Major Chinese developers like miHoYo, Lilith Games, and NetEase are bypassing traditional Android app stores to achieve gross profit margins exceeding 95%, compared to the 50% margin typical of standard distribution.

According to "Take Rates in China: Will Quality Development Beat Out Traditional Distribution?": Major Chinese developers like miHoYo, Lilith Games, and NetEase are bypassing traditional Android app stores to achieve gross profit margins exceeding 95%, compared to the 50% margin typical of standard distribution.

The Chinese mobile gaming market is dominated by a 50% take rate imposed by smartphone manufacturers and tech firms organized under the Mobile Hardcore Alliance and the Global Developer Service Alliance.

According to "Take Rates in China: Will Quality Development Beat Out Traditional Distribution?": The Chinese mobile gaming market is dominated by a 50% take rate imposed by smartphone manufacturers and tech firms organized under the Mobile Hardcore Alliance and the Global Developer Service Alliance.

High-profile titles are successfully leveraging direct-to-consumer models and community platforms like TapTap and Bilibili to circumvent traditional distribution fees.

According to "Take Rates in China: Will Quality Development Beat Out Traditional Distribution?": High-profile titles are successfully leveraging direct-to-consumer models and community platforms like TapTap and Bilibili to circumvent traditional distribution fees.

The shift toward direct distribution has forced some concessions from traditional stores, such as Xiaomi offering reduced take rates for high-profile games like Genshin Impact.

According to "Take Rates in China: Will Quality Development Beat Out Traditional Distribution?": The shift toward direct distribution has forced some concessions from traditional stores, such as Xiaomi offering reduced take rates for high-profile games like Genshin Impact.

The market is bifurcated, as smaller developers remain dependent on traditional stores for necessary infrastructure and reach, accepting the 50% fee as a standard cost of business.

According to "Take Rates in China: Will Quality Development Beat Out Traditional Distribution?": The market is bifurcated, as smaller developers remain dependent on traditional stores for necessary infrastructure and reach, accepting the 50% fee as a standard cost of business.

The increasing influence of brand loyalty and quality content over traditional store placement is pressuring the long-standing dominance of Chinese Android app stores.

According to "Take Rates in China: Will Quality Development Beat Out Traditional Distribution?": The increasing influence of brand loyalty and quality content over traditional store placement is pressuring the long-standing dominance of Chinese Android app stores.

Report · January 1, 2025

Take Rates in China: Will Quality Development Beat Out Traditional Distribution?

Published by Niko

Summary

The Chinese mobile gaming market is currently undergoing a significant shift in distribution dynamics as developers increasingly challenge the traditional 50% take rates imposed by domestic Android app stores. While global discourse remains focused on the 30% take rate standard contested in the Epic v. Apple litigation, Chinese developers face a more restrictive domestic environment where smartphone manufacturers and major tech firms consolidate power through the Mobile Hardcore Alliance and the Global Developer Service Alliance. These entities justify high fees by providing integrated marketing and distribution services, yet these costs have become a primary point of contention for major studios. To circumvent these high fees, prominent developers such as miHoYo, Lilith Games, and NetEase are increasingly adopting direct-to-consumer distribution models. By leveraging high-quality intellectual property, substantial marketing budgets, and community-driven platforms like TapTap and Bilibili, these studios can bypass traditional stores entirely. This strategy allows developers to retain significantly higher gross profit margins—often exceeding 95%—compared to the 50% margin typically realized through standard distribution channels. The success of these titles has begun to force concessions, as evidenced by Xiaomi offering reduced take rates to high-profile games like Genshin Impact. The industry landscape is bifurcated, as smaller developers often remain dependent on traditional stores for the reach and infrastructure necessary to sustain their operations, viewing the 50% fee as an acceptable cost of doing business. However, the rise of direct distribution and community-centric marketing signals a broader trend where quality content and brand loyalty are becoming more influential than traditional store placement. As developers continue to prioritize direct engagement and alternative platforms, the dominance of traditional Android app stores in China faces mounting pressure, potentially reshaping the economic model of the global mobile gaming industry.

