One popular game in China is Honor of Kings, and during Chinese New Year, its streaming platform – Douyu – reported over 60 million streams, double the previous year. Tencent also said that its gaming services grew sharply during the past year.

China’s gaming industry has long been powerful – the Chinese are renowned for their love of games – and the market is hugely attractive to Western entrants, with the country’s gaming revenue for 2019 hitting a whopping US$36.5 billion. It is now only second to the USA as the world’s biggest gaming market. Predictions suggest that it will soon become the leading market, with mobile gaming leading the way. In fact, gaming – particularly eSports – form such a huge part of Chinese life that there are entire sports leagues, TV shows, mass-participation events, and even professional video gaming schools in China!

However, although the size and growth of this hugely lucrative market are immensely attractive to businesses, the Chinese gaming market is highly complex, with a large regulatory framework that regularly changes.

What must foreign entrants consider?

Gaming in China is subject to strict rules and a high level of oversight. The market was reformed heavily in 2018 and is still evolving. For an online game to be marketed in China, its content must first be approved by the regulators and assigned a license.

If the regulators decide that the game’s content is inappropriate (too much sexual innuendo or violence, for example), they will deny the license. China’s approval framework must be taken very seriously by Western gaming companies, as licensing is exceptionally selective. In 2019, Chinese regulators approved 1,570 games, but only 185 were from overseas publishers.

How to get your game listed in China

As of June last year, every online game needs an International Standard Book Number (ISBN) to be listed on China’s app stores (the same 13-digit code found on books.)

There are also rules on age to consider, as under 18’s are subject to strict rules that limit their time spent gaming online, impose spending limits, and include curfews.

How can foreign investors enter the Chinese gaming market?

It can be time-consuming to enter the Chinese gaming market, as the regulatory framework requires significant cooperation with Chinese state entities.

Using a foreign server – accessing a very limited Chinese market

Some foreign developers earn Chinese sales by using foreign servers, where gaming platforms have overseas servers. If a developer is hosting a game on a foreign server only, a formal presentation isn’t required – so they don’t need to get a Chinese license, ISBN, or establish a wholly foreign-owned enterprise (WFOE) presence. However, these servers aren’t widely accessible in China, as they require a VPN. Additionally, Chinese users may struggle to use non-Chinese payment systems – WeChat Pay and AliPay are the most common systems used in China. (Note that most Chinese gamers will use the Chinese Apple Store, the Tencent app store, or other domestic platforms.)

Formally entering the Chinese Gaming Market

1. Find a partner

So to formally enter the Chinese gaming market, a foreign developer will need to find a Chinese partner. For example, Nintendo, a Japanese firm, uses a partnership model with Tencent to distribute its games in China. The partnership will allow you to register your games and market them with a commercial arrangement that splits revenue between the partners.

2. Consider your structure

It can also be valuable to set up a WFOE if you are planning to market games in China over the longer term. This will allow you to collect payments, employ staff, and market in China as a foreign developer.

3. Review for regulatory compliance

Once your structure is set up, it is valuable to review it on a regular basis to stay up to date with the changing rules.

4.Learn about China for further gaming development

The Chinese gaming market is so vast, so different, and so highly evolved that Western developers should also spend time getting to know it. If your company doesn’t have a high degree of knowledge about eSports leagues, gaming forums and exhibitions (including mass participation events), and video schools, it’s time to find out more! Additionally, it’s essential to understand how games are used by certain groups in China, such as the Animal Crossing game, which has evolved to become a design platform for designers and fashionistas – something which the creators might never have envisaged!

5. Market effectively

You will undoubtedly need an official Chinese website to market your game in China, fully optimised for human readers and Baidu search bots alike for ranking.

You’ll need to promote your video game franchise on Baidu, integrate your digital assets to maximise your content, build a quality, trusted brand and strong e-reputation (online reviews from independent sites can help with this.)

Host your game on WeChat, making use of Mini-Programs and the other rich features on the site, such as H5 pages (which can be used to create interactive marketing materials.) List your game on other relevant sites, too, such as Apple China and Tencent. Host and post content and run advertising campaigns on other critical social platforms in China, such as WeChat, Weibo, Bilibili, the Chinese video-sharing platform, Douyin, etc.

It’s also valuable to partner with a relevant KOL and to consider strategic marketing partnerships that offer the immersive, holistic marketing experience that millennials and Gen Z customers crave. For example, Burberry and Tencent have collaborated on a fashion-led game that launched the fashion house’s new collection, and Honor of Kings collaborated with MAC makeup to offer customisation of looks to key characters using new MAC palettes.

Find out more

Marketing gaming products in China can be challenging and complicated – but the potential rewards are far too good to ignore in this vast, rapidly-growing market. Market Me China can help you find your route to success and break into the Chinese gaming market with your Western brand and gaming products. Our team of Chinese digital marketing experts have the knowledge, skills, and experience needed to succeed. Please contact us to find out more.

