Abstract The purpose of this text is to describe and explain how the Chinese industry work and what is currently trending in . This text has been written to act as a starting point for anyone interested in the Chinese games market and plan on doing further research. The Chinese games market is growing faster than ever and has even surpassed the US in terms of games revenue. This growth is expended to be caused by Southeast Asia’s economic growth prospect, huge population, increased internet and smartphone penetration, and the economic change and social transformation of the emerging middle class in China. The Chinese games market is mainly dominated by and NetEase. In 2016 they accounted for more than 52% of all mobile games revenue in China. Foreign game developers and game studios need to understand that the Chinese market is highly competitive and that it is difficult for smaller companies to enter due to corporate giants such as Tencent and NetEase. It is particular difficult for non-Chinese developers and companies to enter due to local restrictions and governmental censorship. If one were to enter the market, it is important to understand the Chinese culture and localize the game and its content. Not only the language, but also the graphical art style, gameplay design, narrative, and monetization and marketing strategy. Webpages, news articles, interviews, and data from research organizations constitutes the basis of this text as very little peer-reviewed material and scientific research was found. Introduction The global gaming industry is expanding and growing faster than ever before and the market is expected to generate $108.9Bn in game revenues at the end of 2017 out of which $46.1Bn (42%) will come from mobile gaming.1 China is expected to stand for one-quarter of all that, surpassing the US and making them market leaders in terms of game revenue.

Southeast Asia’s economic growth prospects, huge population, and fast-rising (mobile) internet connectivity2, smartphone penetration3, and the sweeping economic change and social transformation and explosive growth of the emerging middle class4 has helped China become the largest gaming market in the world. China’s population is estimated to 1.410 million people and by June 2017, China had 507 million active gamers across the country. 5 They generated a total of $27.5Bn in game revenues and is expected to reach somewhere around $36.3Bn in 2018. China also has 717 million active mobile users with a smartphone penetration of 51.7%.6 In the first half of 2014, more than 185.6 million phones were sold and 1.29 billion people had a communication service subscription. The Chinese population spend on average 35 minutes on mobile gaming apps per day. 2 This also makes the Chinese mobile gaming industry one of the largest in the world. In total, the Chinese mobile market is expected to account for $14.6Bn (53%) of the whole Chinese games market revenue at the end of 2017.7

This text describes the gaming market (PC, mobile, and console) in China, their revenue streams and how the market has come to grow so much over the last couple of years. The text briefly explains how

1 Newzoo, "The Global Games Market Will Reach $108.9 Billion in 2017 with Mobile Taking 42%," https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile- taking-42/. 2 GMGC, "Global Mobile Games Industry," (Global mobile games whitebook2015). 3 Newzoo, "The Global Games Market Will Reach $108.9 Billion in 2017 with Mobile Taking 42%". 4 Dominic Barton, Yougang Chen, and Amy Jin, "Mapping China's Middle Class," https://www.mckinsey.com/industries/retail/our-insights/mapping-chinas-middle-class. 5 Mantin Lu, "Trends of China Game Market and Strategies You May Consider," https://www.gamasutra.com/blogs/MantinLu/20171127/310256/Trends_of_China_Game_Market_and_Strate gies_You_May_Consider_Report.php. 6 Newzoo, "The Chinese Gamer 2017," https://newzoo.com/insights/infographics/chinese-gamer-2017/. 7 "The Global Games Market Will Reach $108.9 Billion in 2017 with Mobile Taking 42%". managed to enter the market despite regulations and censorship from the Chinese government. The text also tries to highlight and explain the main characteristics of the Chinese market, the gamers and their playing preference and behavior, as well as strategies for foreign game developers to successfully enter the market. Lastly, a short analysis regarding the method, choice of sources, and the content was performed. Due to little scientific research, this text and its analysis is based upon non peer-reviewed material (news articles, interviews, and data from research organizations etc.) and should be treated as such. The mobile market Many people probably view Asia as one big cohesive market. However, that is not the case. The countries that constitutes the market (e.g. China, , Korea, , and ) have several distinct features that makes them significantly different from each other. Due to these differences, a mobile game that is massively popular in China might not be as popular in any other country within Asia. As previously mentioned, China has the largest mobile market in the world, and is expected to continue to grow. China Game Publishers Association Publications Committee (GPC) released a report in 2016 regarding China’s gaming industry, in which they concluded that “Mobile game ranked top among all the segments, sharing 49.5% of the entire market with the most rapid growth rate”8. This is probably because China is a mobile-first country. Which means that many people have access to a relatively cheap but high-performance mobile phone in which they can use for gaming. As the quality of these mobile phones increases, so do also the possibilities and developments of China’s mobile market as a whole.9

