China's mobile market shifts toward hardcore gaming - Report

Niko Partners has recently teamed with DataEye (which provides analytics on 24,000 games on 600 million mobile devices) to offer further insights into China's digital games market. The first report from the collaboration examines the booming mobile market in the country. While it does essentially reiterate Niko's previous assessment that mobile has hit peak growth in China -- DataEye sees "a diminishing growth rate in 2016 due to further intensified competition" -- the report does highlight several other notable findings.

In particular, the mobile games space in China is no longer driven by the appeal of casual titles. "The rise of hardcore RPGs and eSports drove the entire industry to shift from casual/midcore games to hardcore games," DataEye said. This has resulted in much greater game time and frequency from players across China. During 2015, over 30 percent of mobile game users spent more than 30 minutes to play games, and nearly 40 percent of players said they play more than 3 times per day.

Importantly, DataEye also found that domination from the top companies has led to stiffer competition. Numerous traditional PC game companies shifted their focus to mobile gaming in 2015, DataEye said. The top seven companies (including Tencent, Netease, Perfect World and Shanda) released over 150 mobile games, and of those Tencent and Netease "owned the top 10 titles, showing an obvious monopolized competition."

With a focus on core gaming, developers have to make sure they're building high quality products that can capture an increasingly demanding audience. Needless to say, that's led to increased costs. DataEye sees R&D costs going up along with development cycles. Furthermore, operating costs for things like the distribution channel and traffic promotion are expected to increase significanly. Naturally, this means that industry giants "would definitely continue their financial and R&D advantages, whereas the small and medium gaming developers facing obvious challenges would possibly collapse or be acquired by the giants. Collaboration between big giants and small developers would be a common trend in near future," DataEye said.

You can read much more and obtain a full copy of the report here.