Founder Musings

Observations from Doing Business in China

East meets West. The Yin and the Yang. Two complementary but equally opposing forces.

The other day my friend,who builds satellites for a living, was telling me about her frustrations with their Chinese clients. The clients would ask them to re-do and second guess their decisions and results even though they were the highest rated satellites in terms of quality. After much re-work, they have been auditing each and every step trying to negotiate each agreed upon item. Sadly this is an all too common scenario when working with China.

With China being a $11 trillion marketplace, as well as being an estimated 30% of the world’s population, and home of the 2nd largest most spoken language — ignoring these cultural differences can pose a risk for your business.

The one thing you should know:

Everything is ran like a family business in China.

Optimized around control and power. This means everything is optimized around control and power. Oftentimes all of the “hoops” they have you jump through is to prove your loyalty and respect to them as a partner. This coupled with the strong concept of “saving face” (a term best described as “protecting one’s pride” — not just your own but also the other person) means that some items are done for the sole purpose of reinforcing the control and power that translates to respect within the partnership. If there are ways you can continually prioritize these from their perspective, you will understand where those requests are coming from and will probably decrease as a result.

Trust is built through loyalty. The best way is to think about this is one of two ways: (1) If you were trying to become good friends with the Corleone family how would you go about it? (2) If you owned a family business empire, how would you go about trusting someone new? It is all built around loyalty and proving you are loyal. Loyalty goes farther than competence, like in most family businesses, and loyalty is the only way you can prove trust.

Things that are unsaid are just as important as what is said. Any family has unwritten rules, laws and practices. It is often what is unsaid that tends to be the most important. This coupled with “saving face” creates an environment where not everything is “said”. This is a common occurrence: I introduced a friend to a Chinese investor. It had been weeks of him sending follow ups and further materials post the initial meeting, without much pick up or return. I had to finally break it to him that more than likely the investor was not interested, and was just “saving face” by not responding.

It’s a zero sum game. In a population of almost 2 billion people, they know scale, even at the education level. From a young kid you are ranked. Ranking teaches you many things, but one thing is clear: there can only be one #1. This can create a belief that if someone wins, someone loses — namely you. This can cause behavior that is defensive, competitive, and execution focused. This thinking can spill into business. I spoke to one of the companies in the infamous three kingdom ring — BAT — and he said he had certainly seen some valuations in the past get driven up just so that the other company could not compete. Defensive behavior and exclusivities abound. You have to take note of the past grievances and current state of the relationships between its competitors so you don’t jump into a war.

Relationships, Relationships, Relationships. You can now see why relationships are incredibly important to ensuring this system can be supported. In fact relationships trump technology and the written word. Relationships provide the perfect verification system for building trust and loyalty, teaching the nuances of all the players, and ensuring defensibility of your strategy. I’m not sure if there is software that can replace that…

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I am the co-founder and Chief Development Officer of Kabam. I am currently in Beijing, China. These perspectives are my own and do not necessarily represent Kabam.

China is the king of execution. It’s probably reversed from Silicon Valley — where ideas are cheap, execution is expensive. In China, execution is cheap, ideas are expensive.

5 Things Mobile Companies Need to Know to Succeed in China

By 2020, China mobile app revenue will gross for and estimated $30 billion dollars. Currently it is on pace to make $11 billion dollars. To even have a chance at success, you need to know a few things about China…

1. Fragmentation

Experience Fragmentation. In general the markets are fragmented, as well as experiences. Over the Chinese New Year, a popular document was circulating around WeChat of observations from hometowns when they visited China (h/t Adora Cheung). The observations range from — packed restaurants, expensive cars to ghost towns and everything in between. I couldn’t answer if China’s economy was doing better or worse for the normal Chinese citizen.

Technology Fragmentation. For mobile companies, it is estimated that China has more than almost 1 billion mobile users. This is split among 400 handset brands, across Tier 1, Tier 2 and Tier 3 cities. This means the technology varies from 2G all the way to LTE, despite amazing efforts to upgrade the technology across the country .

