Chinese Game Makers Dog Smartphones to Infiltrate Indian Market

(Yicai Global) May 4 — Chinese phone manufacturers are vying with each other to gain a bigger share of the Indian market.

As their market penetration deepens, Chinese video game developers, with dazzling results at home and abroad, are loath to forgo the Indian market’s huge bonanza.

Tencent Holdings Ltd. [HK:0700], Youzu Interactive Co. [SHE:002174], Suzhou Snail Digital Technology Co. and several other Chinese game makers have alit in India, hoping to gain a foothold and even dominate the market.

Now is the time to enter India, and nobody wants to miss out this on opportunity, said Li Bo, vice president of Youzu Interactive [SZ:002174].

“As the first-movers in the global gaming industry, the European and American markets are already saturated, and competition is intense. By contrast, emerging markets such as Indonesia, India and Brazil offer more opportunities. Strong internet development and the huge potential of local consumer markets have turned them into the main arena for Chinese companies,” Zhao Xiaoma, executive director at CIC Consulting, told CBN.

Half Chinese Smartphones

India’s nearly 1.3 billion population is irresistible to all major phone makers. Chinese smartphone manufacturers such as Oppo, Vivo, Gionee, Lenovo and Xiaomi have gained a dominant position in India after rapid business development in recent years.

Four of India’s five best-selling mobile phone brands are Chinese and their total market share reached 51 percent in November, hitting a one-year high in last year’s fourth quarter, a report by Counterpoint Research shows.

Smartphone shipments hit 500 million in China, while India, with about the same population, sold less than 200 million last year, market intelligence company IDC reports, meaning most Indians still use keypad phones. Smartphone users will make up an estimated one-third of India’s population this year, which underscores the Indian market’s vast growth potential and lack of saturation.

Mobile telecommunication networks are also evolving rapidly in the land alongside the hardware market, with 4G technology increasingly popular. Local telecommunication carrier Jio Infocomm Ltd. announced it had enrolled 100 million new 4G users in 170 days, breaking the record set by China’s WeChat (enlistment of 100 million users in 433 days).

Growth of smart device businesses will spur growth of video games and other content industries. A video content boom looms on the horizon, although India only is a tiny fraction of today’s global market volume.

Business intelligence firm App Annie Inc. estimates smartphone penetration in India at around a current 17 percent, with about 150 million mobile game players, of whom 27 million pay for games. Total market volume grew 90 percent to about USD400 million last year, App Annie added.

Chinese game developers are covetous of the success of their compatriot phone makers, and opted for India after careful thought.

Game Makers Land

That Chinese video game companies plumped for the Indian content market is unsurprising after the massive success of Chinese smartphone manufacturers in the country last year.

Total mobile game revenue in the country currently stands at USD266 million, accounting for merely 0.55 percent of the global total, per a report the Indian Industries Association and global management consultancy Tech SciResearch jointly published. Mobile game downloads are expected to grow 58 percent a year in the next five years, India’s software and services business association Nasscom predicted.

Chinese game makers such as Youzu and Snail Digital are all tempted to jump on the bandwagon, but no guarantees are to hand they can beat local competition wherever they go.

The Indian video game market is about to explode, and now is the best time for game makers to enter the market, Li Bo said. Fleeting opportunity renders it imperative, he stressed.

Game Companies Bullish on India

“We primarily focus on webpage and mobile game development and publishing. We have achieved good results in foreign market development relying on advances in Chinese gaming technology, and accumulated some experience. We also set up a consultant team consisting of top foreign game developers to tap into resources available in local markets. We also established strategic partnerships with international social media and gaming communities such as Facebook, AppStore, Google Play and Armor Games. At present, 90 percent of our revenues come from foreign markets. This attests to the competitiveness of Chinese game companies who go abroad,” Li Hualiang, chairman and chief executive at Shinezone Network, a Chinese game developer specializing in overseas market operations, told Yicai Global.

Youzu’s Li Bo is also upbeat over his company’s overseas performance. “After many years’ development, Youzu Interactive now has more than 1,000 foreign partners, and has published works in more than 190 countries and regions in Europe, America, the Middle East and Latin America. Our overseas revenue has outstripped sales in China. We also set up a research and development center in Europe after acquiring one of the oldest European video game companies, Bigpoint. We’ve been able to ramp up game development as our core business, and to improve our capability in terms of integrating game development and publishing all around the globe.”

Chinese companies have unique advantages to compete on foreign markets, Zhao Xiaoma believes, e.g. their experience in China makes them far more competitive than foreign rivals. They have cost-competitiveness, and the gap in research and development capability has narrowed between Chinese game makers and their foreign foes. However, they also have some inherent weaknesses relative to their foreign counterparts.

Very few Indian players are willing to upgrade game apps, and even in the case of some very popular games, downloads of new versions are very few, an India-based engineer noted. This is due to two unique characteristics of the Indian market. First, mobile network connection is not very good. Second, mobile data packages are expensive in India, with users unwilling to splurge on app updates.

To adapt to the local market demands attention to three issues, Li Bo believes. One is to adapt games content, which requires an understanding of local folk customs, user likes and esthetic taste. For instance, we considered cooperating with Bollywood to develop some IP to achieve linkage of videos and games.

Two is to consider the functions of local hardware and the state of network infrastructure for games with relatively high software and electronic network requirements, but also rely on the strength of local talent, learn Indian family networks, including the game market, and research and development personnel must hire locals, Li Bo advised.