Is the Western mobile games industry losing to China?

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All right. So, let's go from console talk to mobile talk. So, Chris, I know you pulled a bunch of numbers. Let's go over Q1.
bear with me. There's a lot of numbers ahead of you, but generally speaking, I used to do this all the time for Warner and Fortis and and just doing quarterly updates just to track what's happening in the Western markets. Just to be clear, the Western markets includes North America, can't which is Canada and US, and includes all of Europe and Australia. So, this is what the market that I'm looking at, just to be clear. All right. So, so far in the quarter of markets up 3% year-over-year, which is consistent with minimal growth. It's driven by a 19% 19% increase in puzzle games, for [ __ ] sake. There's an insatiable need for puzzle games in this [ __ ] world, dude. These 55-year-old ladies got to get out of the goddamn house. I'm just kidding. It's not just 55-year-old ladies, but fine,

if you want to make a generalization. A 7% increase in strategy. Casinos down 10%, simulations down 12, and RPG continues to deteriorate down seven. So, to delve into the puzzle category first. So, year-over-year, match swap is flat, right? Well, match merge two is up 91%. Gossip Harbor. Gossip Harbor.
is Gossip Harbor primarily. Merge two is just doing it. Sort games are also up, but they are uh 310%, but it's a very low base, so it's not really all that interesting yet, but still that is up and coming. Overall, downloads are continuing to drag. We are down 13% year-over-year, and that is just not good news. That means that still the established players are driving most of the revenue, and new games are having a tougher time to gain downloads. So, the major releases so far in 2026 are Arknights Endfield, Last Asylum Plague, Coin Master Board Adventure.

And just to give a little bit of detail, Arknights Enfield's a Japanese RPG, really not replicable for Western game developers, and it's doing extremely well in Japan, but doing well in US as well. Last Asylum Plague is a Chinese strategy game integrating gameplay from hyper-casual games into a core 4X game with unique theme. Does that sound familiar to anybody? strategy category? Wow, I wonder. Coin Master has made Board Adventure, which Sorry, Coin Master Board Adventure is from Moon Active, which is basically a [ __ ] copy of Monopoly Go. My Garden Tale is a Chinese version of Township. Hollywood Merge is a puzzle game based by another Chinese company. So, you guys see some themes here, some ongoing themes. Anyway, by publisher by country, again, another theme we've been talking about for years now. Chinese, Hong Kong, and Singapore are up 18% year-over-year. Turkey is up 28% year-over-year. US

publishers are down 12%, and Europe is probably very similar. And again, to see the scale of these companies, Chinese, Hong Kong, and Singapore represents 30% of the overall revenue in the West. 30%. This is up from 16% in the 2019. China represents 60% of the strategy revenue, the second largest genre in the business. This is up from 40% in 2020 and up from 11% in 2015. People, they are kicking our ass right now. [laughter] Like, this is bad news bears, man. US and Europe is just not competing, right? And then finally, Turkey has grown from 2% in 2019 to over 10% of the market in 2026. Oh my god, just I think we have the massive data behind what we've been saying on the podcast for the last, I don't know, 6 months or so. Those numbers are crazy. And they're

going into new categories and genres that they haven't been in before. Yeah.
insane. All right. So, that I wanted dive into a couple of games a little bit deeper in what you were talking about. So, we're looking at a slide I pulled from Sensor Tower. This is tier one. So, staying on Kress's tier one topic, top games by revenue of the last 90 days to see trends versus prior month. And so, a quick rundown of the top 10, you got let's me click in here. Like Monopoly Go, Royal Match, Last War, Candy Crush, Gossip Harbor. So, what I'm really fascinated again, like Gossip Harbor, Kress gave you some of those numbers. It's growing. So, it's now ranked top five. It's up 16% revenue and 26% in downloads versus the prior 90 days. And the only other game to really show like that level of growth, a little bit of Coin Master, but it was also Pokémon Go. So, the next slide shows for Pokémon Go that, hey Kress, all that

