Page 368 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
Tencent Holdings Ltd., China’s largest internet Jessie Guo said popular Chinese smartphone games like
company by market value and one of the 10 largest Tencent’s Honour of Kings and Onmyoji from Hangzhou-
public technology companies in the world, has based NetEase are examples of titles that could make
seen enormous success from its mobile gaming and inroads in overseas markets (Perez).
advertising divisions, including social networking
platform WeChat and desktop game League of Legends. Newzoo goes so far as to say “the Chinese appetite
It also owns Honour of Kings which contributes more for top Western PC games holds the key to new truly
than 50 percent of Tencent’s smartphone game revenue global franchises.” According to the figures, China
in 2017 and recorded monthly gross revenue of as much already generates $27.5 billion in gaming revenue.
as 3 billion yuan per month. “Games have become truly That’s over $2 billion more than the second-placed USA
mass market and it’s a massive, massive opportunity and miles ahead of third-placed Japan ($12.5 billion)
that’s only going to get bigger,” Ilkka Paananen, the and fourth-placed Germany ($4.8 billion). China has
Chief Executive Officer Supercell, the developer of the incredible market potential. China’s online population
popular Clash of Clans mobile game, said in the report. as a percentage of its total is way lower than anywhere
“One of these days somebody’s going to build a game else in the top ten, and the domestic gamers’ strong
that reaches a billion users a month.” Most of China’s interest in Western games, particularly PC properties, is
gaming market is home grown with little international only recently getting answered (Scott-Jones).
appeal. About 93 percent of all money spent by Chinese
gamers are on titles developed by Chinese-based Currently, the Chinese market churns out a great
companies. This compares to 56 percent of U.S. gamers deal of games, but most of them are lousy. Many
spending on U.S.-developed games, and 36 percent of mobile developers publish games quickly to seize
Europeans spending on games developed in the E.U.. more market share rather than creating a masterpiece.
Teemu Huuhtanen, the Chief Executive Officer of Next The biggest difference between Chinese and Western
Games Oy, claims breaking into this Chinese market games is their focus on monetization: while Western
requires a pairing of international development talent developers rely on providing new content updates to
with local Chinese expertise (Laxon). keep users, monetization is how Chinese mobile game
developers retain users. For example, to maximize
The mainland market is predicted to be worth $27.5 customer retention, Chinese games heavily use events
billion in 2017, making it the world’s leader as global and promotions such as pop-up windows and message
market revenue advances to $109 billion from $99.6 boards informing customers about discounted items
billion last year, according to a new report from research and events (Venga). Nevertheless, China’s game exports
firm Newzoo. It said nearly half of the mainland’s are expected to grow robustly in 2017 and the gaming
estimated 565 million gamers in 2017 are expected to be industry is expected to face a severe talent shortage.
playing on all three gaming platforms – console, personal These are some of the trends we are likely to see in
computer and mobile. Chinese gamers remain very China’s gaming industry, according to IDC Research,
interested in the top Western personal computer game winner of the 2016 China Game Industry Support Award
franchises, even though the majority of the most popular issued by the China Game Industry Annual Conference.
games [on the mainland] are home grown”. The Newzoo “China’s gaming industry will see further growth,” says
report said the state of the global games market “has Johnny Zhou, Analyst at IDC China. “While remaining
given Chinese games companies confidence to export closely involved with the traditional PC and mobile
their successful games to the West”. It said initial overseas industries, the gaming industry will draw from artificial
expansion efforts by Chinese games companies five intelligence, wearables, virtual reality, big data, cloud
years ago were unsuccessful, which led them to take an service and other emerging technologies and use
alternative route: investments and acquisitions. Tencent, animation, literature, movie & TV, live broadcasting,
for example, has significant interests in a diverse group themed amusement park and other traditional
of Western game developers that include Epic Games, entertainment industries to create more disruptive
Glu Mobile, Activision Blizzard and Supercell, which value” (IDC).
