Report: 92% of Chinese mobile games lose money


China’s gaming market is massive; that much everybody knows. But Chinese regulatory agency SAPPRFT released a report on the market at ChinaJoy that contains some pretty interesting data.

According to the report, total income from sales in China’s game market for the first half of this year exceeded RMB 49.6 billion ($8.1 billion). That’s growth of over 46% compared to the first half of 2013. Mobile games made up a big chunk of it, accounting for RMB 12.5 billion ($2 billion) in revenue, or just under one-quarter of China’s total gaming market.

Despite all that money, though, life is rough for mobile developers. The same report also says that just 8% of China’s mobile games actually make money, meaning that the vast majority of them—92%—are losing propositions. UPDATE 9/9/2014: This article on Netease Games claims that only 2% of Chinese mobile games actually make money, and the other 5% just break even.

Part of the reason for this is that developers can often afford to develop a bunch of losing games, as long as one of them hits it big. Companies pour money into a variety of games expecting most of them to fail, and a few of them to make up the difference. That works if you’ve got the resources for it, of course, but it does make life tough for indie devs. And it’s not a situation anyone in China’s mobile industry is happy about, with some analysts predicting a shakeup in the market within the next few years.

Another problem, according to Netease Games, is that many Chinese games haven’t adequately perfected and smoothed-out the payment process. The result, according to one industry insider, is that “60% of users leave during the payment process […] the payment time in an average game is more than 100 seconds.” Needless to say, sales in mobile games are better when consumers can make impulse purchase decisions and complete the transaction virtually instantaneously.

If mobile payment models can be improved to make payment more instantaneous, it’s likely that Chinese devs would see their success rates rise significantly.

(via Netease Games)

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