Opportunity & Risk
The mobile game market in China is growing rapidly, and Korean mobile companies might be able to find new breakthroughs in China.
The growth potential of the Chinese mobile game industry would be able to provide Korean game companies with many business opportunities. Especially backed up by Chinese consumers' strong interest in mobile games, Korean companies have enough room to penetrate the Chinese market.
However, competition with many local companies in China is one of the major risks. In addition, fierce domestic competition and the short life cycle of mobile games could also be downsides in China as well.
According to State Administration of Press, Publication, Radio, Film and Television of the People's Republic of China (SAPPRFT), formerly known as the State Administration of Radio, Film, and Television (SARFT), on August 5, the mobile game industry in China grew 394.9 percent to 12.5 billion yuan (US$2.0 billion) during the first half of this year, compared to the same period last year. This accounts for 25.2 percent of the entire game industry in China (49.6 billion yuan, US$8.03 trillion). Users of mobile games surged by 89.5 percent to 330 million people for the same period.
Through the recent game show ‘ChinaJoy’ held in China, the growth potential of Chinese game industries has been proven once again. As mobile games are especially getting more popular, Korean companies might be able to seize opportunities to expand into China.
There are risks at the same time. There will be fierce competition with local Chinese game companies as well as numerous mobile game publishers (distributors) in China.
Although Tencent, the biggest game publisher in China, has a great influence in the overall Chinese game industry, its power would not be absolute in mobile games due to the wide variety of mobile game platforms and publishers.
Jung Dae-ho, a researcher at LIG Investment and Securities, explained, “China is definitely an attractive market for games, but competition is getting more intense. Millions of local game producers are releasing new games, and their qualities are being improved every year. Even foreign console game companies are targeting China.”
Likewise, there are both opportunities and risks in the Chinese mobile game industry. Korean mobile game companies are expected to seize those chances and grow in China. IDC projected that the Chinese mobile game market will become the world’s biggest at a size of US$30 billion, the profitability of Chinese mobile companies are improving these days, which could also be beneficial to Korean companies.
During ChinaJoy, many Korean mobile game companies signed contracts with local Chinese companies, which is a good sign for the expansion into China. Chinese mobile game publisher Chukong signed a service contract for Nexon’s Legion of Heroes and Com2uS’s Dragon Knights. Tencent announced an exclusive service contract with Gamevil’s Become a Star, and DEVSISTERS’ Cookie Run was tested at the booth of mobile game publisher IDREAMSKY.