Seemingly implausible just a few years ago, China has quickly ended up one of the world’s most sturdy markets for premium PC video games.
According to Steam’s Hardware & Software Survey from April 2018, 30 percent of its customers have Simplified Chinese set as their default language, 2d handiest to English at 34 percent.
China lags at the back of within the wide variety of titles its users own, however extra than makes up for it in energetic debts (20 percent, as compared to 14 percentage within the United States) in keeping with a record from Steam Spy creator Sergey Galyonkin. When it involves developing and marketing premium-priced video games for a global marketplace, China can truly not be neglected.
This is our first in a series of articles about premium PC games in China. We’ll be sharing our learnings about this thrilling and misunderstood new market. By sharing our private reports, our goal is to help western developers and publishers gain more fulfillment in China.
This Is Only the Beginning…
PlayerUnknown’s Battlegrounds (PUBG) is of the route a high-quality success tale—even in China, wherein it brought about many to buy their first top class game on PC (Overwatch had a comparable effect two years previous). For the ones who have studied the Chinese market over the past decade, those are encouraging traits, but what do they imply for the long term? Who are these recent converts, and where did they arrive from? What had been they playing earlier than PUBG, and that sooner or later satisfied them to pay for a top class sport? To answer those questions, we conducted a survey of over three,000 Chinese contributors, and combined the effects with our own studies to pick out four key drivers:
Driver 1: Overall Changes in Consumer Spending Habits
China has, of course, experienced rapid economic increase over the past decade, with its GDP anticipated to maintain developing regularly within the close to destiny. As an end result, Chinese residents have emerged as wealthier and are spending extra on enjoyment along with certified content material and video games. For example, paid viewership of three main YouTube-like video systems (Tencent Video, iQiyi, and Youku Tudou) reached 70 million in Q1 2017, twice that of the 12 months before. Chinese purchasers are actually paying for a song too, as paid online track spend extended by 59% in 2017 compared to 2016. By all warning signs, the increase in wealth and changing consumer behavior will preserve driving sales of top-class PC video games in China.
Driver 2: Crackdown on Piracy
The Chinese authorities have taken a stronger stance in opposition to piracy and counterfeits in latest years, which has helped pave the way for top-class PC video games in u. S. A. By the quit of 2014, the Chinese government formally launched a 2014-2020 plan to combat piracy and counterfeits. Between 2013 and May 2016, 1.1 million piracy cases were processed, main to 5,000 prosecuted instances and 78,000 violators sentenced.
Notable examples from the video games enterprise encompass NetEase’s successful legal marketing campaign against Duowan for its unlicensed distribution of Minecraft, and Japanese publisher Koei Tecmo’s victory against 3DM for pirating Romance of the Three Kingdoms 13 in China.
Driver 3: Increased Discoverability & Accessibility
Streaming and virtual income channels have no longer only made buying top-class PC video games in China greater handy for purchasers, but additionally exposed them to different games for buy. This is combined with the explosion of influencers in China, who introduce new games to their subscribers. Based on our survey, 25% of top-class PC sports clients found out approximately a brand new game by way of looking a streamer.
According to a streaming industry document through iiMedia Research, China changed into a home to nearly 400 million streaming platform users in 2017—various predicted to reach 500 million by 2019. In 2016, Twitch-like systems in China (Douyu, Huya, and Panda TV) grew hastily after receiving massive investments, allowing them to spend aggressively on consumer acquisitions and amplify their viewership.
Douyu, the most important among them, has greater than 20 million each day lively customers, and hosts streamers who garner over one million viewers each day. Earlier this year, Douyu hosted a streaming event in Wuhan that attracted 521,800 attendees, dwarfing the attendance of TwitchCon (50,000 site visitors), and larger than even Gamescom (350,000 site visitors) and China Joy (342,seven-hundred visitors).
Human: Fall Flat is one of many examples of a top rate PC name that has benefited from streamers in China. After including online multiplayer assist in November 2017, the sport attracted streamers that performed it between periods of their major video games. One fantastic streamer, Lan Zhan Fei, took breaks from PUBG to flow Human: Fall Flat to his one million fans on Panda TV, dramatically increasing the game’s exposure. He went on to post movies about the sport on Miaopai.Com, with every video racking up some four million perspectives. Now, more than 40% of the sport’s sales are from China, up from 15% whilst the game become first released.