brand marketing is really paying off because it's their 30th anniversary and during the the massive spike that they had in Pokémon Go, they were up 14% revenue, 52% in downloads, and downloads have actually continued coming in after the big anniversary event happened in March. So, the March event was from March 3rd to 9th focusing on some region in Pokémon. The the Q1 event commemorates the '96 of the release of the first Pokémon games. So, that happened. So, Phil, I'd I'd love to get your comments there, but the one other thing I just wanted to say was I was surprised that Roblox wasn't in the top 10. When I was looking at 90 days, it was in the top 14 revenue. And then the last 30 days it's grown to the top 11 spot. So, it looks like Roblox mobile from an IAP perspective is coming in hot. So, those were some things I just wanted to pull out I thought were interesting from a game perspective. The

Pokémon Go [ __ ] the brand stuff. I mean, like look, I'm going to give you your moment in the sun, but like at the end of the day, Scopely did take over and you imagine that they are probably juicing UA. But, I'm looking at the downloads and I'm not really seeing it a little bit in March, but like They're just better operators than Niantic. Of course, they're going to add value. Like, come on. No, I know, but I'm just I I I don't know.
That's an event.
You can't attribute all with brand. It's all about the event and driving UA, right? I am not attributing all of it to one specific marketing activity. The sum is greater than the whole of the parts. And so, and this is the whole thing with transmedia versus like all of it has to happen at the same time to get results. So, it's in-game events, it is everything going on with the brand, it's everything surrounding it. And that looks like a revenue spike that you can't argue away that it's just Scopely being an operator. Like, I I don't see that being the the specific answer. Let

me show it. Let me show another graph. So, this is from the Reem Invest Game Report based on Sensor Tower data. This is showing the annual gross in-app purchase revenue by publisher HQ, and then the second graph is showing annual combined average monthly active user by publisher HQ. So, looking really at the countries where the games are coming from. China is absolutely crushing it and the craziest thing is in my conversation with the the Chinese leadership, they were saying that their home market, so games launched on other platforms inside China account for additional 30% of revenue. So, if we'd be seeing the real number how the how much these top companies make in month, I would be crying. So, they are really, really dominating it both in the West and in their home markets. The other interesting part from the Chinese perspective, talking to some of the CEOs, they said like we don't want to be dominating in the West so much. Like we want Western companies to be more competitive because

when they start dominating this badly, they know that there's going to be a some sort of a even governmental backlash. So, they want the competition. And unfortunately, we're not giving them much of that unless we're talking about Turks. And I also asked them like what happens in match three, the insatiable need for puzzle games. And I was like Chinese are going to probably, you know, make the next match three game what? This year, next year? They're going to rival the Turkish companies. They're like, "No, no, no, no, no. They're way ahead of us. Give us like two to three years." Like, "Oh lord." So, we'll see what happens on that. The other elements that comes in from this Aream uh graph is Pakistan and Vietnam. These are the new growth markets. Like companies companies like Amanotes, Game District, come on. Billions of installs, hundreds of developers, tens of millions in ad revenue. Most interestingly, they don't have VC money. They are bootstrapped, funded their own growth, funding their own profit. So, very interesting to see again this sort of a old school model functioning. And

Dude, there's no ad revenue generating from [ __ ] Pakistan, dude. No, no, no. The the HQ of a game, let's say Super Market Simulator or any other type of a hybrid casual hyper casual game that is made out of Pakistan or Vietnam is generating ad monetization worldwide. Of course, mainly in the US, but in the Oh, you're saying develop
Dude, it's mice nuts, dude. Like what we're not talk this is not material. It's it's it's it's less than 100 million for sure, but it's not far away from from the top developers. But yeah, it's below 100 million. Which is it's it's it's below it's below 100 million. He's absolutely correct, but it's not far off. and Pakistan as markets. You're out of your goddamn mind, dude.
I'm talking about four four companies that are coming through there. Like there's a lot of I I think they are the growth markets in terms of where the next companies No, no, no. They are making games. Like Vietnam has become more of a hotbed for game development. Yes, for hypercasual
Look, 43% up. 43% up. 43% of DAU.

