The current status of China's mobile game industry is similar to the Internet boom in 2000. With the advent of the 3G era, the mobile game industry is fine-tuning its steps by redefining its features, adopting new profit modes, enhancing different stages of the industry chain and upgrading the operating mode , so as to embrace the climax of the industry development.
475% -- the miraculously high growth rate of the mobile game industry in 2005 -- made it one of the most profitable industries all of a sudden. However, the negative growth in 2007 undoubtedly dealt a heavy blow to the whole market. People are wondering pessimistically whether the recession of the mobile game industry will continue and where the road to the rising market and industry is…When the waiting grows anxious and there are more uncertainties about the future, the Ministry of Industry & Information Technology (MIIT) issued 3G licenses to three telecommunication operators including China Mobile officially on Jan. 7, 2009, announcing that China has officially stepped into the high-speed multimedia communication era and drawing the eyes of the people back to the mobile game industry again.
I. Status quo of Mobile Games in China
China is presently the world's No.1 consumer of mobile phones. According to statistics from MIIT, the number of mobile phone users grew from 370M to 670M in China between 2005 and Mar. 2009 at an annual growth rate of 20.3%. Such an enormous mobile phone consumer base of China provides a solid foundation for the development of mobile games. In 2008, the number of mobile game users totaled at 33M, up 37.5% from the same period last year and the number of active users reached 6.98M, most of whom are enrolled students at different grades aged below 24. The market is estimated to reach RMB1.94B in 2009. Although the performance of the mobile game industry is relatively impressive over the years, it has failed to meet the expectations of customers and potential investors, and many professionals even expressed decreasing interest and confidence in the mobile game industry. Difficulties in terminal adaptation, network restrictions, unsteady speed, high fees, lack of excellent products and short life cycles of the products are not only the biggest barriers to the development of mobile games, but also critical factors to the success of the mobile game industry in the future.
Today, mobile games mainly fall within 2 categories: offline and online games. The initially pure built-in mobile games have found their way to the present cross-platform online game model through the upgrading and replacement of intermediary products like download games, online games and multi-person online games, etc. From the perspective of user experience, mobile games can be divided into board & card games, role-playing games, mind games and action & venture games. Among them, the recreational games are the favorite of Chinese mobile game players. In 2008, the fees paid for offline mobile games exceeded RMB1.00B, compared to only RMB300.00M for online mobile games. Hence, it can be learned that enormous potential exists for the development of online mobile games.
II. Impact of 3G on Development of Mobile Games
3G means the 3rd-generation digital communication in Chinese. On Jan. 7, 2009, MIIT officially issued 3G licenses to China Mobile, China Telecom and China Unicom, pronouncing that China has stepped into the 3G era. The 3rd generation digital communication is mainly characterized by the improvement in the transfer rate of sound and data and the ability to process a wide variety of multimedia contents like images, sound and video streams to provide various information services such as webpage browsing, teleconference and e-commerce. In the 3G era featuring high-speed network access, significant improvements will be seen in network transmission and carrying capability. This means that it only takes less than five seconds to open a webpage, abundant QQ and MSN facial expressions will be made available on mobile phones, and the mobile phone video function will be brought to full play, providing an excellent platform for a boom of mobile games. The leapfrog development in sound and data transmission in the of 3G era will inevitably create unlimited opportunities for online mobile game development.
According to the results of online surveys conducted by people.com, 80% of the Internet users said whether they will switch to 3G largely depends on the fees, which have been on the decrease. Therefore, the operators need to look for capital growth points elsewhere and mobile games will be the main focus. At the same time, people will prefer mobile games that enable entertainment & interaction anytime and anywhere more as mobile Internet access becomes cheaper and more convenient.
III. Development History of Mobile Games in Japan
Globally, Japan is the leader of the mobile game industry and the Chinese mobile game companies have much to learn from the development history of their Japanese counterparts. Early in 2001, Japan put 3G networks into commercial operation. The Japanese operators not only improved the network environment and terminals, but also provided a wide variety of value added services, thus greatly advancing the development of the mobile game industry. Japanese mobile games are usually novel in form. Apart from recreational & entertainment games, masterpieces that have fancy backgrounds and complete gaming functions have emerged one after another, attracting more users to download and purchase them.
Prior to developing a new game, a Japanese mobile game enterprise will generally carry out extensive planning and then move on to developing an outstanding game. After fancy packaging and large-scale promotion, the game is put into operation, during which process the value of the game is maximized and its service life extended to generate long-term profits. Also during the operation process, the users can usually play the game free of charge on a trial basis at the very beginning and will pay to play on if the game proves satisfactory. The fees are paid on a monthly basis or in lump sum with no hidden fees attached, which helps strengthen the game's user viscosity and extend its life cycle. In the mean time, this can also cultivate loyal customers for game developing enterprises and operators. The development of attractive works, maximization of game value, extension of a game's life cycle, and clear-set charging description are what Chinese mobile game developers embracing the 3G era shall learn from the Japanese enterprises.
IV. Analysis of Development Prospects of Chinese Mobile Game Enterprises
The current status of China's mobile game industry is similar to the Internet in 2000 when the Internet access services were rare, access environment was in shortage, fees were high and pirate games proliferated. However, starting from 2002, broadband services have mushroomed in China -- the fees have decreased, the enterprises are freed from the control of the operators and the Internet-related industries have achieved leapfrog development. The mobile game industry in the 3G era is repeating the history of the Internet boom. Hence, it can be concluded that with gradual improvement in network transmission capability and further falling fees, the mobile game industry can also expect leaps and strides in its development, but the mobile game industry must develop in a way that plays to its own strengths instead of copying the development strategy and profit plan of the Internet game industry.
With the advent of the 3G era, the service providers are doing their best to keep pace. The mobile game developers are also preparing themselves proactively for the competition. Indeed, the mobile game industry is waiting for the peak of development. However, they are also making necessary changes to redefine the characteristics of the industry, look for novel profit modes, improve different links of the industry and upgrade the operating models. Only by offering 3G mobile products/services as soon as possible can one take the lead and win more ongoing interests and recognition earlier than the competitors. Presently, the mobile game developers are vying against each other, with the industry leader remaining unknown and the future development path uncertain. However, this is what venture capitalists would like to see. Among the top 10 Chinese mobile game enterprises in 2008, quite a few of them are waiting for VC investments to give full play to their potential and become the most eye-catching rising star in the mobile game industry in the 3G era.