There are many reasons and speculations as to why the Chinese mobile market is growing so rapidly. Firstly, the rapid mobile growth has been caused by the arrival of the biggest PC gaming companies in China, namely, Tencent, NetEase, and Giant.10 Together they released more than 150 mobile games onto the market in 2015. Secondly and more recently, a wider supply of mobile games, an increased amount of smartphone users, easier access to new and relevant game content, and better infrastructure such as improved mobile network. Thirdly, the average Chinese mobile gamer is young and live mainly in first or second tier cities, they are a frequent user of social media (QQ and WeChat), and are prone to spend money online as digital consumers of movies, music, or games.7 Lastly, China’s one-child policy might also contribute to the recent market growth, necessary social connections and friendships can easily be facilitated with smartphones and their social networks. Tencent and NetEase There are mainly two companies that dominate the Chinese mobile games market – Tencent and NetEase. Tencent has been the largest gaming company in the world since 2013 and their robust growth is probably due to their massively popular mobile game .11 The mobile game has an estimated of 200 million players monthly and the game has proven so popular that Tencent implemented restrictions to keep their younger audience from playing the game excessively. The game has since then been localized to the global market under the name . Tencent utilize the

8 Mantin Lu, "Facts and Trends You Want to Know About China Game Market 2016 to 2017 " https://www.linkedin.com/pulse/facts-trends-you-want-know-china-game-market-2016-lu-psm-pspo- sps?trk=prof-post. 9 Manya Koetse, "Game Time: 5 Must-Knows About China’s Mobile Gaming Market," https://www.whatsonweibo.com/game-time-5-must-knows-chinas-mobile-gaming-market/. 10 Charissa Echavez, "China's Mobile Games Industry Sees Rapid Growth," http://www.chinatopix.com/articles/83070/20160415/chinas-mobile-games-industry-sees-rapid-growth.htm. 11 GBTIMES Beijing, "Tencent Remains World’s Most Successful Video Gaming Company," https://gbtimes.com/tencent-remains-worlds-most-successful-video-gaming-company. social elements available for mobile gaming such as their own developed social network QQ and WeChat so that players can invite friends, talk to each other, see who is online, and discuss strategies, etc.12 Tencent is not purely a gaming company, but has many different products and services in various areas of technology. In addition to the social platforms, Tencent also have multiple online payment platforms, entertainment hubs, news channels, cloud services, and an AI Lab.

NetEase is just like Tencent, one of the leading technology company in China. NetEase focus on PC- client and mobile games, advertising and email services, and e-commerce platforms. NetEase also have a partnership with Blizzard Entertainment and Mojang AB, which grant them the licenses necessary to operate popular games like World of Warcraft, Starcraft, Hearthstone, and Minecraft. The company has developed both the PC and mobile version of the game Fantasy Westward Journey Online. In 2015, the Fantasy Westward Journey franchise had over 310 million registered users. However, NetEase best performing mobile title, Onmyoji has been in the top grossing charts since its release in September 2016.13 Tencent and NetEase alone, generated $7.7Bn in mobile gaming revenues in 2016.14 That account for 52% of the whole Chinese mobile market.