The multiplied availability of digital distribution channels fuels the boom of premium PC games and publicity to the western-developed content material. More than 1/2 of premium PC game enthusiasts in China use Steam, with PUBG being a key driver for adoption. Tencent now operates two virtual PC storefronts: WeGame (which presently hosts about one hundred fifty PC video games, 1/2 of which might be the top class), and casual game portal QQ Game. These structures receive Alipay and WeChat Pay as part of China’s trillion greenback cell fee industry, making it smooth for Chinese gamers to make purchases.
It’s critical to notice that a number of the largest PC games are operated on one-of-a-kind systems in China. NetEase operates Minecraft and all of Blizzard’s video games, while Perfect World manages Counter-Strike: Global Offensive and Dota 2. Additionally, there are a handful of smaller premium PC video games systems, which include Cube Games—domestic to the likes of Subnautica and Brothers: A Tale of Two Sons in China—even as others, inclusive of Sankyo and 3DM, are essentially Steam key resellers. Given the increase in the PC top class video games market, we count on more companies to construct PC distribution systems, similarly increasing the general footprint of top class video games in China.
Driver four: College Students & Young Professionals
Using our survey effects, we’ve got grouped the respondents into eight segments. These segments may be observed within the following chart; from our perspective, the “Mobile Grad” and “Big Time & Money Gamer” segments have the most growth capability:
The “Mobile Grad” group turned into born within the overdue 1990s. They witnessed the upward thrust of PC MMOs once they have been in their early young adults, and had been sooner or later swept up via cell, loose-to-play titles. Dominated by means of hardcore genres including strategy and online RPGs with little range, these gamers grew tired of playing the equal kinds of games, once in a while complaining that even “new games” felt like repackaged older content. Amongst the 19-to-24 section we surveyed, forty% noted “fatigue of unfastened-to-play video games” as a cause they commenced playing top rate PC video games.
Not in contrast to the upward push of PC online shooters like Doom, Quake and Unreal Tournament within the west, college campuses in China are healthful environments for PC gaming. The majority of Chinese university college students live in dorms, that means they’ve linked computer systems, masses of friends to play with, and a newfound abundance of loose time now that they are no longer residing underneath the watchful eye of their dad and mom. Word-of-mouth is a powerful influencer for this section, as approximately half of-of those surveyed referred to “influence or advice through classmates or near friends” as a purpose they started out to play (and pay for) top class PC titles. As this group receives older and will become financially unbiased, they’ll spend more on those games and help gasoline future growth.
Another crucial phase is the “Big Time & Money Gamer” group—25 to 34-year-olds born inside the 80s or early 90s, who grew up in a time whilst many Chinese households sold their first PCs. With little earnings or even approach of legitimately shopping PC titles, these gamers grew to become to downloading pirated video games or shopping for them at neighborhood mother-and-pop stores. More than 70% of respondents in this organization admitted that they used to play pirated PC titles.
While the initial lack of revenue due to piracy become irritating for recreation makers, IP owners, and distributors in the west, it led to a generation of purchasers who are now nicely-versed in PC gaming and willing to pay for top rate content. Gamers in this section are economically unbiased, earn above-average salaries, and might now manage to pay for to buy video games. In our survey, 79% of this institution cited “monetary independence and a willingness to pay for top class video games” as a purpose to buy PC video games. Additionally, 65% of this organization indicated that they’re making plans to spend extra on premium PC titles in the future.
Immense Untapped Potential for Premium PC Games in China
Although the range of top-class PC game enthusiasts in China has grown swiftly, we believe the market will, in addition, enlarge because of the aforementioned drivers. Based on the information we amassed, about 10% of the five hundred million gamers in China are gambling premium PC video games (in comparison to round 20% of the gamers inside the U.S. And U.K.)—a percent we agree with will rise, given that top class PC games are nevertheless in their infancy within the united states of America. As of March 2018, the average Chinese Steam user owns handiest 12 games, compared to 43 games owned by using Americans, in keeping with Steam Spy. If the share of Chinese game enthusiasts who play top rate PC video games will increase from 10% to 15% and each gamer’s spending increases by 50%, the top rate PC marketplace in China will absolutely double in length.
