NetEase explains the Chinese mobile games market

information about the Chinese market unfortunately we own about 15 minutes so I'm gonna do my best there's a lot to talk about but just about me I'm a Dutch guy have lived in China for six years now some hardcore gamer so I joined many SSB head of mobile business developments and who is Nettie's was the question we've been getting over the past two years as we're expanding XP is a very large email news media game company that's been developing ECM most in China for a very long time then I moved into mobile we've been doing that very successfully right now they're worth twenty four billion dollars on the US Nasdaq we develop games like thanks us for journey which is not number one in China we do all the blizzard games in China like Warcraft and hearthstone so we are very established in China but not as well known in the West yet and we're working on that I want to run you through a little bit of the Chinese

market data we just had a very nice talk by yuzu and we like those guys very much reading their reports but we think there's nobody better than actual developers in publishing in China knows market data because it's a very in transparent market if we look at how the market has developed from 2010 to 2015 we can see that mobile games have taken up a much bigger share than before but then also the market in general has grown very much you can see now in this slice the total mobile game market volume before was 1 billion that was 5 years ago and now it's about 51 million RB RVs about six are beautiful um oh okay you can also see that in 2010 there was no console at all we all often get the question how consoles do in China well here you can see 2010 nonexistent at all they were allowed last year now we have 0.2% of the market on console so not very good web games

are there but Mobile's really growing on PC is stable PC makes an awful lot of revenue but releasing new projects products is virtually not profitable anymore alright then the total revenue of the markets we also heard in the previous talk we see essentially that the top 10 of the market takes half of the revenue in total so we have about 13 billion are be revenue to 2 billion US dollars revenue in the last quarter the market is slowing somewhat but this still grow now if you look at what kind of games are actually popular in the Chinese market we see a big shift is reading changed in the past year we see the rise of animals if you look at a year ago or two for 2015 you can see that mmo's took about a 14 percent share of the market now we're a quarter for 2015 and they've taken up a third of the

market also because of our own games fantasy Westward Journey and westward during lion - number one - they are MMO style games on the other hand on the right side of the graph we see that strategy is there but a little less we have mobile shooting games capturing a bit of market share also mainly because of one or two games doing very well what has shrunk the law casual really hard to do ethical right now in China there's just not a lot of money to be made by users cost an awful amount of money so there are only a few titles that can still succeed in the market our games also the RPG going down so we see that the market is definitely shifting to a new type of game play which is good it offers some opportunities now what you also might have heard is the distribution in China is very fragmented and I just wanted to touch shortly on that in China's not just the App Store

and Google Play in fact there's no Google Play whatsoever there might be players trying to get around the divorce but it's really not there it's might come back actually in 2016 they're working on it but as a result the Chinese market is extremely fragmented and here you can see a sort of distribution of the different Android channels and their market share on the Android platform now there's another thing you should know about Android distribution because of all these different stores all the phones are open they're open to site loading apps and that means that actually besides going through an app store you can also directly download the games to your device so when all the day that firms are showing in their charts like yuzu or talking data saying okay this is the size of the Android Market and these are tough players you won't find many zin there and why is that because Nettie's prefers not to go through the app stores if we can avoid it in fact we like to do marketing and use our media power to send use with QR codes QR codes which

are very popular in China or just a download link to directly get the game onto data bus which save them all of the cost because on the next byte you can see what does an Android distribution platform actually charge you now if they charge you 30% like Apple does if you have a good deal but a whole most of the time they will charge you up to 50 percent 60 percent of your revenue which is a lot and it makes you is that profitable as easy as you would elsewhere in the world these distributors they compete with each other if you're a small company they have a lot of bargaining power but if you have a big successful game if it's not on their platform then they're losing out market share compared to the other channels so they want the game on their platform and they will give you a preferential rate so it makes a lot of sense to work in a partner that has this scale in China now I talked a little bit about the market data but I actually want to die specifically into mobile

games so let's look at the top 15 growth in games in China I don't think that for a lot of you there are many familiar icons on this page now the next thing I want to do is take away all the games that are made by the number one and two in the market in China to see the result we are only left with DS which means that biggest two companies in the market in China that's when we dominate 50 now the next page I want to show you how many games are actually left if we take away all the games that are developed in time and that's this you have super cell with clash of clans and boom each you have hearthstone and you have crossfire and that's it okay so this is just a reality check on making it to 250 grossing time all right so let me tell you a little bit how we can stand a

