Gaming in China and thoughts on suceeding

>This is a summary of information that was provided at the Boston Post Mortem talk last night, which was given by Jeff Goodsill, the general manager of Tencent Boston.

It covered some tips on how to try and make a success of the market as well as some things that you need to understand to be able to have a chance.

One thing to understand about the market, the average salary for people is very low, $500 a month, this is a contributing factor into the high piracy rates in China as well as the reason that 70% of games fail in the market there. With that initial outlook, why bother? Because there is a lot of money to be made but you have to tailor the experience for the market. Games playing out there is seen as a social experience, a way to meet people and talk to friends and family cheaply, it’s all about the social interaction and micro transaction. Many games are free without purchase to get around the piracy factor, they also do not bother with the subscription model because it limits the number of regular players by allowing only those who can afford it. The money is on micro transactions, small, cheap, easy but many of them.

This has lead to the government introducing a strict 5 hour a day play time to curb the huge number of hours people were playing games, more than 5 hours a day seven days a week. You have to have this mechanism to stop people playing to get approval in the country, but that does not mean that those people can not make purchases or continue to chat after they have exhausted their daily playing time.

Talking about the market size. The country has the largest amount of people online and using the internet. 230 million people were online last year 2008, it is 388 million users now. People that have mobile/cell phones, that was 370 million users five years ago, it is now at 700M, 33M of those users are using their phones to play games daily. Broadband access covers 93% of the country, that is massive, the US is only around 63%.

The game market has 23% casual users, the rest is primarily mmo’s, whether that is FPS style, side scrolling, fantasy or real world games, these games generate $380B.

One thing you can do to give yourself the best chance of success and perhaps saving some money at the same time, getting the language right. English isn’t spoken by many people, certainly outside of the largest cities, but with a country with so many dialects, picking Mandarin would be your best option to have appeal and reach to the largest sector of the market.

Where you can go to see what has been produced and who are making successes – Tencent, Shanda, Changyou and Perfect World. These companies cover most of the market making much of their money in MMO microtransactions, “Dungeon and Fighter” would be a good example of how the transactions work with 100M registered users and 2M daily users. Don’t discount the level of polish on some of these games either, some of them have $2-5M budget and 2-3 years development time, and one particular game had 6 years and $15M, when you consider the average salary, this means they are using mammoth teams to create a huge amount of game content.

It is all about showing off, being the best, being the most individual, so while a lot of the transactions might seem silly to us in the West, they ave very important to the market. Key way of maintaining active users is tying in the playing experience with the market, for instance a player might have to farm for 20 hours before having a skill level to allow him to buy a pink pony, having that pony shows off he has a lot of game loot as well as dedication to playing the game to his friends as well as his guild. Another popular one is charging people to join larger guilds, so it will be free playing with 5 people, but you have to pay to join a 20 person guild, going all the way up to the thousands of people in some games. People also enjoy completely random side games that have no bearing on the real game, such as fishing trips, family/clan dinner parties, anything that can be gone in a group, often where people can show off what they have accomplished and bought.

Again this might sound very silly having so a high number of hours to pace for in a game, but these players are looking to spend 700-1000 hours in a MMO world before they completely max out on everything, so the scale is something completely different to what we are used to. So when you have the pacing thought out, you also need to plan the monetisation of the game from the get go.

So you have thought about your game, how do you manage the business side of things?

There is a 12/13 hour time difference with China, so you have to plan your communications out very well and factor in a large budget. Tencent spends $250K a year on communicating between the US and China sites, this includes many flights for in people conferences when you just have to be face to face. Obviously covering the flights and hotel, but even more importantly the cost of having a good translator, which is often key. A good translator is worth their weight in gold, not only in being able to translate what you say, but to also understand business and gaming so that they are able to convey the nuance of what you are saying and pass that information back to you.

Getting a game successfully released requires going through three regulatory government bodies, these include GAPP, SGAFRFT and MOC. Understanding that these bodies are always having “turf” wars can be a problem and because of that, going through a partner company is often your best bet, these publishers I will cover a little later on.

Key aspect about your game though, it must not contain any reference that is anti government/communism, religion, alcohol and especially any references to both Korea and Japan. The games must show that they are not promoting addiction, nor addictive behaviour, so no obvious gambling and having that five hour game limit is a must. Also no references to skeletons, there are a few exceptions to this one rule, mostly for those old games who already had the references but for anything new, you should avoid.

Going back to having a partner to get your game out, these publishers take on a few important roles, obviously guiding you through the government regulatory bodies, but they also work to combat farming bots, because they are more harmful to you making money than a pirate, for some games there can be as many as 50 bots per active player, but the best way of combating these bots is simply working on balancing the game and rebalancing so that they bots are not needed.

So who do you approach, the big partners who are used to dealing with the West and having the best reputation: –

Netease.com Inc, who generated $452M in revenue last year, they also host WoW and own their own search engine.

Shanda Interative Entertainment Ltd, they generated $523M

Perfect World Co, they generated $211M but they are also based in the US

Giant Interactive, making $232M

Tencent, revenue last year was $1B, they own the number one social site in China, have 100+ games in the top 5 categories and are now currently the largest phone, mobile and internet providers.

Getting one of these partners interested in working with you. Simple things that you are probably used to doing, but show a prototype of your game and mechanics, show what kind of schedule you plan for and your staff requirements that you can provide or how you could bring people on board and most importantly, how do you plan to make money in the game, who the target player is and how you intend to grow your product to hook more players and to help grow a continual future partnership with your publisher.

Finally, I’d just like to thank Jeff Goodsill, the talk was really interesting and I hope I was able to pass on as much information as I was able to gleam without any inaccuracies, but anything wrong with be accountable to by note keeping.

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