I mean, you're or whatever. This is like a [ __ ] statistic. THAT'S WHY THEY DON'T HAVE revenue
Because they are because they're hypercasual games cuz you don't see this is in-app purchases. This is not ad revenue. This is how people go down the wrong [ __ ] path and start investing in [ __ ] dude. Like I don't know what's happening in the market. CHINA IS KILLING us out there, right?
Hold on. Yeah. Hold on. Hold on. Eric, I think you've been fundamentally I think everyone, not just you, Eric, but tons of people have fundamentally misunderstood what's happening in the West. So, the argument that I would present is that the United States is still, and not only still, but increasingly driving consumer demand. I don't think that's something that we should ignore. So, if you look at 4X strategy revenue as one example. So, you were mentioning that it's dominated by Chinese games and a couple in particular. Increasingly, the share of 4X revenue has come from the United States. So, if we just compare the United States and China when it comes to 4X I I know, I'm getting there. Hold on. This

is not an irrelevant point is that 70% of 4X revenue is from US consumers and that has increased where it used to only be about 40% relative to China. China actually used to be majority share at least by 2018 in 4X revenue and the United States has increasingly dominated, right? Why is the United States increasingly dominating from a consumer perspective? Because now this positions China as a making games for the US market. That's a new revelation. I think that's important. It's important when we talk about the geopolitics of the situation. and why is that happening? Because the United States continues to have wages rise. Not only that, our wages are rising at a greater rate than China. And not only that, remember we're starting from a higher base. So if you're growing at 3% real wages per year, the actual real spending power that is increasing is enormous. And so what happens, right? When you have wages rise? We keep talking about US content being really expensive to develop, right? US developers are very expensive. Why are

US developers really expensive? Well, because we're extremely productive and we have competition from say chat GDP, from Claude, from Anthropic. All these different companies. And so we're not making content anymore. This is what you're seeing. We are not the most profitable place to make content. So what are we doing instead? We're doing what we've always done. We're moving up the supply chain to higher margin opportunities. What are higher margin opportunities inside of games? It's owning the platform. Platform is the highest part of the supply chain. It's owning the engines, it's owning Roblox, it's owning Steam marketplace. These are all the highest possible margin things you can do. This is the best part of the supply chain to be a part of. Why do you want to compete in content anymore, Eric? Why do you want to do this? Why do you want to compete with the Chinese where there's no moat in mobile? There's zero moat. Anything you make in the West is instantly going to be copied by the Chinese. It's low margin. This is Andrew Wilson was right. Andrew Wilson was right. You cannot compete with the Chinese unless you have IP, like we talked about Pokémon Go, because everything is just going to be copied and reverse engineered. There's no way a US developer is going to be

able to go after merge. Instead, we should focus on, again, the highest part of the supply chain, being a platform, being Steam, being Unity, being Unreal, being Roblox. That is where the future of Western development lies. Not in content, but in platforms. Ironically though, you're talking about the least profitable platforms like Roblox and UEFN, right? Like Steam, yes, obviously that's hugely profitable. But like you're not finding much profit on Roblox, right? That's come on. You you know that's not true. You know they're playing with the P&L. It's a it's
No, no, no, but like they're literally huge upfront capital costs. I know, but they're literally marginally not profitable, particularly in their expansion outside of the US, right? Like they're spending an obscene amount of money to deliver this content.
They're not paying taxes. What? Yeah, because if they're unprofitable, they don't have to pay taxes. They're This is an accounting game. It's not true. I'm not going to go over this again.
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Like Yeah, let's let's let's not enter that domain. But a market cap of 40 billion, Eric. A market cap of 40

billion. You're telling me you don't want to own Roblox instead of be a content factory? I'd much rather be sitting in Silicon Valley working for Roblox earning $1.5 million a year as a mid-level employee. That seems like a pretty good situation.
tens of thousands of game developers out there trying to build games and like what? Three companies that have platforms? There's not enough opportunity for these people.
up in the in the US, Phil? The this is our comparative advantage now. We have higher margin opportunities for the types of people that we normally use for game development. They should be building AI platforms. They should be working on Roblox. They should be working on Steam. This is their best place they should go. We are not going to be a content factory on mobile. HD I think is a different story because I think brand gives us a moat that the Chinese can't copy. But on mobile, we're going to get destroyed. And you agree with this, Eric. I do agree with you, Phil. That's that's I'm trying to disagree with you, but I agree with you, but I'd like I'm hoping that's not the case because we got a lot of [ __ ] people in mobile in Europe and North America that are basically are cooked, right? But but it's not like our wages are declining

