Delivered at Casual Connect Tel Aviv 2016 | This session will focus on Chinese market performance, current status and breakdown of many other dimensions based on the objective and integrated data. It will also provide valuable information and help developers find the most suitable way to approach this mysterious oriental market.
4. Chinese Income Distribution
$50 $500 $5,000 $50,000
1975
1985
1995
2005
2015
Source: National Bureau of Economic Research Working Paper
5. Fast Growing Internet Users
457
513
564
618 649
688
34.3%
38.3%
42.1%
45.8%
47.9%
50.3%
10.0%
20.0%
30.0%
40.0%
50.0%
0
200
400
600
800
1,000
2010 2011 2012 2013 2014 2015
Number of Internet UsersInternet Penetration Rate
Unit: Million
Chinese Internet User Base
(2010-2015)
Source: CNNIC
Number of Mobile Internet Users
Mobile Internet Users as % of Internet Users
Unit: Million
Chinese Mobile Internet User Base
(2010-2015)
303
3…
420
500
557
620
66.2%
69.3%
74.5%
81.0%
85.8%
90.1%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0
200
400
600
800
1,000
2010 2011 2012 2013 2014 2015
6. Top 20 Smartphone Apps in China
(Mar 2016)
Source: Tencent Financial Report, Analysys.cn, excluding game apps
Rank App Name Company MAU Rank App Name Company MAU
1 Wechat Tencent 762.00 11 Youku Youku Tudou 143.01
2 QQ Tencent 658.00 12 UC Browser Alibaba Group 138.61
3 Taobao Alibaba Group 193.91 13 Tencent News Tencent 133.50
4 Baidu Baidu 185.09 14 360 Mobile Security Qihoo 360 132.28
5 Alipay Alibaba Group 170.09 15 QQ Music Tencent 125.97
6 Sogou Pinyin Input Sohu 157.81 16 Tencent Mobile Security Tencent 120.79
7 Tencent Video Tencent 151.20 17 Kugou Music KuGou 116.03
8 iQIYI Baidu 147.61 18 Baidu Map Baidu 109.59
9 QQ Browser Tencent 143.64 19 Baidu Mobile Store KuGou 106.20
10 Sina Weibo Sina 143.33 20 MyApp Tencent 106.02
- Tencent FamilyUnit: Million
7. Game Center E-commerce PaymentO2O
WeChat in China – The New Way to Connect
Voice Message Location Sharing
11. Global Game Market Overview
Unit:USD in Million
22,194 26,173
12,023
12,272
12,376
12,506
23,050
23,820
25,170
17,990
18,420
19,430
32,77029,875
18,047
12,618
25,870
24,480
19,950
18,910
0
20,000
40,000
60,000
80,000
100,000
120,000
102,658
4,187
2016E
95,682
4,103
3,848
2015
88,468
4,022
2014
81,117
2017E 2018E
4,268
108,826
Japan
South Korea
North America
Europe
China
Southeast Asia
Others
Latin America
Global Game Market
(2014-2018E)
Source: Newzoo, iResearch, Tencent Analysis
12. Large and Growing Chinese Online Game Market
Unit: USD Million
11,007 12,540
17,55615,71714,069
3,664
3,490
3,116
2,640
2,087
7,208
6,613
5,511
4,113
2,742
0
5,000
10,000
15,000
20,000
25,000
30,000
2015
19,293
2014
15,836
2018E
22,696
2017E
25,819
28,428
2016E
PC BrowserMobile PC Client
CAGR
16.1%
15.1%
12.4%
27.3%
Chinese Online Game Market
(2014-2018E)
Source: iResearch, Eguan,Newzoo
14. Source: Newzoo, and game revenues of Sony, Microsoft, Apple and Google were estimated by quarterly earning reports in which these are not specifically segmented out
