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iDreamSky's Jeff Lyndon on why everything you know about the Chinese mobile gaming market is wrong

Distribution, preloads and IAP gate all explained

iDreamSky's Jeff Lyndon on why everything you know about the Chinese mobile gaming market is wrong
There are a few things we all know the Chinese mobile gaming market: it's big and getting bigger and it's hard to monetise.

Good as a starting point for those of us in the west, those who are actually building a business in the country need to be much more sophisticated.

One such is Jeff Lyndon, who's executive director and co-founder of publisher iDreamSky, which runs the Skynet social gaming network, and distributes Fruit Ninja amongst other titles.

Here are some of his key pointers to operating in the market.

Biggest of all

The Chinese mobile gaming market is huge. It's estimated there are more than one billion mobile users: it's the biggest mobile market in the world.

By the end of 2012, smartphone penetration will be between 220 and 280 million, with Android taking the largest market share and iOS coming in second. The smartphone explosion is taking over the nation just like it has taken over the world.

However, the Chinese market is very different from its western counterpart.

Firstly, distribution is an absolute mess. Amongst the 160 channels that we distribute through in China, none of them represents over 5 percent of the distribution volume.

Therefore, if you need to get your app out there, if you don't work with at least 80 channels, you're not reaching 50 percent of the market.

Secondly, preloaded games market is different. While in the west, a content provider can charge manufacturers for preloaded titles, in China it is the reverse.

Unless you are the best of the best, you won't be preloaded for free unless you have some crazy strong connections. Or unless you are paying, of course.

In fact, big players in the Chinese market are buying up preloaded spots to lock out the competition. If you really want to charge for preloaded content then the numbers will be absurd - $5,000 - $20,000 for a one year unlimited volume licence.

Flip, reverse it

Thirdly - and we learned this the hard way - in the west you will likely design your unlock or IAP mechanism in later part of your game. The idea is you make your player fall in love with your game first, then you charge them.

In China, however, you charge them almost before they try your game.

To give you an example, we have a game in which we gave away the first 16 levels for free, charging for the remaining 104 levels. The conversion rate was below 1.4 percent.

Then we changed the balance, giving out one level for free and charging the same amount for the remaining 119 levels. The conversion rate jumped to 3.4 percent.

That's a 240 per cent increase!

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