China Walls Itself Off From Foreign Mobile Games: Market Share Analysis 2016

Key insights

7 takeaways

01
Foreign-developed mobile games saw their share of top 250 downloads in China drop from 39% in 2014 to 25% in 2016.
02
Domestically developed games dominated the Chinese market, increasing their share of top 250 downloads from 61% in 2014 to 75% in 2016.
03
The decline of foreign games is driven by the rapid expansion of domestic giants like Tencent and NetEase, who produce titles better aligned with local cultural and aesthetic preferences.
04
New government regulations implemented in 2016 require foreign publishers to undergo a mandatory, multi-month approval process to obtain licenses for app store releases.
05
Political tensions have directly impacted market access, exemplified by a 2017 ban on new mobile games developed in South Korea.
06
Despite the downward trend, Chinese players continue to favor Western titles from a consistent group of countries, specifically the United States, France, and Finland.
07
Major foreign publishers including Electronic Arts, Gameloft, and Supercell remained the most popular non-domestic developers in China between 2014 and 2016.

Summary

The mobile gaming landscape in China experienced a significant shift between 2014 and 2016, characterized by a marked decline in the market share of foreign-developed titles. Data indicates that foreign games accounted for only 25 percent of downloads among the top 250 mobile games on the Chinese App Store in 2016, a notable decrease from 33 percent in 2015 and 39 percent in 2014. Conversely, domestic publishers captured 75 percent of the top 250 downloads by 2016, up from 61 percent in 2014.

This trend is driven by two primary factors: the rapid expansion of major domestic publishers like Tencent and NetEase, and an increasingly restrictive regulatory environment. Domestic firms have successfully captured market share by producing content specifically tailored to local cultural and aesthetic preferences. Simultaneously, the Chinese government has implemented more stringent licensing requirements, mandating that foreign publishers secure official approval before launching games. This bureaucratic process, which can span several months, serves as a significant barrier to entry for international developers.

Despite these challenges, foreign interest in the Chinese market persists, with players continuing to download titles primarily from the United States, France, and Finland. Major international publishers such as Electronic Arts, Gameloft, and Supercell remain the most popular foreign entities among Chinese users. While the regulatory landscape and the dominance of local developers have created a challenging environment for non-domestic firms, the market remains a target for international companies seeking to navigate these complex barriers to entry.