Big fish, small pool
Because game companies can't survive on ad revenues for very long, many adopt a second revenue stream, called In-App Purchasing, a practice that has existed almost as long as Internet games have been available.
When customers download one of these apps free of charge, they are only allowed access to a number of basic levels, not the full game. The companies hope that the limited access will get players hooked on the game and they will be happy to pay for access to the higher levels, or for tips, hints and other information.
It's really only when gamers begin to pay for in-app purchases that the smaller developers finally begin to make money from their creations.
The free-to-play/in-game purchasing model has now been adopted by a number of international companies as they seek to introduce their products to the mobile market. The practice is especially popular with so-called console players whose games are usually better known on static platforms, such as Nintendo's Wii or Sony's Playstation.
"We are seeing some very interesting trends in mobile gaming. The smartphone is now well and truly in the hands of mainstream consumers," said Jim Lee, general manager and publisher of the games company EA Mobile China. More than 80 percent of the phones sold in the Chinese market now are smartphones.
"We are learning about a lot of local developers. They have created or perfected many innovations and we will continue to marry these with what we do best; big brands and blockbuster quality. I believe this will be a winning formula."
As bigger fish come into the pool, it's becoming increasingly difficult for local developers to benefit from their products. Giants such as Electronic Arts, the parent of EA Mobile China, and Unisoft Corp, a leading game company from France, are already well known and enjoy strong customer loyalty. That's not the case with independent Chinese developers, who have to work hard to make their products much more visible.
In response, some Chinese developers pay Internet users to post positive comments about their products online as a way to raise the profile and boost the rankings on games' lists. Usually, however, it costs 5,000 yuan to hire a group of "Zombies", as they are known, for a day, a price few smaller developers can afford.
Despite the presence of large and small game app developers and the huge size of the Chinese market, Wesley Bao believes the promised land is still far away. "The Chinese market is just as complicated as ever. While I see plenty of opportunities, I also see plenty of risks."
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