In 2016, social channels and social media became the most influential channels for potential user to choose what games to play and to learn about the latest gaming trends.15 This is probably one of the reasons as to why companies like Tencent and NetEase dominate the market, they provide the necessary social channels used to reach out to the players and they do this in an effective and convenient manner. Distribution and value chain The Chinese mobile market is highly competitive and quite difficult (not only for foreign companies but also Chinese developers) to enter. Back in 2016, NetEase explained that out the top 50 grossing mobile game at the time, only four were developed by foreign companies.16 Based on revenue alone, Tencent and NetEase accounted for eight out of the ten most popular games on iOS devices in November 2017.17 Because of these two giants, it might be difficult for smaller or foreign companies to enter the mobile market without proper management, knowledge, and preparation. Nordic Game Institute argues that the Chinese mobile market consists of four key actors:18

1. Teleoperators and carriers usually take care of the billing in China, often based on SMS- payments. 2. Distribution channels and application stores represents the Chinese eco-system. The distribution system in China is, compared to the western market extremely fragmented (e.g., over 400 different android app stores). Each has its own set of rules and regulations. 3. Publisher are publishing third party games, sometimes on several distribution channels at once. Occasionally, they might finance the game’s production.

12 Andrew Webster, "Tencent Is Bringing China's Biggest Game to the Rest of the World," https://www.theverge.com/2017/12/18/16469736/tencent-arena-of-valor-honor-of-kings-north-america- launch. 13 Dean Takahashi, "Tencent Leads the Top 25 Public Game Companies with $10.2 Billion in Revenues," https://venturebeat.com/2017/03/23/tencent-leads-the-top-25-public-game-companies-with-10-2-billion-in- revenues/. 14 Newzoo, "The Global Games Market Will Reach $108.9 Billion in 2017 with Mobile Taking 42%". 15 Lu, "Facts and Trends You Want to Know About China Game Market 2016 to 2017 ". 16 PocketGamer, "Netease Explains the Chinese Mobile Games Market," (Youtube, 2016). 17 Newzoo, "Top 20 Ios Games and Apps by Revenues and Downloads," https://newzoo.com/insights/rankings/top-ios-games-and-apps-revenues-downloads/. 18 Nordic Game Institute, "China Mobile Games Market 2016 - Opportunities for Western Developers," (Neogames, 2016). 4. Lastly, aggregators who act like intermediaries that cooperate with several publishers and distribution channels at the same time.

The Chinese value chain and distribution channels differs significantly from those seen in the western market. In the western market, a developer can publish their game directly to the distribution channel (e.g., Apple App Store or ) without the need of a third party or middleman. In China, this is only possible for non-Chinese developer releasing games on iOS devices.

Furthermore, it is also common for the main industry players (e.g. Tencent and NetEase) to operate in all of these areas at the same time. For instance, in addition to being China’s biggest publisher, Tencent also has their own distribution channel (MyApp), their own social media channel (WeChat), and their own payment system. This makes it very convenient and easy for Chinese players to buy, download, share, and play all of Tencent’s games. Another interesting thing to point out is the market share of the developers. In the western market, developers typically receive a revenue cut of 70%, while in China, developers receive somewhat around 20-30% depending on the business model. On the flip- side, the Chinese mobile market is huge which might compensate for the fairly low market shares.

The Chinese mobile market has over 400 different app stores for android devices, but only ten of those are worth pursuing as a developer. According to Newzoo’s insight in November 2017 the two most popular distribution channels or app stores in China was MyApp (Tencent) with a coverage of 25.1% and 360 Mobile Assistant with a coverage of 16.1%.19 On the contrary, there is only one app store for iOS devices. The distribution between iOS and android devices in China is 30% respective 70%.

Table 1. The five most popular mobile games (android and iOS) in China November 2017 (Newzoo).

GOOGLE ANDROID APPLE IOS RANK Name Publisher Genre Name Publisher Genre 1 Honor of Kings Tencent MOBA Honor for Kings Tencent MOBA

2 Onmyoji NetEase RPG Fantasy Westward NetEase MMORPG Journey

3 Dream Journey 4399 RPG Ghost Story NetEase MMORPG

4 Fantasy NetEase MMORPG Fantasy Westward NetEase MMORPG Westward Journey 2 Journey

5 Happy Tencent Card Game Onmyoji NetEase RPG Doudizhu

The PC Market Mobile gaming is currently trending in China, something that is clearly reflected in the material and information found. Due to this trend and compared to the Chinese mobile industry, little information has been found about the Chinese PC and console market. Out of the previously mentioned 507 million

19 Newzoo, "Top 10 Android App Stores in China," https://newzoo.com/insights/rankings/top-10-android-app- stores-china. players in China, 136 million people are PC gamers and 247 million are browser game players, both of which has declined since 2016.20

Even though the amount of PC gamers are declining, PC games spending are still increasing (albeit, not in the same rate as the mobile gaming industry). The Chinese PC market uses mainly four types of monetization methods. Premium, subscriptions, paid game time, and microtransactions. In China, microtransactions on PC systems are by far the most popular form of monetization and can be found in 88% of all PC games.21 With games like , Crossfire, and Overwatch22, Tencent and NetEase dominates the PC market as well.

