Jialun said: Seven Trends Predicted for China's Mobile Gaming Industry in 2016

Hello everyone, and welcome to this episode of “Jialun Says.” The biggest event in the gaming world this week was likely the Hainan Gaming Industry Annual Conference, and the industry has begun wrapping up the year and looking ahead to 2016.Today, Uncle Cha will share some random thoughts based on Game Teahouse’s observations and coverage of the gaming industry over the past year, offering seven major predictions for the development trends of China’s gaming industry in 2016, focusing primarily on two aspects: R&D and the industry as a whole.

The increasing segmentation of mobile game products has become an inevitable trend. Next year, we’re particularly bullish on the following four sub-sectors within the mobile gaming space.

1. Mobile Esports

  In 2015, a large number of esports-style games performed exceptionally well—from the early titles like *All-People Gun Battle* and *All-People Assault* to *Honor of Kings*, as well as the recently launched *CrossFire* and the upcoming *League of Legends: Mobile*.Currently, game companies would be hard-pressed to hold their own in the industry without at least one competitive title. More importantly, mobile esports is not just about games—it has evolved into a complete industrial chain encompassing game products, live streaming, offline tournaments, and gaming merchandise. Its market potential far exceeds the revenue generated by any single game title.

2. MMORPGs: Hardcore Mobile Online Games

 The biggest event in China’s gaming industry in 2015 was likely the battle for the top spot between Tencent and NetEase, with their flagship titles being *Fantasy Westward Journey* versus *Legend of Mir*.Both are large-scale MMORPGs. While the mobile gaming industry as a whole still grew by over 80% this year, industry insiders are saying that despite this significant expansion in overall market size, no one is actually making money—because a large portion of that growth has been concentrated among the top gaming companies.Another even more alarming consensus is that many distribution channels have struggled to grow their user bases this year—it’s become nearly impossible to promote new games—because users are completely locked into these massive MMO games. As a result, many major game companies have begun developing their own MMO titles.

3. SLG (Strategy) Games

 The massive success of *COK* in China has directly spurred the development of a large number of new SLG titles. Currently, the Apple Top Grossing Chart is dominated by *COK*, *COC*, *Sweep the Army*,*Tank Frontline*, *Battleship Empire*, and *Tycoon 2*. This abundance of titles has cultivated a loyal player base for strategy mobile games, and in 2016, these players will continue to demand a steady stream of new games to play.Furthermore, the long lifecycle, high ARPU, and ease of global expansion characteristic of strategy games will attract more Chinese game companies to enter this market.

4. High-Quality Single-Player Casual Games

 Changes in the telecom operator landscape in 2015 truly put domestic single-player game companies through a harsh winter, but this also weeded out a large number of companies that relied entirely on low-quality “skin-swap” games, leaving only those dedicated to creating genuinely fun single-player games.Most importantly, while standalone games have low ARPU, their user base is extremely vast—virtually every smartphone user could be a player. Coupled with the widespread adoption of Alipay and WeChat Pay, which have shaped user payment habits, in-app purchases for standalone games no longer rely entirely on mobile carriers. Nevertheless, the market still suffers from a severe shortage of high-quality standalone casual games.

Furthermore, looking at the overall development trends of the gaming industry, we believe the following three areas are worth paying attention to. However, it’s important to remember that major trends representing the future generally don’t generate revenue in the short term. You need to proceed within your means.

5. The Large-Scale Expansion of Chinese Games Overseas

As Game Teahouse, we’ve been advocating for the overseas expansion of games for nearly two years now. Since our inception, we’ve been actively disseminating knowledge about the overseas mobile gaming market.A significant portion of the reports on overseas markets currently available online originate from Game Teahouse. At the same time, we have organized nearly 10 overseas study tours, ranging from nearby destinations like Taiwan, Thailand, Vietnam, Japan, and South Korea to the United States, France, and Finland across the Pacific.After completing this tour, we found that Chinese games account for the largest share in the Asian region, but their presence in Europe and the U.S. remains relatively limited. At the same time, the number of games and companies truly expanding overseas is still quite small. In 2016, with the return of Google Play and Twitter’s selection of four domestic agents in one go to expand its business, we believe more Chinese games will go global in 2016.Game Tea House is currently organizing a study tour for the 2016 Game Developers Conference (GDC) in the U.S. in March. We welcome your registration.

6. VR Games

 After a year of domestic adoption in 2015, the VR industry has begun to attract significant attention from developers. Some VR-related stocks on the A-share market have performed exceptionally well, and major hardware manufacturers like Samsung and Sony have also begun aggressively promoting their own VR hardware products. Many large shopping malls in China have started setting up small VR experience zones to reach a wider audience.Next year, Oculus—the industry leader—is set to release a true consumer-grade version. Once the hardware begins to gain widespread adoption, the biggest shortage will be engaging games. However, Uncle Cha still believes it’s a bit too early to develop VR games right now, and it’s difficult to turn a profit; this is an area best suited for well-established game companies to begin laying the groundwork.

7. Pan-Entertainment

This has been a very popular concept this year. In the future, games will inevitably integrate with industries such as literature, film, television, and animation. Pan-entertainment is already an unstoppable trend. In 2015, the gaming industry was actually in the early stages of this pan-entertainment trend, with everyone frantically acquiring existing well-known IPs to develop games based on them.Next, we’ll definitely see these industries begin to interpenetrate. NetEase officially announced its pan-entertainment strategy at its annual Game Lovers Conference, which includes adapting existing games into TV series and feature films. Moving forward, more games will be adapted into novels, web series, or feature films with the same titles, along with various merchandise.

In reality, all predictions are based on personal perspectives. For entrepreneurs in the gaming industry, it’s essential to develop strategies based on their own strengths and characteristics—and above all, avoid turning themselves into a literal “pig” just to shut others up.