Incentive to remain fragmented. Many Chinese companies do not think about expanding out side of China because the market at home is so big. If your company has 25% market share, that is about 500 million people (assuming a population of 2 billion people). That is still a great business. This leaves for incentives for companies to remain fragmented, especially for those that have an offline component.

Marketplace Insight: China has leapt frog into the mobile world with their apps and ecosystem supporting it. The adoption of mobile payments have penetrated deeper than mobile payments in Silicon Valley — the earliest adopters of technology. This means working to have your app successful in China, you must think of a mobile-only context interacting with the offline world- “mobile-first” or “and-mobile” is the wrong mindset to apply here.

2. Platforms

Well, who owns these platforms on these handsets? For iOS it is easy — Apple manages their own store and working with them is in many ways similar to working with them in the US. But Android is a very different story.

Android has an estimated over 200 app stores, and Google Play is not there (although rumor is that it is launching soon). The top 3 represents about 60% of the market, pretty evenly split up between the stores. Therefore, just focusing on the Top 3 may not help you distribute as wide as possible. In teh future, app stores on Android will consolidate as smaller app stores will have a harder time staying alive. However, consolidating into one big one (like Google Play) on Android seems unlikely. The likely scenario is the Top 3–4 would remain evenly split on the lion share of the app ecosystem.

3. Partnerships

Partnerships become a key to managing this fragmentation. In China operate closer to middle men. They partner with you to share in the upside and take a cut with the promise you can get wider distribution. With so much fragmentation, many companies look to partnerships to help consolidate and navigate. And, there are many partners ready to take the opportunity and challenge.

Societal Insight: Due to censorship, the written word may not be as easily used for information gathering as it is in the west. Finding out who the players are requires effort in building and maintaining relationships through a lot of face to face time.

Partnerships (or relationships) are certainly something that becomes necessary when entering the murky waters of China. Not only is the ecosystem, but society and culture is incredibly complex. Knowing the subtleties of gaining trust and respect can be different and difficult to decipher if you have not invested time in it.

Cultural Insight: Did you know that in Chinese when you address a relative, the title takes into account older/younger, male/female, mother’s side/father’s side, and generation? The titles then change depending on context from the person addressing. Even, many local Chinese even get confused and can never remember the appropriate titles, so it is incredibly complex.

Layering together complexities and fragmentation of the economy, ecosystem and society — relationships (or partnerships) are necessary to succeed.

4. User Acquisition

In the Western world, the US in particular, the web has become the dominant way to advertise for technology. The low density of the population has encouraged and found this to be the most effective way to reach as many people in a spread out across many miles. In China, leveraging density becomes key.

Offline. Over 9 million people ride the Beijing Subway system, and is the highest annual ridership of 3.41 billion trips. This is just Beijing, not all of China. Media and TV is highly regulated. This means with few players in the system the large density of people will go to very few sources of information . Therefore, launches leverages this type of density and consolidation with large offline and media events using PR.

We-Media. Outside of traditional media the rise of WeChat (China’s Messaging/social network) and Weibo (China’s Twitter) has enabled a new kind of social media that is leveraged in acquiring users. This new media is commonly referred to as We-media. On Weibo, the #1 celebrity has over 80 million followers within China alone. Wechat has over 1.1 billion accounts, with 650 million monthly active users . Many celebrities have been born using social media to influence and converse with their followers.

Media Insight: After spending much of my time making sure the links were correct and our website was ready for the first article we published for the Chinese media, I found out that most news publications will not link outside of their site. A whole post can be dedicated to why, but it is indicative to how information sharing is done and brokered.

Digital Marketing. There is still room for this, but this by far is the smallest part of the budgets, in particular for mobile games.

