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Mobile gaming expected to make money

By Yu Wei in San Francisco | China Daily | Updated: 2013-04-29 11:23

Games on mobile digital platforms are still a small fraction of all Internet-based gaming in China, but recent data suggest the revenue gap will narrow while both categories continue growing.

Games are by far the most popular type of application among Chinese users. This is reinforced by new research from the firm App Annie, which said gaming accounted for 90 percent of first-quarter revenue in China for apps downloaded to devices running some version of Apple Inc's iOS operating system for gadgets. That's the highest percentage of any country served by Apple's App Store, the survey found.

Worldwide, the US market continued to drive most of the growth in App Store sales for iPhones, iPads and other iOS-powered devices, App Annie said. China was fourth during the quarter, behind also the Japan and the United Kingdom.

App Store revenue from China isn't likely to surpass that of the US anytime soon, but its online-gaming business has "great potential", said Roy Liu, head of business development for Greater China at Chartboost, a San Francisco company that bills itself as the world's biggest games-only platform for app developers.

He said about 10 mobile games in the Chinese market generate at least $1.6 million a month in iOS-specific sales, with some as high as $6 million.

China's gaming industry overall - online, home-based consoles, social networking websites and mobile devices combined - grew 35.1 percent last year, to $9.7 billion, compared to 2011 revenue, according to the annual China Game Industry Report by digital-media information provider TechWeb.

Mobile gaming, which is still its early stages in China, accounted for just a sliver of that pie, with sales revenues last year of $520 million. That, however, represented a huge jump of 91 percent from 2011. The number of Chinese playing mobile games shot up 74 percent to 89 million users.

A year ago, China was barely inside the top 10 in iOS-device revenue although it ranked No 2 in downloads from the App Store, which also includes Apple desktop and notebook computers.

App users in China have been used to a "free to play" model wherein the basic product can be downloaded at no cost, but a growing number - especially mobile gamers - are paying for value-added services, said Lu Peng, vice-president of Tencent Games, part of Chinese Internet giant Tencent Holdings Ltd.

This is partly a replay of other free-to-premium "habits" that Internet users have adopted over the years, Lu said, but it's also due to the popularity and high quality of offerings on Apple's app platform.

He said, however, that it's too early to tell whether a reversal of the high-download/low-revenue trend in China is coming.

"Generally, an in-app purchase makes more sense than paying for downloads in China," said Thomas Luo, co-founder of PingWest, a US-Chinese tech-industry news service.

Chinese users, he explained, are more inclined to buy within the space of a "freemium" game app. If a user likes a game, he tends to monetize his play at a very high rate, Luo said.

Some industry experts have attributed the low level of app-buying in the Chinese market to limited use of credit cards. But Luo said the Apple App Store has become highly flexible in accepting different online payment methods.

"Apple now supports Chinese users' paying for apps and games through China UnionPay instead of Visa, which enables more users getting the chance to buy directly," he said.

Jason Hong, a computer-science professor and head of the Human Computer Interaction Institute at Carnegie Mellon University, said revenue in China from iOS-based devices will increase along with growing popularity of iPhones.

Apple sold over 2 million units of its iPhone 5 within three days of its launch in China last year. CEO Tim Cook said last week that Apple's revenue from the Chinese mainland, Hong Kong and Taiwan rose 8 percent during the recently completed quarter, to $8.2 billion.

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