Internet cafes are one of the primary ways Chinese players consume non-mobile video games. In China they almost serve a utilitarian purpose as they are the only way for many Chinese people to play PC games.23 In other cases, platforms such as Valve’s Steam and Tencent’s WeGame has made it easier for consumers to spend money on premium downloadable titles. Steam Valve has negotiated themselves into a unique position in which the Chinese government allows them to operate without the regular restrictions they pose on other foreign game companies.24 This is allegedly due to an agreement between the Chinese government and the Chinese company Perfect World, who are the publisher for DOTA 2 and Counter Strike: Global Offensive in China. As a result of this agreement, every Chinese gamer also have access to the entire steam library even if many of those games would have probably been banned if they were ever released on another platform. For instance, Microsoft’s Gears of War 4 was blocked from the Windows 10 store as the Chinese government deemed it to violent. Meantime, the equally violent Grand Theft Auto V is currently being sold on Steam. The Chinese government however, has, as of December 2017, decided to block several Steam community features and services including forums, guides, achievements, badges, game hubs, and groups. Chinese players can still access the store and Steam itself and still be able to play and buy new games through steam.25

Steam’s total active users has, in only a year risen from 14.8 million to 31 million active users26 and 64% of all steam accounts today use either Chinese or simplified Chinese as their preferred language. The recent growth might have to do with the release of the popular game PlayerUnknown’s Battlegrounds as 78% of steam users in China currently owns it.27

20 Lu, "Trends of China Game Market and Strategies You May Consider". 21 Piers Harding-Rolls and Chenyu Cui, "China - Largest Games Market Continues Its Growth Story," https://technology.ihs.com/593405/china-largest-games-market-continues-its-growth-story. 22 NetEase has the publishing rights to Blizzard’s games in China. 23 Luke Winkie, "Niko Partners' Zeng Xiaofeng's Tips for Publishing in China," https://www.gamasutra.com/view/news/302959/Niko_Partners_Zeng_Xiaofengs_tips_for_publishing_in_Chin a.php. 24 Chris Priestman, "Steam Games in China: Making the Most of a Lucrative Opportunity," https://www.gamasutra.com/view/news/296327/Steam_games_in_China_Making_the_most_of_a_lucrative_ opportunity.php. 25 Chris Kerr, "China Blocks Steam Community, but Store Remains Open," https://www.gamasutra.com/view/news/311995/China_blocks_Steam_Community_but_Store_remains_open. php. 26 Steamspy, "Overview," http://steamspy.com/country/CN. 27 Tyler Wilde, "Thanks to Pubg, China May Now Have More Steam Users Than Any Other Country," https://www.pcgamer.com/thanks-to-pubg-china-may-now-have-more-steam-users-than-any-other-country/. The console market Consoles have not been very successful in China and they have also been banned for over a decade in order to protect the Chinese youth from violent and harmful content.28 The Chinese government officially lifted the ban in 2014. Even though the ban was active for over 10 years, various consoles were made available to the Chinese population through the grey market. However, consoles never really managed to captivate the Chinese audience. Chinese gamers preferred to spend time and play social, inexpensive, and fun online PC games instead, as the consoles were at the time only local gaming experiences and expensive to buy.29 Console gaming were left behind and forgotten. Today, the deeply rooted free-to-play culture that dominates the Chinese market is not suitable for consoles and console games, especially since everyone already have access to highly engaging gaming content on their smartphones or in any of the many different internet cafes.