chance going to China the heart stop very important now Chinese like cute art stuff which means like a big head small body big eyes a background in Chinese literature or some background story Westray journey is a very good example of such a game now it doesn't necessarily have to have the backgrounds in Chinese literature it can also be Western or getting to realism a little bit so classic glance pretty good example still cues it's a magical world it works it's accepted and finally you have the art style cartoon just very happy very colorful it's also a very much appreciated on the hardcore sites we see that a little bit more recent realism is appreciated but also not too much so going towards the extremely realism is not appreciated I lost something like pixel art is also totally not accepted so you can pretty

much forget about doing all right so I piece we also heard that that in museums presentation like IPS are very good but not all like he's working time even the Yankees that are known in China might not work very well there's a reason for it and especially related to the movie eye piece there's not so much engagement in China when people go to the cinema to watch a non Chinese it's not like they get very engaged in the universe and if the movie is very big than a game automatically will do very well so you have to choose which eyepiece are suitable now they couldn't be in a piece that if it proves to be introduced to China like Warcraft or it could be IPS that live in China for a long time like commentary it's been around the China for 30 years as well console panda is a modern 19 that works I'll be late have some relation with the cultural background so there are some Western IDs that would work but they're also quite a

lot of Western IP step old Oh big although successful in the moving world might not do well in China okay so what must you have if you want to go to China sue them a lot I just discussed it free-to-play also very essential there isn't premium market in fact it wasn't really much of her previous premium market before but Apple has produced one army which is about 15 20 cents price points in China which kind of got the market going but is really mostly to get exposure for your game again more downloads than that you actually make money as a premium game then you need to have PvP of cooperative gameplay or some kind of competitive for comparative elements in your game because desti will trigger for monetization if you don't have that probably also not going to do a lot of revenue at all single Blair doesn't pretty work and finally also a

major different carrier is easy to control Chinese games Chinese gamers they love that it can just play it with one hand or even just watch meaning that you were building and all over automation mode or an autopilot so that the game can run and you can just look what is going on now how do we look at the games ourselves when we felt them first of all we choose gameplay over monetization design this is pretty obvious one but we time to make games that players like and then put the citation far in the back not when you start the game immediately we think that the money will come if that bear stick around long enough and actually we design our games more to appeal to a uterus quality time like we decide hearing today the night I'm going to play this game even if it's on a mobile phone we want to have the quality time with the user not their bathroom break or honor quick time in between actually the games that are right now one into two in a market they require users to be

there for three to four hours a day and that means that it's essentially an additional society where you have an additional life next to your real life and live unapologetic about that we want people to be engaged for a longer time not just trying to push users through as many as possible and we apply IP only to gameplay that has been proven so typically our IQ projects are not working on the basis of a new type of game player we try different gameplays in the market and then if the gameplay that's good take the eyes that we decide okay let's apply a Nike that can make an even bigger but we don't want to use the akeem something that the players recognize as being good or something that we like and then letting them in the game and discover that actually the gameplay is untested or not something that would appeal to many users so if you would ask me what are the roads to China or a Western developer you essentially would have the most audio

option to be better being better is probably the hardest choice for any Western result or why because you're competing head-on with Chinese companies that know what they're doing and have the expertise in the market you've been tried but virtually nobody has succeeded second and I think this is a very viable solution for most people is to be lost maybe don't aim for the top 50 top Homburg but as we saw in the new presentation as well the market is so huge that you can take a small part of it and it still is a very significant revenue especially if the team is not very big and finally be surprising bring to the market what hasn't been brought to market before you can see some of the icons below they all have their own elements that wasn't in the market and what made them successful again it was either a football management and sports games were never operating the market or who meets a new type of gameplay or monument vally appeal appeal to Chinese consumers because it was

something they had never seen before things like that will have to get a significant share of market now this is all I can tell you in a short period of time and 15 minutes is really not enough to give you a comprehensive be able to market so anyone wants to know more about China I'll be happy to discuss it with you whenever you