Surprising Similarities Between Chinese & Western Gamers
Big Overlap of Top Selling Games
Western developers have been taught for many years that the Asian marketplace (and mainly Japan) is impenetrable, other than some a hit exceptions (i.E. The Grand Theft Auto franchise). The precise news is that the tastes of Chinese top-class PC game enthusiasts are just like those of Americans: Of the pinnacle 50 games on Steam in the U.S. And China, 26 of them overlap (whilst 22 out of 50 games overlap among us and the U.K.). Even extra encouraging is the truth that almost all of the games that made the pinnacle 50 in China, however, didn’t overlap with the U.S. Pinnacle 50 were developed within the west. This is probably due to the reality that there are fewer neighborhood Chinese top-class sports builders, thus Chinese gamers are accustomed to playing western games, even without localization. Simply placed, western video games pass hand-in-hand with the rise of top-rated games in China.
We’ve spoken to some of the western builders who’ve enjoyed fulfillment in China, no matter not directing a lot of attention towards the market. Whenever viable, we advocate that studios upload factors that cater to the Chinese target market. For example, Behavior Digital actively solicited ideas from Chinese gamers whilst growing its Spark of Madness DLC for Dead by using Daylight. This led to a brand new individual named “The Doctor,” based on controversial medical psychiatrist Yongxin Yang. This DLC obtained ninety-eight % tremendous evaluations amongst Chinese game enthusiasts. Overwatch—the first-ever top-class PC recreation that broke 5 million income in China—recently released a Chinese New Year event, with a new mode and cosmetic items. Moving ahead, count on to see more builders creating content that caters to Chinese gamers.
Games with Online Competitive or Cooperative Modes are More Likely to Gain Traction in China
Among the pinnacle 50 titles on Steam, video games with online PvP or co-op modes account for 87% of the sales in China, and 71% within the U.S. Even if we exclude PUBG, the variety remains 65% in China as compared to 55% within the US. This is in line with our survey results, as 42% of respondents selected “social” as one of the motives they play top rate PC games (only 6% of respondents said they play unmarried-participant games completely). Some video games have seen sales spikes in China after including online PvP or co-op modes. Don’t Starve Together, for instance, is greater successful than Don’t Starve in China, with 16% as compared to twelve% of its sales coming from China.
Popular Steam Tags are Similar
We’ve in comparison Steam’s consumer-described tags among pinnacle games in China and pinnacle video games inside the U.S. and determined extra similarities than variations. Popular tags including “Open World”, “Multiplayer”, “Sandbox” and “Fantasy” are not unusual amongst top video games in both areas. In terms of differences, some examples consist of “Female Protagonist” and “Anime” performing better in China than within the U.S., whereas the “Single Player Only” tag plays worse in China.
Chinese Gamers Use Streaming Platforms and Social Networks — But Only Domestic Ones
Similar to the west, Chinese gamers use streaming, video systems, and social networks as a way to discover and have interaction with PC premium games. However, for the reason that systems inclusive of YouTube, Twitch, and Facebook are inaccessible in China, game enthusiasts there engage with streaming systems which includes Douyu, Huya, and Panda. Because of the stiff competition, systems are inclined to pay an excessive fee to signal pinnacle streamers to their platform exclusively. For example, streamer “Miss” signed a three-year contract with Huya for RMB100M (approximately $15M).
An Exciting Time for Premium Western Games in China
Like so many latest tendencies in China, the fervent upward thrust of top-class PC video games changed into thought to be not possible just a few years ago. Now, now not most effective are Chinese game enthusiasts now often purchasing PC games, there is definitely no stigma against western-evolved video games unlike their acquaintances in Korea and Japan. Furthermore, given their hobby in third-individual motion video games, historical fiction, and indie video games, Chinese gamers have relatively greater eclectic tastes. In the future, count on to see Chinese game enthusiasts include even extra numerous content material, and for developers in China to comprise the one’s learnings (yes, at instances, by using copying).
For each nimble indie developer that has located achievement in China, there are dozens greater who have failed. Many western builders with games that require minimal localization, marketing, and network control have located China to be their first (or 2d) most powerful market, even as others hold to discover the region perplexing and occasional-acting. Some developers we spoke to lament the truth that they have got obtained an influx of negative critiques from Chinese gamers annoying a localized model, at the same time as others who have long gone via the effort (and cost) of localizing their recreation for China have seen only small bumps in sales.