Reports

China's mobile gaming market - including both single-player and mobile online games – recorded strong growth in H1 2014, reaching revenues of almost RMB 11.8 billion (USD 1.9 billion), up approximately 34% YoY, and a total Q2 user base of 448 million, up 39% YoY. However, we expect growth rates to slow in H2, as Tencent (0700.HK) makes a strategic pullback from monetization and China's rate of smartphone user growth decelerates, resulting in a 2014 estimated market size of RMB 29 billion (USD 4.7 billion), up from RMB 13 billion (USD 2.2 billion) in 2013.

China's mobile gaming industry also saw significant listing activity in Q3, including the IPO of game publisher iDreamSky (Nasdaq: DSKY), in which Tencent holds a stake of nearly 27%, the submission of an IPO prospectus by mobile and browser game publisher Feiyu Technology, and new industry rumors that Beijing-based mobile IM and mobile game operator Momo Technology is planning a US IPO in December.

Low barriers to entry and high potential rewards continued to draw a flood of new developers into China’s mobile gaming market in Q3 2014, further improving the position of top distribution platforms like Tencent, Qihoo 360 (NYSE: QIHU), and Baidu (Nasdaq: BIDU), on which small developers are heavily reliant. In July, Alibaba Group, already fortified through the earlier acquisition of UCWeb and its 9game mobile game distribution platform and PP Assistant app store, made up further ground in the mobile gaming arena through a strategic cooperation with San Francisco-based game developer and publisher Kabam. Under the agreement Alibaba will publish Kabam mobile games in China across Alibaba's mobile applications including mobile C2C e-commerce site Mobile Taobao and mobile instant messaging (IM) app Laiwang. Alibaba will also invest approximately USD 120 mln in Kabam.

Mobile gaming assets continued to attract strong investor interest, with at least 12 domestic mobile gaming M&A deals announced in Q3 2014; among them, at least 4 of the acquirers were from traditional industries unrelated to mobile, such as film and TV program production, electronic toy manufacturing, building materials, and ceramics. One of the largest among these deals was the acquisition of mobile game developer Diandian Interactive from parent company FunPlus by Shanghai-based building materials manufacturer Zhongji Investment (600634.SH) for over RMB 6.0 bln (~ USD 1.0 bln).

To help investors and game industry enterprises identify opportunities among China’s burgeoning number of mobile game titles, developers, operators, and distribution channels, Marbridge has developed the Chinese Mobile Gaming Industry Matrix. The Q3 2014 edition of the Matrix provides details on over 160 leading mobile game companies and over 440 of the top games in Excel (read-only) format:

• Listing Status (public, to list, private)
• Location (city in which operator/developer is headquartered)
• Company Homepage URL
• Company Contact Phone Number
• Experience in Overseas Game Publishing (specific examples available for ~12% of companies)
• Games Operated/Developed (with top grossing games highlighted)
• Game Environment (Android, iOS, WP)
• Game Type
• Game Dates (expected release, beta test, commercial launch)
• Game Source (self-developed vs. licensed)
• Revenue Model (pay-to-play vs. in-game items)
• Game Operation Statistics (DAU, monthly revenue, cumulative downloads - as available)
• Game Homepage URL

The Chinese Mobile Gaming Industry Matrix also provides data on China’s top 26 mobile app/game distribution platforms, including:

• Platform Operator Name
• Investment Received (available for ~40% of platforms)
• Number of Apps Hosted (available for ~40% of platforms; dates vary)
• User Base (available for ~75% of platforms; dates vary)
• Cumulative or Daily App Downloads (available for ~55% of platforms; dates vary)
• Revenue Share Ratio with Developers (available for ~55% of platforms)
• Business Model (available for ~35% of platforms)

In addition, the matrix provides a Q3 summary of Chinese mobile gaming industry news covering:

• M&A and Internal Investment Deals (19 items)
• Partnerships (38 items)

The Chinese Mobile Gaming Industry Matrix is available either for one-off purchase or on a subscription basis with quarterly updates.