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Meet the Chinese Online Gaming Demand

The demand for Chinese online games is changing. While massive multiplayer online role playing games (MMORPG) is still the biggest genre in the market, they are beginning to notice a gradual decline in the number of new gamers (source: Tech in Asia). Experts and trends forecast the next big market is social gaming. These types of games, distributed and played on social networks, are not only addictive and easily accessible; they are also targeting non-traditional gaming markets, such as women.

Adapt for the Chinese market

Not only is Chinese culture different to ours in the West, Chinese online games and gaming habits are different too. In the run up to Activision’s recent launch for Call of Duty Online in China, a lot of effort went in to the tutorial levels, as the game is more complex than popular Chinese First Person Shooters, such as Crossfire (source: Polygon). These kinds of adjustments help you remove any barriers that may put gamers off your game.

Endorsements in Online Game Marketing

Just because you might not have the budget for big-name stars to endorse your product doesn’t mean you can’t gain publicity with a well-known brand ambassador. Social media platforms are full of influencers – people who have built up large followings and become an authority on certain topics. Many of these will be gamers and bloggers. By reaching out to them and understanding their likes and needs, you can still secure yourself endorsement from trusted experts in the field who have a large audience.

Choose the Right Pricing Model

How you price your product will affect its popularity. There are several ways you can monetize Chinese online gaming. Currently the most popular is the Free-to-Play model, where users can access the game for no cost, but have the option to pay for in-game options, such as extra lives, special character costumes, or better weapons. The micro transaction system has proved highly lucrative for game publishers across the world.

Another option is to invite users to join a closed Beta version of the game. Supposedly for testing the game and receiving customer feedback, this exclusivity can generate a lot of excitement. It works so well that some games never come out of Beta modes.

Succeeding in the Chinese online gaming market is about understanding what works and what your target market likes. Once you know this information, online game marketing is about getting your game in front of the right audience. A simple task that takes a lot of work, and offers a lot of rewards.

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What games are most popular with Chinese gamers?

Currently the most popular type of Chinese online game is the MMORPG. In these massively multiplayer online role playing games, a huge number of players can interact, fight, or work together in the same virtual world. They select a character and, earning experience for completing certain quests and challenges, improve their attributes and teach them new skills. These kinds of game appeal to hard-core gamers, who spend many hours a week on Chinese online games.

The online gaming industry is seeing a shift in taste, however, with the growth of MMORPGs beginning to slow, and hard-core gamers representing a smaller proportion of online gamers than before (source: Forbes). Game companies have also seen a change in the way revenue is distributed between games, with MMORPGs holding a smaller share. It seems like the next big thing for online gaming in China could be casual social games – those distributed and played on social networks such as Renren (source: Economist). These games are reaching a new gaming audience, such as women, who only represent 27% of online gamers in China (source: Go Globe).

Where and when do people play Chinese online games?

Most gamers like to play at home during the evening, between 6pm and 10 pm. Unsurprisingly the lowest gaming activity is seen between midnight and 8am, with only seven percent of gamers in total playing during these hours. After home, internet cafes are the most popular location for online gaming, with nearly a fifth of all gaming activity. A cheeky seven percent of the population play games at school or at work (source: Go Globe).

Do people spend a lot on online gaming in China?

Most online games use the highly successful free-to-play model, with players able to access and play the games without having to pay. This is popular all over the world. Revenue is generated through in-game purchases. Players can pay for extra equipment, new characters, additional levels, and all kinds of upgrades.

Chinese online gaming companies are using this free model to connect with a large market of gamers. China suffers from high levels of piracy when it comes to offline games, so free-to-play gives companies a way of presenting their game to the market and charging players who become engaged. It clearly works, as 64% of Chinese gamers spend money on their games every month, a rate that is higher than other developing countries (source: Forbes).

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 1. Tencent

Telecommunications giant Tencent enjoyed a year on year growth of 40% between 2012 and 2013, and ended up generating more revenue than the other five top Chinese online gaming companies combined. Tencent also has interests in lots of other areas of technology, including social media and online advertising, so the company’s total revenue for 2013 was $2.161 billion (source: Tech In Asia).

2. Netease

Netease is another Chinese company shifting its focus towards the mobile game market, which grew 93% in 2014 for a total revenue of $2.9 billion. They recently teamed up with SGN to distribute the smash hit Cookie Jam throughout China. The game looks to rival King Digital Entertainment’s Candy Crush Saga, which has 500 million active monthly users (source: Venture Beat).

 3. Changyou

While Changyou’s revenue rose 18 percent to $738 million in 2013, its net income was down 5%. This was one of the motivations behind the company’s recent aggressive investment plans, announced in March last year, which see the company shifting focus to the mobile market. The $600 million investment will be used to acquire new games, form partnerships with new games developers, and market mobile games (source: South China Morning Post).

