kabam helped publish in developed countries is called Wartune, a top 10 simulation/life game product in 2010 in China. Kabam started publishing that game in January and, after three months, now commands monthly sales of more than $1 million in Western markets.