The East outspends the West when it comes to mobile, and the gap could grow as more countries come online.
Asian countries are responsible for $14 billion in spending on mobile games, according to industry-tracking firm SuperData. As you might expect, a ton of that cash comes from China, one of the world’s largest economies. But the $5.2 billion that 785 million Chinese gamers spend on iOS and Android is actually less than the $6.2 billion that 132 million Japanese gamers spend. That number makes Japan both the highest spending market on mobile games — even ahead of the United States — and the country with the highest average revenue per player. With South Korea’s $1.3 billion rounding out Asia’s “big three,” this region is already a powerhouse. But India, Southeast Asia, and the rest of China could cause mobile spending to grow even faster in the future.
Now, it’s not news to most mobile developers that Asian countries like Japan, China, and South Korea are mammoth markets for mobile gaming, few developers and publishers have figured out how to really catch on in those regions. Blizzard’s Hearthstone card battler has found success among China’s and South Korea’s pro-gaming scenes, but it’s the rare Western hit in a market dominated by local companies.
“While China, Japan and South Korea are too big for Western publishers to ignore, Asian game makers like Tencent, Gungho, and Netmarble dominate the top-grossing charts by serving local tastes,” SuperData chief executive Joost van Dreunen said.
But it’s not as easy as making games that appeal to the Japanese or Chinese. Even other developers in Japan have failed to really crack their own market. That’s because smartphone gaming in that country is controlled by the duopoly of Mixi’s Monster Strike and GungHo’s Puzzle & Dragons. Both of those games make around $1 billion every year, and much of this revenue comes from Japan. Outside of those two releases, few games really make much money at all.
China is even tougher. That’s because the official Google Play app market does not have a presence in the country. Instead, the various Android phones run dozens of different app markets. And developers need to have relationships with publishers to get their games on all of those stores to have a chance to succeed. The problem is that between the publishers and the app stores, studio have to give up between 60 percent and 70 percent of their revenues.
And that is likely why many developers are looking to places like India.
“Countries like India have yet to develop a large homegrown game industry, but have strong revenue potential as local telecom operators have started lowering their rates,” said van Dreunen.
India is growing quickly. It is already on pace to generate $416 million in revenues this year, and it could grow to $1.2 billion by 2018. With more than a billion people, the market could grow to rival China and Japan over the next decade.
“Western game makers who establish an early foothold in these regions will see major payouts in the next few years as spending in these markets grows,” said van Dreunen.