By Shuli Ren
Deutsche Bank attended The China Game Industry Annual Conference last week and came back with a few takeaways.
China’s video gaming industry grows at a brisk pace this year. The industry is expected to grow by 37.7% to reach 115 billion yuan in revenue. While client-based games, with 53% market share, continues to have the lion’s share of the market, mobile games are expanding rapidly this year at an estimated pace of 144.6%. Mobile games are now the second largest segment in the gaming industry.
During the conference, Tencent Holding‘s (0700.HK/TCEHY) management said the company had already moved onto the big screen and started testing the waters in TV games this year. “These initiatives should help advance its multi-screen ecosystem,” noted analysts Vivian Haoand Alan Hellawell III.
There could be two reasons. The mobile gaming industry has already reached a bottleneck in term of user growth, commented Qihoo 360‘s (QIHU) representatives. This is in line with Qihoo’s own surveys. Total number of mobile gamers already reached 358 million. In addition, competition among developers has heated up:
China Mobile Games & Entertainment’s (CMGE) management said that it costs at least RMB5m to develop a mid-core mobile game at present, and that surging costs in game development and promotion have started knocking smaller players out of the business.