7.2
5 5.1
4.4
3.5
4.5
2.4
1.6 1.6
2.3
8.7
6.8
5.8
4.7
4.4 4.3
3 2.8
2.2 2
0
1
2
3
4
5
6
7
8
9
10
Tencent Microsoft Sony Activision Blizzard Apple EA Google NetEase Warner Bros King
FY 2014 FY 2015
Top 10 Public Companies by Game Revenues
Unit: USD in billion
+21%
+36%
+13% +6% +26% -4%
+25%
+76% +39% -12%
Tencent Leads Game Publishers in the World
16. Chinese PC Game Market Overview
1,518 2,131
1,595
1,733
1,6711,426
1,395
1,395
4,385
4,370 4,094
843
2,469
1,809
1,334
3,772
0
2,000
4,000
6,000
8,000
10,000
12,000
2014
9,997
644
2013
9,123 690 552
583
2016E
10,304
2015
10,380
Music
Others
RPG
MOBA
Shooting
Action
Unit: USD Million
Source: Industry News, Company Annual Report
Chinese PC Client Game Market
(2013-2016E)
CAGR
7%
17. Tencent Leads the Market in Growing Fronts
BrowserRPG SportsRacingMusicPokerMOBAActionSTG
TencentOthers
Tencent Game Market Share by Genres
(2015)
Source: Industry News, Company Annual Report
18. Proven Track Record of Hit Games
Dungeon & Fighter
Developer: Neople
PCU: 3M
Jun 2008 Jul 2008
Cross Fire
Developer: Smile Gate
PCU: 4M
May 2008
QQ Dance
Developer: Tencent
PCU: 2.6M
Jan 2008
QQ Speed
Developer: Tencent
PCU: 3M
Aug 2003
QQ Game
Developer: Tencent
PCU: 9M
May 2015
May 2013Sep 2011
League of Legend
Developer: Riot Games
PCU: 10M
NBA 2K Online
Developer: 2K
Sports
Call of Duty Online
Developer:
Activision
1H 2016E
Moonlight Blade
Developer: Tencent
Orcs Must Die
Developer: Robot
Nov 2013
Blade & Soul
Developer: NCSoft
PCU: 1.7M
Heroes of Newerth
Developer: S2
Games
Apr 2015
FIFA Online 3
Developer: EA
Monster Hunter
Online
Developer: CAPCOM
Jul 2015 Dec 2015 1H 2016E
20. China Mobile Game Market Outpaces All Other Regions
Mobile Game Market Growth by Regions
(2015-2017E)
Source: App Annie, iResearch, PWC
Mobile Game Market Size by Regions
(2014-2017E)Unit: USD in Million
7,402 9,677
6,488
6,715
7,232
7,7296,016
6,205
6,602
7,015
3,782
4,050
4,382
4,738
4,935
0
10,000
20,000
30,000
40,000
2017E
37,299
11,522
2,021
2016E
33,619
1,874
2015
29,559
1,736
2014
25,968
1,647 South Korea
China
Japan
North America
Europe
Southeast Asia
Latin America
Others Area China Japan
South
Korea
North
America
Europe
Southeast
Asia
Latin
America
Others
Market Share
(2015)
25% 22% 6% 21% 14% 5% 2% 5%
Market Share
(2017E)
31% 21% 5% 19% 13% 5% 2% 5%
Growth Rate
(2015-2017E)
33% 6% 7% 5% 8% 11% 14% 11%
21. Tencent Dominates
Chinese Mobile Game Value Chain
Mobile Game Landscape in China
(Mar 2016)
*Revenue allocated along the value chain based on revenue share percentage
Source: Company Public Information, Industry News, Company Annual Reports
100%
35%
30%
25%
20%
15%
10%
5%
0%
40%
45%
65%
70%
75%
95%
50%
55%
90%
80%
85%
60%
Distribution
Tencent Android
30%
Tencent iOS
13%
Netease iOS
9%
App Store
360
Baidu
UC
Mi
Huawei OPPO
Others
Publishing
Tencent
36%
Shanda Games Ledong
Longtu Games
Yinhan
Netease
22%
Perfect World
ChangyouTianma
Perfect World
Lilith Game
Tianxiang