either. Like that's the important point here, right? If demand was going down, our wages would decrease. No, but there will be no wages if there's no opportunity to develop games. But but again, you don't have to agree with that.
than Chinese. Europeans are cheaper than Chinese. At this point.
Well, that's Well, I mean it depends whether or not you're considering like the added payroll tax of a Swedish employee at 30%. I I'm not quite sure. They're not as productive. I don't think you're going to see a smooth doing 996. I think I That's a very interesting point. I have to think about this because yeah, I have a project that I'm thinking about working on that really kind of is exactly [laughter] what you're talking about. David Ricardo was right. This is comparative advantage at work. There is no response to this Eric. There is no response to this except to move up the supply chain. There is no other solution. We will not be able to This is exactly why NetEase shut down the Marvel Rivals studio. We could regulate though. We could regulate Chinese from bringing games to our market. Right? We're going to talk about that.
think that's a very interesting geopolitical tool. I think the fact that the majority of 4X revenue is coming from the United States and the US consumer is now driving the Chinese

story because again, Chinese growth is stalling. I think that's a very interesting bargaining chip. I would agree with you on that. I think that would be fair to be honest cuz like we can't enter that market.
talking about that No more domestic publishers.
Yeah. Yeah. I think you're right about this one. I think this is a very interesting geopolitical tool. Okay. What what about this solution? You know, the kind of the the co-dev solution. So you've got Call of Duty Mobile that, you know, has a US kind of arm with TiMi or what Riot does with you know, some of their games or Diablo Immortal with co-dev. So you've got kind of Western led IP, Western led concepting but Chinese kind of developer. Again, but that hasn't worked out. I mean, that's only worked out for two games, right? The rest of the games been
And it has worked out for Chinese.
Well, well, hold on. Hold on. Let's bring up the survival bias plane. We don't know how many times it's been tried. We don't know what the hit rate or success rate is but we have a lot of data points that suggest So Diablo Immortal
Apex Legends. CoD Mobile. CoD Mobile.

Yeah, but Apex Legends as well. First of all, Apex Legends was a success. We know that that business shenanigans killed that. That increases the hit rate. That was a success story.
Yeah. How was it a success story? The game is like canceled after 6 months. Yeah, yeah, but but it was a There's a why it was canceled. There was a Yeah, exactly. It was due to the relationships. We got multiple reports on that. And it went pretty sour. And then they just walked away. They walked away. They were like, "Keep your [ __ ] game." And they walked away.
But hold on. Hold on. Hold on. Let's go back to Jen's original point. Original point, which I think holds holds true. And this is what I found, again, I spent six days in China, [ __ ] do I know. But still the feedback I got from Chinese developers, very good at taking orders, but when it comes to the more innovative, free-thinking piece that I think the West is really good at, that's something they struggle with right now. So again, I think Western product management, Western IP, combined with Chinese scale, which they're incredible at, they're machines, I think is a very interesting combo.

Let's do more of this. Yeah. I think that's a fascinating way to just I think Blizzard's shipment of their IP to Korea is also interesting. I think that stuff is fascinating. And I think Western product managers should be involved though. I don't think you should dump this
Have you talked to Phil Have you talked to, for example, people who worked on COD Mobile or any of these other titles of what it was like Well, I was working for Scopely. And they And they said And [laughter] they said, "Yes." I don't think it was Kumbaya. Yeah, exactly. That's what I mean. Cuz you're Cuz you're selling this as like this is a match made in heaven. And it's not. Well, I think it's always going to be a contentious relationship, but I would say look at it at the end of the day they made magic. They made beautiful babies. So who cares if it was feisty to get there. All right.
Okay. Well,
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good good good discussion. Thank you, Phil. Good way to way to bum out the entire mobile game industry and Tier One. Appreciate your analysis.
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