5. Commitment

Lastly, and the most important key to success is a commitment to China. Demonstration of commitment in time and money. The highest levels of the organization, the CEO and executive team, need to put it as a priority to even get a shot at the $11 trillion dollar marketplace.

On a Saturday morning I got a call from a Board member of a gaming company in the West. He had all these questions about the Chinese market place and what it took to succeed. When I asked him: How come he was calling on a Saturday to learn about China versus the CEO? I knew from that moment their chances were doomed.

China needs to be seen first, and then it can be heard.

☞ If you’ve enjoyed this post, please “♥︎” to let others know. After all, sharing is caring.

☞ You can find me on Twitter

I am the co-founder and Chief Development Officer of Kabam. I am currently in Beijing, China.

It’s About Taking Risks, But Not Dumb Risks

Passion can drive to get over that hump; just make sure it’s a hump and not a cliff.

I got an email from a university student who got so excited about following his passion that he wanted to quit school. The problem was that he was not sure what he was passionate about, and should he quit school. Here is his blurb:

It seems to me the most difficult step is the first one (perhaps as you get further and further other choices you are faced with become very hard, but once you are already knee deep some mixture of adrenaline, passion and excitement serve to keep pushing you forward). What have you found as being the biggest help for you in getting started? You mentioned changing around your work a bit — how do you know you’ve found the right project/product to work on? Once you get started what do you think the most difficult part of the work is?

For me, taking that first step is very difficult. This is in part also because I don’t want to disappoint my parents who have worked hard to allow me to be here. How did you overcome this worry, what did you tell your parents?

I have found in the last couple months especially, that I don’t enjoy school so much. Part of what draws me to working somewhere, especially a startup, is that the work you do matters, it is significant — you are building something people use and care about. This isn’t so true in school — projects for classes don’t matter so much, once the semester is over, all your hard work is lost and the class becomes irrelevant. This is something I’ve been struggling with a bit over the past couple months, I’m finding it more and more difficult to justify spending my time doing things that I don’t really care about. I just wanted to hear your impressions on school and especially to contrast them with my opinions.

I would love to hear your thoughts if you get a second to answer!

My advice:

1. Don’t drop out of school, especially when you have nothing to run to. For Bill Gates and Mark Zuckerberg, the opportunity costs of them staying at school was too high. Their businesses were gaining traction and if they didn’t leave they would lose out on a massive opportunity. What is the upside of leaving if you don’t know what you are leaving for?
2. Finding your passion. There are groups you can join to help on that first to see what you ARE passionate about.
3. Internship I spent a lot of my time in school doing odd jobs, and internships to see what I was passionate about and learn more about what it was really like to work in that industry. But I wouldn’t do anything drastic until you know for sure. It’s about taking risks, but not dumb risks.
4. Once you do find your passion, there will be times where you won’t be 100% passionate about every single class, assignment, course or even teacher. (e.g. I LOVE tech, was not passionate about the networking class I had to take. You will learn resilience and dedication, the other side of making your dreams a reality). If you do find that startups are for you, then you WILL find that every little class, person you met has helped you along the way.

How Western Mobile Gaming Companies Succeed in China

Note: This article was originally written for and published in Sootoo, a Chinese publication in September 2015

The mobile gaming market currently represents the largest gaming category with opportunity for growth right on the horizon. Surely there is VR/AR, which has yet to gain the traction needed to be a platform that is as widely available as the mobile phone. In China alone, the mobile gaming revenue has exceeded expectations to surpass US Revenues in 2016 with $7.7Billion USD (Newzoo) and is expected to make up at least 20% of the mobile game revenue worldwide (Venturebeat). China cannot and will not be ignored.

Many mobile gaming companies, both Chinese and non-Chinese, are trying to figure out how to be a part of this opportunity. Two great examples of successful entry into the Chinese Mobile Gaming markets by non-Chinese companies include Supercell with Clash of Clans and Boom Beach. The second example is 植物大战僵尸2 (Plants vs. Zombies 2) from the U.S. gaming company Electronic Arts (EA). Both were successful and took various strategies to succeed.