Only a small portion of Chinas digital games revenue can be attributed to console games. To put it into perspective, Microsoft’s console Xbox One is estimated to have sold around 25-30 million copies world- wide since its release.30 During the first week of release in China, only 100k copies were sold31 and by the end of 2016, both Sony’s PS4 and Microsoft’s Xbox One combined had only managed to sell less than 500k copies. The unsuccessful console stories are only apparent due to the expensive price tag and the just recently lifted ban. Why would anyone want to buy a $400 video game consoles and then another $60 per game when more engaging and socially rewarding content already exists? Main characteristics of the Chinese market Western game companies who are trying to establish and make money in China has to understand that there is a difference between the markets. Listed below are some of the more important things western game companies and developers need to understand to successfully break into the Chinese market.32

 A highly competitive market – It is difficult for smaller (not only foreign) companies to enter the market because corporate giants such as Tencent and NetEase.  Restrictions and censorship – It is particularly difficult for non-Chinese companies to enter the market due to local restrictions and governmental censorship. All games that tries to enter the market must be pre-approved by the Chinese government.33 The government regulates that games with content “violating basic principles of the Constitution, threatening national , sovereignty and territorial integrity and that might divulge state secrets should be banned from importing.” And that games “threatening state security, damaging the nation's glory, disturbing social order and infringing on other's legitimate rights will also be prohibited”34  Fan economy – Many of the popular games are based on Chinese literature, comics, anime, or TV-shows. This is important to understand because it can generate more revenue. Foreign companies are encouraged to conduct research and collect data on the Chinese market before-

28 Nikopartners, "Sony Playstation in China – Two Years In," http://nikopartners.com/sony-playstation-china- console-game-market/. 29 Ibid. 30 Aaron Souppouris, "Sony Has Sold 50 Million Playstation 4s," https://www.engadget.com/2016/12/07/sony- playstation4-50-million-sales. 31 Steven Wong, "Behind the Ban," http://www.shacknews.com/article/87589/the-great-wall-consoles-in- china#chapter-1. 32 Koetse, "Game Time: 5 Must-Knows About China’s Mobile Gaming Market". 33 Winkie, "Niko Partners' Zeng Xiaofeng's Tips for Publishing in China". 34 People's Daily Online, "Censorship on Imported Online Games Strengthened," http://en.people.cn/200405/31/eng20040531_144921.html. hand to help them better understand the Chinese gaming culture and the consumers and their preferences.  Mobile E-sport games – Mobile e-sport games is currently a huge market in China with a lot of potential. Chinese people prefer competitive games with PVP35 elements. This can increase the games appeal and attract more players and increase revenues. The number of people engaged in mobile e-sports in China is 285.3 million and the e-sport market is expected to generate $6.78Bn in revenue in 2017.36 The most popular mobile game in China right now is the competitive e-sport game Honor of Kings. Strategies to enter the Chinese games market In order to adapt to a different market it is important to localize the game. As a developer you have to embed yourself into the Chinese culture to get a better understanding for it. For instance, if a western developed game were to be successful in China you would need to translate the game into the local language, change the game’s art style, game design, and genre, as well as decide on an effective monetization model and marketing strategy. All of this is very game, market, and audience depend, and therefore, one could solve the problems of localization in many different ways.

Despite the obvious fact of translating the game in to the market’s local language, the game’s art style the first thing to localize when entering the Chinese market because of the cultural differences and overall gaming preferences.37 Occasionally, game studios reskin their whole game. The game’s 2D and 3D graphics as well as the game’s UI system need to be re-designed to better suit the new market. A suitable art style for the Chinese market is cute and stylized characters with abnormal large heads38 or content drawn with anime-style graphics and cartoon-styled avatars.39 This (stereotypical) art style works in almost every game genre. Furthermore, western cartoon style (e.g., Futurama and Family Guy) and realistic imagery are actively disliked by the Chinese audience.40

Games with background stories or cultural narratives might also need to be re-written. In China, stories about the Three Kingdoms or Journey to the West is quite popular, while the western population relate better to the stories of the European middle age. Just as western players are accustomed to certain types of stories in their games, so are the Chinese players. It is important to understand this and adapt the game’s narrative and make it familiar to the players without offending any cultural or sensitive content.