4. Shanda

While Shanda was one of the big six gaming companies to see a drop in profits during 2013, by the beginning of last year the company was valued by its major shareholders – Shanda Interactive Entertainment LTD and Primavera Capital – at $1.9 billion (source: Reuters). Shanda focuses primarily on massively multiplayer online games (MMO).

5. Perfect World

Perfect World pride themselves on bringing out games that cater to changing consumer demand. Although they generate a large portion of their revenue in China ($100 million), their games have also been successful in Europe, Japan, and North America. In 2012 they signed an agreement with leading American developer a Valve to exclusively operate the highly successful Dota 2 in mainland China (source: Perfect World).

6. Giant

The Giant Interactive Group focuses on massively multiplayer online role playing games (MMORPG) in which players build and improve their characters in a virtual world. Their ZT Online game was the most popular game in China in 2006, with 1.3 million active subscribers (source: Digital Media Wire). Giant supports its online gaming in China with a distribution network of more than 113,000 retail stores that sell game points and prepaid cards which grant access to the game.

Chinese online games

The Chinese online gaming market may be dominated by six major players, but at the rate it is expanding, there are plenty of opportunities. With the right online game marketing, you too could be enjoying success in the marketplace for Chinese online games.

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When the game launches, it will do so on the players’ terms, not Activision’s. How have they managed this?

Optimised for local connections

China struggles with low internet speeds, particularly in rural areas. This is one of the biggest challenges facing online gaming in China, where a secure, reliable connection is vital to ensure that players from across the country can interact and compete together. Slow internet speeds can result in huge loading times, low framerates, and render certain games unplayable. Internet speed is why online games, even in the West, typically have graphics that seem a lot less advanced than console games.

With this in mind, Activision has spent much time and effort developing the game so that it looks good, whilst not requiring a massively fast connection to play. This research and development focus will ensure that Call of Duty Online doesn’t fall at the first hurdle.

Partnering with key domestic players

It may seem odd, but Activision’s partner in bringing Call of Duty Online to China is Tencent: publisher of the most popular online game in China, Crossfire. Tencent also have shares in Activision, so they have an interest in ensuring the company does well in the lucrative market.

By teaming up with such a large player in Chinese online gaming, Activision gain access to a huge number of Chinese gamers. Their association with a known and trusted domestic brand will help Activision gain credibility and win over Chinese customers, who can be slow to trust but incredibly loyal.

Studying Chinese online gaming competition

Call of Duty Online is a very different game to Crossfire. It involves a much more complex set of controls and the ability to multitask during gaming – something Chinese gamers don’t usually have to do in the same way as Western gamers. This could be a potential problem for Activision, who anticipate Chinese gamers feeling daunted by the potential of Call of Duty Online.

To address this problem, Activision have taken special care to make the tutorial level of the game as comprehensive as possible. They have identified that Chinese gamers have different needs, and so have adapted their offering to address those.

By paying careful attention to the state of online gaming in China, and identifying the problems and concerns of online gamers in China, Activision have given themselves the best possible chances of succeeding in the market.

(Image source: Baidu Baike)

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DTWS

By 2012, 2.5d combat game Du Tang Wu Shuang was losing fans and brand awareness at a remarkable rate. With the sequel due for release, developers NetEase needed a way to reverse the fortunes of the franchise, whose brand awareness was dropping faster than any of its top five Chinese online gaming competitors. In the highly competitive marketplace, they needed a way to reconnect with fans, ensuring lots of people registered to play DTWS2.

NetEase signs popular Taiwanese model and actress Lin Chi-Ling

Lin Chi-Ling, a popular model and actress, known for her roles in Red Cliff/Red Cliff II, The Treasure Hunter, and Switch, was signed by NetEase to become a brand ambassador for the Du Tang Wu Shuang franchise. This was not the first celebrity signing used to promote the franchise – the original DTWS was endorsed by Donnie Yen, a prolific martial arts film star known in the West for his roles in Blade II and Hero (source: chinagame.178.com).

The signing was part of Genedigi MSLGroup’s plan to employ a strong word-of-mouth campaign for the game’s launch. Lin was involved directly in the game as a player, interacting with other gamers to bridge the gap between fantasy and reality. The chance to interact with a popular and beautiful film star was sure to entice many of the predominantly male gamers back to the DTWS franchise.

Campaign result

The move certainly worked. After the launch of Du Tang Wu Shuang 2, NetEase’s Chinese online gaming revenue rose by 21%, with the game being ranked second in the top five 2.5d games of 2013 Q3. Both the term DTWS 2 and the game’s theme song trended on Weibo and views of the game’s online videos surpassed 7.17million, with 980 links on YouKu. 1.2million online comments were made about the game. During the 40 day campaign period, Baidu searches for the game increased by 1000% and media coverage by 300%. In total, the campaign generated over 500million impressions.