Supercell Juren
Blue HarborSnail Digital
Others
Tencent Published (Others)
17%
Yinhan
Ledong
Tencent
24%
Development
Others
Digital Snail
Blue Harbor
Youzu
Juren
Tianxiang
Shanda Games
Netease
17%
Tencent Published~11%
22. Tencent Mobile Game Performance
No.1 on Free Download Chart No.1 on both Free Download and Grossing Chart
45 Games 13 Games
Source: App Annie (As of Mar 2016)
23. Tencent Games
iOS Top Grossing Games Ranking in China
Source: App Annie
Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16
1
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
Fantasy Westward
Journey
2 We Fire We Fire We Fire We Fire The Legend of Mir 2 The Legend of Mir 2
Westward Journey
Online
Westward Journey
Online
Westward Journey
Online
Westward Journey
Online
The Legend of Mir 2
Westward Journey
Online
3 Shenwu2 Shenwu2 MU Miracle The Journey of Flower
The King of
Fighters’98
Westward Journey
Online
The Legend of Mir 2 The Legend of Mir 2 The Legend of Mir 2 The Legend of Mir 2
Westward Journey
Online
Clash Royale
4 MU Miracle We Fly We Fly MU Miracle We Fly We Fly
The King of
Fighters’98
Loong Craft
The King of
Fighters’98
Hero Moba Hero Moba Hero Moba
5 We Fly MU Miracle Shenwu2 Shenwu2 We Fire
The King of
Fighters’98
We Fly We Fly Loong Craft Naruto Mobile We Fly Cross Fire
6 Dota Arena Dota Arena Dota Arena Happy Elements Happy Elements We Fire We Fire
The King of
Fighters’98
Hero Moba Cross Fire Cross Fire Naruto Mobile
7
Blade of Three
Kingdoms
Boom Beach Happy Elements We Fly 9LZ WeChat Dash Clash of Kings Hero Moba Clash of Kings
The King of
Fighters’98
Naruto Mobile We Fly
8 West Arena Happy Elements Boom Beach Craz3 Match The Journey of Flower Clash of Kings Clash of Clans Clash of Kings We Fly Loong Craft The Legend of Zu The Legend of Mir 2
9 Craz3 Match Landlord Poker Clash of Clans Dota Arena MU Miracle Happy Elements CangQiongBian We Fire We Fire We Fly
The King of
Fighters’98
The King of
Fighters’98
10 Boom Beach
Blade of Three
Kingdoms
I am MT2
The King of
Fighters’98
Shenwu2 We MOBA Happy Elements Clash of Clans Clash of Clans Shenwu2 Clash of Kings
Legend of the Qing Qiu
Fox
Hit Titles
24. Tencent Leads the Market in Key Genres
Tencent Mobile Game Market Share by Genres
(2015)
RPGRacingStrategyTower
Defense
SimulationCasual &
Puzzle
MOBABoard
Game
MusicFlight
Combat
Action
Source: App Annie, Industry News, Company Annual Report
TencentOthers
26. Chinese Mobile Game Market Has Huge Potentials
254
367
452
118
135
145
0
200
400
600
800
2013
390
+24%
2015
603
2014
510
AndroidiOSOthers
User Base
(2013-2015)
Source: CNNIC, Trendforce
Unit:Million
Daily Playing Times
42% 47%
37% 25%
21%
29%
0%
25%
50%
75%
100%
2014
< 30 min
30 min - 1 hour
> 1 hour
2015
Monthly Pay Rate
(2014-2015)
+9%
2015H22015H12014H22014H1
27. New Opportunities of Different Genres
to Be Explored
Players’ Preference by Genres
(2015)
16%
RPG 33%
Music
67%
40%
Flight Combat 46%
Tower Defense 52%
Casual & Puzzle 58%
RAC 64%
Poker & Chess