Another thing that separates the western market from the Chinese market is the mentality behind monetization strategies. Games released in China has to be free-to-play, especially if it’s a mobile game.41 Pay-to-win is a quite common phenomenon in China and players are used to be able to pay their way out of tricky or difficult situations in the game. Table 1 show that Chinese players prefer competitive gameplay and cooperation based games, such as MOBAs and MMORPGs. Because of the Chinese fiercely competitive culture, Chinese players do not mind spending in-game currencies to be at the top of the leaderboards and boast about their accomplishments to their friends and families.42

35 Gameplay with focus on player vs player. 36 Ric Cowley, "Mobile Esports Revenues in China Expected to Climb to Nearly $7 Billion in 2017," http://www.pocketgamer.biz/asia/news/65891/mobile-esports-revenues-china-2017/. 37 Mantin Lu, "Why Successful Games in China Rarely Obtain the Equivalent Success in the West," https://www.linkedin.com/pulse/why-successful-games-china-rarely-obtain-equivalent-mantin/. 38 PocketGamer, "Netease on How to Break into the Chinese Mobile Market," (Youtube, 2016). 39 Winkie, "Niko Partners' Zeng Xiaofeng's Tips for Publishing in China". 40 Priestman, "Steam Games in China: Making the Most of a Lucrative Opportunity". 41 Lu, "Why Successful Games in China Rarely Obtain the Equivalent Success in the West". 42 PocketGamer, "Netease on How to Break into the Chinese Mobile Market." There is of course a small percentage of people who are interested in playing premium games and are more than happy to pay for them as well. Keep in mind that a small percentage in China is made up of millions of gamers.43

As previously discussed, China has strict policies about what kind of games are allowed into the country. As a result, all games distributed in China need a license from the Chinese government. However, to circumvent some of these license related problems, non-Chinese companies can either establish their own company in China (might be easier said than done), team up with a local partner that has an understanding of the market and its regulations and possibilities (e.g. Tencent), or publish games on Steam or iTunes App Store.44 45 Unfortunately, for any other form of distribution or publication a Chinese license is required.

As previously mentioned, an active social media presence is important for game developers in China. Social channels are the main source of information for most people and it is also the most common way users receive the latest news and game related information. Social elements in your game is absolutely vital to success in China46 and since social networks such as Facebook and Twitter is not allowed in China, foreign companies has to have an understanding of WeChat, EasyChat, and Weibo instead. It is recommend to open an account on the most popular and active social networks and start communicating with the target audience and the game’s fan base.47

Since virtual status and the art of showing of is not seen as something negative (which it might be in the west) and because of the competitive gaming culture, gamers also tend to share a lot of their gameplay, game experience, and achievements through social media. Therefore, games aimed specifically towards the Chinese market should apply a business and monetization strategy to goes hand in hand with the game’s design and player preference and behaviors. Due to this phenomenon, a game in China can become a viral hit thanks to a simple chat post.

Lastly, NetEase describe three different ways as to how western developers can enter the Chinese market:48

1. Be better – This might be difficult for foreign countries as you are competing against Chinese companies head on that knows what they are doing and have the expertise and understands the market. 2. Be modest – Do not aim for the top 50, or even top 100. The market is huge, even the smallest cut can generate a great amount of revenue provided that the development team is fairly small. 3. Be surprising – Those companies that do succeed and do well in this fiercely competitive market are those that innovate and bring something new to the table. E.g., Boom Beach and Monument Valley. Analysis Almost no peer-reviewed material was found and used to write this text. Only a few articles were found using ACM portal, IEEE, Scopus, and Google Scholar. However, most of these articles was either obsolete, had method related problems, or was behind massive pay walls or subscription based