Supercell has released two hits — Clash of Clans and Boom Beach — in China. Just focusing on Clash of Clans, it was first released in 2012 with barely any localization. Many Chinese players go as far to recall that the game wasn’t even in Chinese. However, their game released a new kind of game genre in China called “CoC,” which refers to the real-time tower defense/strategy that Clash of Clans offers. For Boom Beach, Supercell decided to partner with Kunlun on marketing and distribution in China, but did not change too much of the gameplay (Pocket Gamer). Boom Beach has surpassed Clash of Clans on revenue and downloads — Clash of Clans is at #17 and Boom Beach is at #11 of the top 20 Grossing iOS Apps in China (Think Gaming). This is a testament to having a strong local distribution partner can really move the needle.

Plants vs. Zombies 2 launched in China in 2013. They took a purely localization path to this game, and deeply culturalizing the game. First they had content that was familiar to China. Within a few months after the release, they released a whole new world Kung-Fu World (功夫世界), that would be much more familiar to China (Wikia). Secondly, they added content that would be recognizable to any Chinese person as part of the main gameplay: a peach plant, a kung fu master zombie, and the drunken monk zombie. They went as far as changing the systems design, creating certain items that you can buy with hard currency, more so than the Western version (Polygon). They also set up the business model to be free-to-play rather than premium paid download. Furthermore, they moved in the pay wall in the first 3 days, something Westerners may think is aggressive, but not too aggressive by Chinese standards. As a result, their revenue increased by 32% (Polygon). Within a year of its release, it had reached the fourth highest source of revenue in micro-transactions for EA (Polygon) — and that was just China alone. It also became the top download and grossing mobile game in China (Polygon). Clearly, this strategy works as well. 
 However, it is now 2015 and the landscape in China has changed from the time when these games were released. Three things in the China market have changed: (1) The number of game developers have increased. (2) Channels are consolidating, making it harder for one single game to distribute. (3) Product quality is getting better and better. Each one of these has its implications on what it will take to succeed in the Chinese market today.

Game Developers Increasing
 Happy Universe, a Chinese Publishing Company, has estimated that there are about 14,000 game developers in China, which is about 10,000 more developers than just one year before. This means the competition is very high for local Chinese and foreign mobile gaming companies. Any game developer will currently be competing with beloved Chinese PC-franchises such as 梦幻西游 , as well as non-Chinese games such as Clash of Clans and Plants vs. Zombies 2 (植物大战僵尸2). To stand out from all this competition would be to look at the source of IP as a differentiator. This is why many Chinese companies will look internally such as 花千骨 (which is based off of a popular TV show), beloved Chinese PC-franchises梦幻西游 mentioned above, or they will look to Hollywood with 功夫熊猫. For Western game developers, this may be an area that is more accessible as a source of IP. There are many games that have been based off of Hollywood IP — Kung Fu Panda and NetEase, Minions with Gameloft, and Marvel with Kabam. This allows game developers to benefit from not just creative IP, but also helps make distribution easier and economical due to brand recognition.

Channel Consolidation Leads to Partnerships

When it comes to distribution, it is very important for game developers to partner with someone. While there is only one store for iOS, there are hundreds of app stores for Android. Because most channels are consolidating, it is even more important for game developers to find a partner to push past all the game developers and get the attention of the top five distribution channels. That is just happening with local developers. Therefore, for non-Chinese companies, it is critical to get a local partner to make sure your game can get the distribution. Also, partners can help you navigate the local customs and infrastructure by helping to publish it. For example, when Clash of Clans was first released, it was integrated with the Google payments system, which is banned in China, leaving no way to collect revenue (Tech In Asia). A partner can help to avoid these issues as well as help integrate more popular systems such as Alipay or Tencent. Later when releasing Boom Beach, Supercell decided to work with Kunlun. While we do not know the exact reason for them to decide to get a partner for their Boom Beach release, we can only suspect it was to help to navigate these local customs and infrastructure. Other game developers, such as Kabam, who is partnering with Longtu, decided to partner early on before their Marvel Contest of Champions game was released to get their best opportunity to distribute their game.

