This week we attended and sponsored PG Connects, the first conference organized by PocketGamer. Of the topics covered during the two days of the event and due to our operational Asian office (Seoul) and our own interest and exposure in the area, we chose to focus on the content of the “East Meets West” track. The latter was indeed aimed at understanding the specific challenges of publishing and distributing a mobile game in emerging markets in general, and in Asian countries in particular.We’ve compiled a quick and non-exhaustive wrap-up of the most important takeaways from the session. Please note that we did not mention all the contributors to this insightful content. If you however participated in the talks and panels and wish to have your quote rightfully attributed, just let us know at blog@www.applift.com and we’ll be happy to add the source. The full lineup and program is otherwise available here.

Generally

Tim Merel of Digi-Capital started by stressing the general games opportunity: the global games market should reach $100bn by 2017, mostly driven by mobile and online games as well as by the Asian markets.Part of the effects can already be felt today: in 2013, mergers & acquisitions activity in gaming rose to a record $5.6bn, 29% more than in 2012. Moreover, out of the 10 M&A deals that went through last year, 9 had Asian buyers (including the giant deal that saw GungHo and Softbank take a majority take in Supercell). Additionally, 13 out of the 15 gaming IPOs that took place in 2013 were either Chinese, Japanese or South Korean companies.Mobile gaming dominated this M&A activity by transaction value (67%) as well as by volume (35%).After these general considerations, here’s a recap of the main aspects and challenges of publishing and distributing mobile games in Asian and emerging countries, as each have their own specificities:

China

In the charts: China’s app store charts are dominated by Tencent, but non-Chinese publishers are also present.On importing and publishing a mobile game in China:

• Importing and establishing your game to China is not an option: your game will be there anyways, be it with or without you… (piracy is indeed an issue)
• As most Chinese mobile players are not exposed to Western cultural content, culturalization is paramount in all aspects of a game: design, monetization mechanism, etc.
• A local partner is strongly recommended to handle all aspects of localization, publishing (and distribution).

On distribution:

• On iOS: getting featured by Apple is easier than in Western markets and remains the best advertising channel.
• On Android: it is possible and advised to negotiate and purchase promotions on Android alternative app stores (featured placements)
• Offline advertising is very important, especially at launch, and can even influence the choice of Apple in selecting which apps to feature.
• The line is now blurred between app stores in the traditional sense (carriers, OEMs) and novel distribution channels such as social messaging platforms (also dubbed “over-the-top messaging apps” or OTTs such as Tencent’s WeChat or China Telecom’s YiChat). Both types should be addressed.
• There are over 400 alternative app stores in China. Being present on 15 to 20% of app stores is sufficient to capture over 80% of the Chinese users. However, be careful as your game might be pirated on the remaining app stores where you don’t have any control.
• To ward off piracy: cooperate with the app stores and push updates as well as new content on a regular basis.
• Publishing on operator app stores is recommended as they allow for carrier billing and drive up monetization.
• A good entry point are brick and mortar retail stores, as they often install their own choices of apps on the phones they are selling.

On the size of the gamesDevelopers should pay attention to the size and data appetite of their games on 3G as bandwidth and data consumptions are much more limited than in the West or even in other Asian countries: for instance, a 3G monthly data plan offering 5GB will eat up 15% of an average Chinese salary. In the US, the equivalent figure amounts to 1.5%.On cultural aspects:Chinese cities are commonly divided into 3 size tiers. Only part of the first-tier cities (3 provinces out of 22 including, among others, Beijing and Shanghai) are exposed to Western culture and standards, which is why extensive “culturalization” is paramount to reach the rest of the country. Another important fact is that second- and third-tier mobile users, as they are less exposed to new technology and in this regard less educated, are also much less volatile and generally present higher retention rates. It was noted that Tencent (the first Chinese app company, publisher of WeChat) makes most of its revenues in precisely those geographic areas.

South Korea

In the charts: The most important feature of the Korean market is the prevalence of Android as the leading operating system, with over 90% market share in 2013. The top of the charts is dominated by Korean publishers such as CJ Group (Kakao) and Gamevil. The top foreign publishers are Asian (Chinese and Japanese).On Kakao’s publishing platform:The mobile game market is trusted by Kakao’s publishing platform, which is also an OTT messaging app. The games published on Kakao make up ⅔ of all app revenue in South Korea. It was also noted that, for instance, Candy Crush Saga did not fare well in Korea before publishing on Kakao.

• Kakao takes a 21% cut on the developer’s app revenue, which then comes in addition to the standard 30% cut from app stores. Developers are finally left with less than half (49%) of the original revenue.
• Kakao has a strong female audience and is therefore more suited for casual games than MMOs for instance.
• If publishing through Kakao can be a good way to climb the tops, success is not guaranteed and, from a ROI perspective and given the 50/50 revenue split, it might not always make sense. It was mentioned that if you are operating on a tight margin, you might still be better off publishing on your own.

On soft launching on Android in Korea (and Asia in general):As there are no comparable markets, as Canada or Australia is to the US, the best is to perform a “closed beta launch”, where the APK is then opened to a small circle of early users. This also underlines the importance of community management and keeping a close and direct relationship with your fanbase.

Japan

In the charts: The top publishers are mostly Japanese companies. Obviously, LINE, the largest Japanese OTT, is very present but by far not as much as dominant as Kakao in South Korea.On monetization:Japan is the best country for app store revenue. According to App Annie, early last year Japan overtook the United States as the country with the overall highest app revenue on Google Play and iOS combined. Japan has indeed a long and established tradition of Free-to-Play which in turn can be a good explanation behind the world’s highest ARPU as well as Japan’s high in-app purchase conversion rate.On publishing:

• Collaboration between top publishers are common.
• Rolling out new and original content regularly is paramount (this is a general Asian trait).
• ASO and in particular icon optimization is much more important than in the West.
• There are two mechanisms which play a great part in driving mobile game revenues up in Japan, and which all mobile game publishers can benefit from:
  • The first mechanism is Gatcha, whereby users pay a certain amount to get a random virtual item (card, unit…), for instance through a wheel of fortune. A straightforward example of Gatcha can be found in Supercell’s HayDay. This technique, which resembles gambling, creates a lot of excitement and provides a thrilling game experience.

    

  • The second one consists in live events: limited-time events that show special graphics, characters etc. and foster user engagement and retention.

Other emerging markets

South AmericaThe most important feature of South America is that over 70% of the population is unbanked and over 80% of all mobile spend is prepaid (cash). Therefore, carrier billing is essential. In terms of platforms, Android is installed on over 50% of smartphones (and growing), and Windows is still ahead of iOS.Free-to-play is still in the early stage, but will develop over the next years. Generally, once Google Play integrates carrier billing, mobile revenue should take off.IndiaCurrently, the Indian mobile games market is still below the $100 million mark, with a mobile base of over 850 million people. As in South America, most mobile usage is through pre-paid and cash is king. This aspect combined with the fact that revenue share deals with operators are generally very disadvantageous for developers is the reason why payment remains the biggest challenge for mobile gaming to take off on the subcontinent. This is however changing and Google Play should also soon integrate carrier billing.In terms of distribution, a positive aspect is that there is no App Store fragmentation such as in China. Generally, content is also very important for all media channels, and it should be no different for mobile gaming (Bollywood content is strong).What is your experience with the Asian mobile games market? We’d love to hear your feedback at blog@www.applift.com!