SPT
Source: App Annie, Industry News, Company Public Information, Company Annual Report
Turn-
based ARPG MMO Cards FPS/TPS MOBA
Poker
&
Chess
Match
3
Flight
Combat Parkour COC Puzzle Tower
Defence
War
Strategy
16151615161516151615161516151615161516151615161516151615
Others Tencent
Market Size by Genres
(2015-2016)
29. Different Taste in
Mobile Games
Cobweb of
Distribution
ChannelsUnsuitable
Business Model Unsuitable Gameplay
Language Barrier
Cumbersome Payment
Network Environment
Unsuitable Art Style
Hardware Performance
and Fragmentation
Under Marketing
/Promotion
Missing Localization
or Live Op Team
Insufficient
Onboard Tutorial
Unappealing Theme
Challenges for Overseas Publishers in China
30. Subgenres China Japan
South
Korea
US
RPG
ARPG 7% 1% 45% 7%
MMO 24% 1% 13% 19%
Card RPG 9% 18% 26% 12%
Mixed Card RPG* 4% 76% 14% 62%
Turn-based 56% 5% 2% 1%
Genres China Japan
South
Korea
US
RPG 70% 74% 61% 5%
Casual & Puzzle 6% 10% 9% 16%
Action 7% 6% 7% 10%
Strategy 15% 10% 12% 47%
Poker & Chess 2% 1% 11% 23%
A Different Taste in Mobile Games
Comparison of Top 50 Mobile Games by Genre
(2015)
Source: App Annie,Tencent Analysis
* Mixed Card RPG : Puzzle & Dragons etc.
31. Low-end, Domestic Phones
Lead to Device Fragmentations
Smartphone Installed Base Share by
Brand
(2016Q1)
Apple, 23.5%
Samsung, 14.3%
Xiaomi, 10.2%
Huawei, 7.9%
Bubugao, 4.6%
OPPO, 4.5%
Lenovo, 2.9%
Coolpad, 2.3%
Meizu, 2.2%
Others, 27.6%
0%
20%
40%
60%
80%
100%
Price Range of Domestic Mobile Phones
(2016Q1)
Unit: USD
23%
28%
39%
10%
Above $480
$320-$480
$160-$320
Below $160
Android Game Device by Resolution
(2016Q1)
0%
20%
40%
60%
80%
100%
1920*1080, 16%
1280*720, 26%
960*540, 8%
854*480, 13%
800*480, 10%
1080*1776, 5%
Others, 21%
Source: ZDC, Talking Data
35. Key Capabilities in Mobile Game Publishing
Tailored
Operation
Strategy
Coverage of
Vast User Bas
e
Multidimensional,
Social Graph Base
d Marketing
Social Graph
Improves Game
Performances
36. Mobile Game Platform with Vast User Base
Premier Platform
• Mainstream premier games for
the general public
MyApp Platform
• Rich game portfolio for all type
s of mobile users
MAU: 658 Million MAU: 762 Million
(2016Q1)
Peak Daily Distribution: 145 Million
37. Multidimensional, Social Graph Based
Marketing/Promotions
Promotions Based on Social Graphs
Tencent Social
Network Users
Social Promotions
SNS/
Ranking
Invitations
/
Forwards
C to C Sharing
Game
Center
Enter the
Game
Marketing and Promotions
Celebrity
Tie-ins
Theme Songs
(MV)
Transmedia
Promotions
Official
Website
WeChat/
Mobile QQ
Official
Accounts
Tencent
Games
Arena
38. Tailored Operation Strategy
Casual Games with High DAU
Blockbuster
Release
High DAU
Casual
Game
Midcore Mobile Games:
Controlled Release
8 weeks
before
OBT
Steady
operations
4 weeks
before
OBT
OBT 1 week
after
OBT
3 weeks
after
OBT
39. Future Strategy
Next Steps
for PC Games
• Maintain leading position in each
genre
• License games from all over the world
• Explore innovative
gameplays