Finding celebrity endorsement for online game marketing

Celebrity endorsements are not a new or rare marketing technique when launching any kind of product. While giant stars may be well outside of your budget, the DTWS 2 campaign shows that word-of-mouth can have huge rewards for companies. With the popularity of social media, it is easier than ever to connect with people who influence many others, making it possible to build strong partnerships with key online celebrities.

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A look at the top three games played online will give you an idea of just how successful this format can be, and also show you what is most popular within the marketplace. The success of these games demonstrates the power and viability of Chinese online gaming. Can you see your game in the marketplace?

Chinese online gaming: Crossfire (Tencent, SmileGate)

The top online game in China last year accounted for almost an eighth of the total online gaming revenue, bringing in $967 million from its micro-transactions system (source: Forbes). Crossfire is very popular amongst young gamers, and is very heavily based upon one of the biggest online games of its type – Counter-Strike – which sees players take on the role of soldiers battling to fulfil certain objectives.

Crossfire benefits heavily from the fact that it does not require a particularly fast internet connection to play; vitally important for online gaming in China considering the country’s relatively poor internet speeds.

Crossfire is free-to-play, and makes its money by offering paid-for upgrades within the game.

League of Legends (Tencent, Riot Games)

Tencent also publishes the second most popular game in China, in a joint venture with US developer Riot Games. Their collaboration is one of only a few partnerships happening in China that brings American games to the country (source: Riot Games). League of Legends pitches teams of users against each other in highly strategic battles.

League of Legends adopts a more traditional system of micro-transactions, in that the vast majority of its paid-for upgrades allow players to unlock content quicker. Users are not inhibited if they do not want to pay, which is likely one of the reasons why league of Legends continues to be so popular (source: IGN).

2013 revenues: US$624 million

Dungeon Fighter Online (Nexon)

DFO is based upon popular side-scrolling fighting games such as the classic Street fighter, with fast-paced action. Players progress through a series of rooms, each increasing in difficulty, filled with enemies who they must defeat in order to progress to the next room. Slaying monsters rewards them with equipment, in-game currency, new equipment, and materials with which they can craft new items, allowing them to improve and upgrade their character.

In-game tokens can be purchased with real money, which can then be spent on upgrades to improve your character. You also need tokens in order to respawn if your character is killed, otherwise you have to wait (source: IGN).

2013 revenues: US$426 million

Many of the most popular Chinese online gaming titles are free to play, but use the micro-transaction system to generate huge amounts of revenue. By offering players an enthralling experience, with the chance to earn rewards, they are attracting legions of Chinese gamers with large pools of disposable income.

Is your game ready for the Chinese online goldmine?

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With a growing population of people with disposable income and the world’s largest internet population, China can be a very lucrative place for online gaming. We take a look at the market.

The growth of online gaming in China

Online gaming has had a free reign in China for the past few years. In 2000 the Chinese government banned games consoles, citing fears over the affect they have on the mental health of young people. With the 14-year ban only being lifted at the beginning of 2014, people wanting to game have had to turn to other outlets, with consoles now having to try and lay claim to the market. However, the price of consoles such as the Xbox One and Playstation 4 equate to nearly a month’s wages for the average gamer in China (between $400-$500), with new games costing around a week’s wages (source: Reuters). By comparison, many online games are free, making them a much more popular choice.

Current Market State

Online gaming in China has a penetration rate of 59.5% among total internet users and 33% of mobile users. While many of the top games are free, in-game purchasing is a lucrative source of revenue, with 66% of gamers in China spending money on gaming each month. Action RPG (Role Playing Games) and FPS (First Person Shooter) games are the most popular, with 28.1% and 18.8% share of the market respectively. Nearly half of all gamers play games between 6pm and 10pm, with three-quarters playing at home, and nearly one fifth playing in internet cafes. 73% of gamers are male, with 23% female, and the biggest age group for gamers is 19-25, accounting for over half of the market. 60% of gamers prefer to play games with 3D graphics (source: CNNIC).

Future Predictions for Chinese online gaming

At the end of 2013 the online gaming market was worth $13.5billion (82.1billion Yuan). This is expected to grow to 131billion Yuan by the end of 2015, with mobile gaming accounting for 33.8billion of the total revenue (source: Statista). Experts predict that rapidly growing number of smartphone users in the country will mean that mobile will continue to increase its share of the Chinese online gaming market. By 2018 it is expected that the gap in revenue share between online gaming and other gaming will close, with online gaming accounting for nearly half of all gaming spend in the country (source: PWC).

It is estimated that in 2015 there will be 266million Chinese online gamers, spending at least 2 hours per month gaming (source: CNNIC).

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