43 Luis Wong, "A Maze - Faq: China for Indie Game Developers," https://www.indienova.com/en/indie-game- news/a-maze-faq-china-for-indie-game-developers/. 44 Koetse, "Game Time: 5 Must-Knows About China’s Mobile Gaming Market". 45 Wong, "A Maze - Faq: China for Indie Game Developers". 46 PocketGamer, "Netease on How to Break into the Chinese Mobile Market." 47 Wong, "A Maze - Faq: China for Indie Game Developers". 48 PocketGamer, "Netease Explains the Chinese Mobile Games Market." models. The following keywords were used in combination and conjunction to search the databases: Game development, production, china, game market, video game industry, and trend. Since little information about the Chinese games industry was found, several news articles from webpages and research organizations like Newzoo, Gamasutra, Indienova, Nikopartners, Pocketgamer, The Verge, and Youtube were used instead. The sources were found using Google Search Engine with the same type of keywords as previously mentioned and by backtracking references used in certain articles. In order to combat problems with validity and reliability using a search method like this, the material was reviewed by comparing the information found in the news articles across multiple sources. Even though multiple sources were checked, the information (especially revenue based data) were almost always slightly different. This difference and lack of content only shows that the area is in need of proper research. The majority of all the articles in the databases are mainly based on Western culture and might be one of the reasons why so little peer-reviewed material was found. The possibilities exists that this information can be found behind pay walls or within the walls of China itself. However, it would be difficult to find, retrieve, and translate peer-reviewed articles and content from Chinese databases.

Newzoo and Gamasutra are probably two of the most reliable source in this text. Newzoo’s predictive analytics model combines insights and data feeds from tracking 10 million PC gamers and their behavior across 40 countries, analyze usage data from more than a billion mobile devices worldwide, and gather quarterly game revenue data from more than 100 public and non-public among other things.49 Newzoo’s estimates are “based on a combination of primary consumer research, transactional data, quarterly company reports, and census data.”50 Newzoo has been covering the global games, e-sports, and mobile market extensively for over 10 years and released annual reports and quarterly updates about these areas. These rapports and updates do however cost money, but Newzoo also offers a lightweight and reduced version for free. Newzoo is also cited quite heavily by many of the other news articles mentioned throughout this text. Gamasutra on the other hand focus purely on news and information for video game developers. Gamasutra offers daily news letters and updates from the video game industry as well as blog posts and post-mortems from readers, developers, and companies. Articles from Gamasutra can be found in peer-reviewed and scientific material which makes them a little bit more trustworthy than other news sources. The rest of the sources that constitutes this text are mainly news articles and should be treated as such.

It is surprising to see how a market, as big as Chinas, can exist almost undetected. It is also interesting to see how quickly the mobile gaming industry in China has grown in the last couple of years. “[M]obile games spending grew 55% in local currency in 2016 and reached $12.4 billion”51 which is probably one of the reasons as to why the Chinese mobile industry is mentioned so frequently in various news articles. The Chinese games market is literally a goldmine for game developers and it is only a matter of time before western game developers figure that out and starts to localize their games and content in hopes of growth and added revenue.

Based on the material available, news articles, and the small amount of scientific and peer-reviewed research on the Chinese games industry, the following areas would be interesting to further investigate: The Chinese mobile gaming industry, strategies as to how to enter the Chinese games market, and main characteristics and player behavior amongst Chinese players. These are obviously

49 Newzoo, "Global Games Market Report Free Version," in Foreword (Newzoo, 2017). 50 "Top 100 Countries by Game Revenues," https://newzoo.com/insights/rankings/top-100-countries-by-game- revenues/. 51 Piers Harding-Rolls and Cui, "China - Largest Games Market Continues Its Growth Story". not the only research areas within the field, they are however, based on the findings, interesting to say the least. Conclusion In 2017 China was expected to generate a total of $27.5Bn in games revenues. With this, China surpassed the US and became the games industry capital of the world in terms of market size. In China there are mainly two companies that dominates the gaming market. Tencent and NetEase. Their ability to effectively exist in all parts of the distribution and value chain has made them unstoppable since they provide the player with entertaining and engaging content in an effective and convenient way suitable for the Chinese population. The Chinese market is highly competitive filled with restrictions, regulations, and censorship. In order to successfully enter the market as a foreign company or developer you have to localize the game, adapt to effective monetization strategies and Chinas pay- to-win culture, and understand the importance of social media presence. As a game developer trying to enter the Chinese market you have to either, be better than everyone else, be modest and lower your expectations, or be surprising by being innovative and provide a unique gameplay experience.

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Author Marcus Hellkvist