AAA Product Quality

The best long-term strategy to thrive in this environment is to have an amazing high-quality game. What does “AAA quality” mean in the mobile world? Traditionally in the West, a “AAA quality” game meant amazing graphics, larger than life fidelity, and life-like animation. Hence, the need for a dedicated console machine to play these games. Today the processing speed of the mobile phone is equivalent to that of the earliest model of the xBOX, a machine dedicated to playing games of the highest quality — AAA quality. This will cause the players to expect more from the game from a graphics level. This has happened with 梦幻西游with the introduction of 3D graphics as the top grossing game in China right now has raised the bar. In addition to great graphics, you need great gameplay that has a systems design that you can play over and over. A great game will play like chess — a timeless game that no matter how many times you play, it is a different game for you. And finally something that is not new to Chinese game developers or its gamers is that games are a service. This is something that many Western game developers are learning and can stand to learn from many Chinese developers. As the top games continue to be a business model that is Freemium, rather than a paid download, the need to provide top quality service to your players and customers also contiues — giving them compelling content and game play that will systematically raise the core value of your game.

The Final Piece

The final piece of the puzzle that is necessary for success in China, and is not realized by many people in the beginning, is commitment. This takes time and usually eventually requires a team. It requires support from the highest levels of leadership in the organization. Many Western companies partner with someone as their first step of commitment. And that is usually a very good first step. Eventually, to have long-term commitment, having a local team will prove to be helpful. Kabam executed on a rare strategy of first building a team and office in 2010 to yield best-in-market products. This strategy can work if you build the right team and can pay off in spades as many things that take time on a team, such as trust, as well as operating in China. Both take time to build and time is not something that you can shortcut.

Conclusion

Regardless of what strategy you choose in entering into Chinese markets, it takes a great partner, a great product and a great team to help make sure that you are on the path to success. This advice can be the same for both Western and Chinese companies as we have the same goal — to create an amazing game that appeals globally!

West to East and East to West: How Brands in Mobile Gaming can Bring the World Together

Note: This article was first written and published for the Chinese publication GameRes in November 2015

Introduction
In the West we are seeing a consolidation of the mobile gaming market. The Top 5 slots have been occupied by the same games (companies) for the past year: Game of War, Clash of Clans, Candy Crush Saga, Boom Beach and Candy Crush Soda Saga. Most of these games were the Top 5 in 2014 as well. This is a sign of a maturing market — consolidation of the top players where they continuously have the unfair advantage. What is a US mobile game maker to do?

Moving towards the East, we are slowly seeing similar consolidation just starting to happen, particularly in China. For China we are seeing a channel consolidation while the number of game developers have increased four fold — from 4,000 game developers in 2014 to 14,000 game developers in 2015 (source: Happy Universe). Eventually the game developers will have only a few channels to distribute their game which will mean consolidation will happen within each of the few channels left. What is a China mobile game maker to do?

Enter brands. Brands are effective in several areas: distinguish yourself from the other games, increase installs due to brand awareness, and therefore reduce the cost of acquisition. However for a game that is using a brand to be successful we first must understand the market landscape, how brands are used in the US and China, and finally how successful games leverage brands.