Key insights

Major Chinese developers like miHoYo, Lilith Games, and NetEase are bypassing traditional Android app stores to achieve gross profit margins exceeding 95%, compared to the 50% margin typical of standard distribution.
The Chinese mobile gaming market is dominated by a 50% take rate imposed by smartphone manufacturers and tech firms organized under the Mobile Hardcore Alliance and the Global Developer Service Alliance.
High-profile titles are successfully leveraging direct-to-consumer models and community platforms like TapTap and Bilibili to circumvent traditional distribution fees.
The shift toward direct distribution has forced some concessions from traditional stores, such as Xiaomi offering reduced take rates for high-profile games like Genshin Impact.
The market is bifurcated, as smaller developers remain dependent on traditional stores for necessary infrastructure and reach, accepting the 50% fee as a standard cost of business.
The increasing influence of brand loyalty and quality content over traditional store placement is pressuring the long-standing dominance of Chinese Android app stores.

From the report

Take Rates in China – Will Quality Development Beat Out Traditional Distribution? Epic v. Apple Sets the Stage for Developers Evaluating High Take Rates in China Apple charges 30% of every transaction that takes place in apps distributed through the App Store, worldwide. China App Store is no exception. In 2020 Epic Games challenged this “standard” in an anti-trust case that has received wide recognition in the West. Epic says that the 30% “take rate” is too high and wants to offer its own store on iOS as an alternative. The Epic Games Store, currently available on PC, charges a 12% take rate to third-party developers who distribute via that store. Epic says that it only costs them around 5% to process payments, 1% for the CDN bandwidth and 1% for other costs, which means the total cost per transaction is only around 7%. Epic takes roughly 5% profit on top, while Apple takes approximately 23% profit, assuming the costs are equivalent. Notably, 28 Chinese app developers filed a complaint against Apple in 2017 for its abuse of market power which included removing apps and charging a high take rate for in-app purchases. Apple has a significant market share globally and roughly 25% of Chinese gamers play games on iOS smartphones. Chinese iOS gamers generally spend more on games than do Android gamers, with roughly 40% of mobile game revenue from iOS smartphones. Epic could afford the risk of Fortnite getting kicked off the App Store for violating payment policies in protest to the 30% take rates, but smaller developers cannot afford that risk. China Developers Aren’t Challenging Apple, but Look Out Local Android Stores

game revenue from iOS smartphones. Epic could afford the risk of Fortnite getting kicked off the App Store for violating payment policies in protest to the 30% take rates, but smaller developers cannot afford that risk. China Developers Aren’t Challenging Apple, but Look Out Local Android Stores While the media focuses on Epic v Apple, Chinese game developers are starting to challenge domestic Android app stores. This is something not seen in the West, although Google Play, the world’s largest Android app store, also charges a 30% take rate. Android is an open platform and 3rd party stores exist on it, which is not possible with Apple’s closed system. While Epic Games did initially try and bypass Google Play on Android, by distributing the game directly, the company ended up changing course and putting its game on Google Play.

Google Play is not in China. Google services are essentially banned in China. The void is filled by hundreds of Chinese Android app stores, with about 10-20 of them taking the vast majority of market share. Many of these dictate their own take rates, as high as 50%. Some developers tacitly protest that fee, including Lilith Games (Rise of Kingdoms), miHoYo (Genshin Impact), and Giant Interactive (Pascal’s Wager). These games are not distributed through big stores, rather directly from the developer or via platforms that charge lower take rates. Kaeya @Pluto Genshin Impact

Pages: 10
Words: 2,399
Type: Report

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Android App Store Ecosystem in China Chinese smartphone manufacturers including Huawei, Oppo and Vivo dominate the domestic Android smartphone market. These three, along with others, formed the Mobile Hardcore Alliance in 2014 to consolidate Android app distribution. Smartphone manufacturers pre-install their own app stores on their branded Android devices and share resources to increase appeal to developers. In 2020 the Global Developer Service Alliance (GDSA) was launched by smartphone manufacturers, including Huawei, Xiaomi, Oppo, and Vivo, to create a joint platform that would allow developers to upload apps and games to all their app stores simultaneously. This is another effort to simplify the disjointed China Android ecosystem and consolidate power with smartphone manufacturers. Smartphone Stores As a result of the proactive approach to recruit apps and distribute them easily, smartphone manufacturers are the dominant force in China’s Android app distribution market. They have pushed out most competition from smaller companies, though large tech firms, such as Tencent and Alibaba, are still competitive. Tencent’s MyApp store is one of the most popular app stores on Android due to its integration with WeChat and distribution of Tencent games. Soon the manufacturers and tech giants determined they could justify charging 50% take rates, by offering integrated services such as distribution across all GDSA partners and marketing services to promote games. App distribution is a profitable business for smartphone manufacturers, which often see low margins on hardware sales.

Take Rates in China: Will Quality Development Beat Out Traditional Distribution?

Take Rates in China: Will Quality Development Beat Out Traditional Distribution?

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