was taken over by the mainland firm for $8.6 billion in
2016. “This year [2017], we expect to see new attempts The Ministry of Education has approved multiple
by Chinese game giants to launch games into Western college majors associated with this activity since
markets,” the Newzoo report said. Jefferies Equity Analyst September 2016. Xilingol Vocational School in Inner
368
Tencent Holdings Ltd., China’s largest internet Jessie Guo said popular Chinese smartphone games like
company by market value and one of the 10 largest Tencent’s Honour of Kings and Onmyoji from Hangzhou-
public technology companies in the world, has based NetEase are examples of titles that could make
seen enormous success from its mobile gaming and inroads in overseas markets (Perez).
advertising divisions, including social networking
platform WeChat and desktop game League of Legends. Newzoo goes so far as to say “the Chinese appetite
It also owns Honour of Kings which contributes more for top Western PC games holds the key to new truly
than 50 percent of Tencent’s smartphone game revenue global franchises.” According to the figures, China
in 2017 and recorded monthly gross revenue of as much already generates $27.5 billion in gaming revenue.
as 3 billion yuan per month. “Games have become truly That’s over $2 billion more than the second-placed USA
mass market and it’s a massive, massive opportunity and miles ahead of third-placed Japan ($12.5 billion)
that’s only going to get bigger,” Ilkka Paananen, the and fourth-placed Germany ($4.8 billion). China has
Chief Executive Officer Supercell, the developer of the incredible market potential. China’s online population
popular Clash of Clans mobile game, said in the report. as a percentage of its total is way lower than anywhere
“One of these days somebody’s going to build a game else in the top ten, and the domestic gamers’ strong
that reaches a billion users a month.” Most of China’s interest in Western games, particularly PC properties, is
gaming market is home grown with little international only recently getting answered (Scott-Jones).
appeal. About 93 percent of all money spent by Chinese
gamers are on titles developed by Chinese-based Currently, the Chinese market churns out a great
companies. This compares to 56 percent of U.S. gamers deal of games, but most of them are lousy. Many
spending on U.S.-developed games, and 36 percent of mobile developers publish games quickly to seize
Europeans spending on games developed in the E.U.. more market share rather than creating a masterpiece.
Teemu Huuhtanen, the Chief Executive Officer of Next The biggest difference between Chinese and Western
Games Oy, claims breaking into this Chinese market games is their focus on monetization: while Western
requires a pairing of international development talent developers rely on providing new content updates to
with local Chinese expertise (Laxon). keep users, monetization is how Chinese mobile game
developers retain users. For example, to maximize
The mainland market is predicted to be worth $27.5 customer retention, Chinese games heavily use events
billion in 2017, making it the world’s leader as global and promotions such as pop-up windows and message
market revenue advances to $109 billion from $99.6 boards informing customers about discounted items
billion last year, according to a new report from research and events (Venga). Nevertheless, China’s game exports
firm Newzoo. It said nearly half of the mainland’s are expected to grow robustly in 2017 and the gaming
estimated 565 million gamers in 2017 are expected to be industry is expected to face a severe talent shortage.
playing on all three gaming platforms – console, personal These are some of the trends we are likely to see in
computer and mobile. Chinese gamers remain very China’s gaming industry, according to IDC Research,
interested in the top Western personal computer game winner of the 2016 China Game Industry Support Award
franchises, even though the majority of the most popular issued by the China Game Industry Annual Conference.
games [on the mainland] are home grown”. The Newzoo “China’s gaming industry will see further growth,” says
report said the state of the global games market “has Johnny Zhou, Analyst at IDC China. “While remaining
given Chinese games companies confidence to export closely involved with the traditional PC and mobile
their successful games to the West”. It said initial overseas industries, the gaming industry will draw from artificial
expansion efforts by Chinese games companies five intelligence, wearables, virtual reality, big data, cloud
years ago were unsuccessful, which led them to take an service and other emerging technologies and use
alternative route: investments and acquisitions. Tencent, animation, literature, movie & TV, live broadcasting,
for example, has significant interests in a diverse group themed amusement park and other traditional
of Western game developers that include Epic Games, entertainment industries to create more disruptive
Glu Mobile, Activision Blizzard and Supercell, which value” (IDC).
was taken over by the mainland firm for $8.6 billion in
2016. “This year [2017], we expect to see new attempts The Ministry of Education has approved multiple
by Chinese game giants to launch games into Western college majors associated with this activity since
markets,” the Newzoo report said. Jefferies Equity Analyst September 2016. Xilingol Vocational School in Inner
368