How Brands are used in the East and the West

Looking at the differences in the marketplaces, we can see the impact of brands for each marketplace. In the West, mainly the US, attracting players can be done based on performance based marketing. This means US game developers can buy traffic from other sites or mobile apps such as Facebook (social networking app) or Pandora (radio music app) to come to our game. This works very well in the West because the population density is not as high and the technology infrastructure is set up for game developers to buy ads easily, effectively and economically. However, because of the ease for any game developer to do this, the cost per install or (cost of acquisition) is rising because game companies cause the pricing to increase for all game developers in the ecosystem. Many game developers have turned to TV advertising. TV is used to drive downloads and much software is being built to measure when a TV ad is shown along with a more rudimentary measurement of a promotion code entered after seeing a TV ad. This is all in the effort of discovering how many downloads or app visits did the ad have. This can work well work on a unit economic basis but as a total sum, TV advertising is not a cheap endeavor. Therefore you want to make sure you are leveraging your TV time as wisely as possible. Brands give viewers a quick recognition and higher likelihood to download.

For China, offline marketing is still incredibly important. The main reason for this is the population density in China is so much higher. Not only are there more people in China, but the density is a lot higher. Therefore spending money on a subway ad makes a lot of sense, when almost 9MM people can see it daily in one city alone (source: Wikipedia). However getting offline attention has its own challenges especially when the game is meant to be played online — on the mobile phone. Therefore, you will find a lot of QR codes to enable users to download the game by scanning the QR code. This infrastructure is well built all over China to allow O2O transfer a lot easier. However like performance based marketing in the US, buying subway ads can get quite expensive when the space is so much more limiting than the number of game developers. TV is also used, but it is used to drive awareness of the game. QR codes on TV make it more difficult to scan and therefore difficult to measure how many installs the TV ad drove. 
 When you have precious space such as a subway ad or a TV ad, you want to use it as smartly as possible. Brands are a way to ensure that when a player sees an ad, the likelihood of download is much higher because of the recognition. This in turn drives down the cost of the install or user. If a brand enables a person to see an ad once and instantly recognize then download versus a person needing to see an ad multiple times to remember the game, the one with the brand will have a cheaper cost of user acquisition. For the marketing environment alone, both the east and west are turning towards brands to help them out.

How Successful Mobile Games Use Brands

A brand extends much farther than at the point of marketing when developing a great game. Great game developers do two things in integrating the brand into the game: they view the brand as a partner and are able to augment the brand value.

The best partnerships are when the brand and the game developer are more than just marketing partners; they are creative partners as well. Brand partners that lend some of their writers or access to the creators of that IP have a huge advantage to be able to more tightly bring that brand essence into the game. We have seen this with many Western games such as Marvel: Contest of Champions (by Kabam) or Walking Dead: Road to Survival (by Scopely). When the game developer partners creatively, this lends more naturally to partnering from a marketing perspective. When a partnership is good, the game developer can use the brand’s existing channels to talk about that update. This way it reaches as many fans as possible, and it is free marketing for the game developer. When a partnership is great, the game developer and brand can do something creatively aligned and eventually create campaigns that are tightly integrated, such as announce key beats of the brand franchise together, have a booth together at an event, or create a campaign that crosses between the offline fans and the online players. Thus, reaching both fans and players.

The second key to successfully partnering with the brand is to find a way to augment the brand value. The entire idea of partnerships is that the brand and the game developer both bring something to the relationship. Oftentimes game developers will be able to deeply engage players into the brand. For example, when the movie Avengers: Age of Ultron was released the partner enabled the game developer to show an exclusive trailer in their game. This enabled the trailer to be viewed millions of times and participate in driving ticket sales to the movie.

The final key to success is go past the brand — deeply integrating the brand in the game. This is done even when choosing the genre of the game. We see this in the Chinese game 花千骨– where the game developers did not just make an endless runner or puzzle game; instead, they chose the genre thoughtfully to be in line with the story and characters of the TV show 花千骨. The brand is the source of IP for the game and should be treated with respect, but leveraged as highly as possible for the game developer. When this is done, the brand can look to the game developer as a source of IP. This is extremely rare but has happened. For the mobile game Marvel: Contest of Champions, the brand decided to re-release the Contest of Champions comic book series from the 1980’s when they did, Marvel wanted a new character for the Marvel Universe. Rather than asking the comic book writers for a new character, they went to the game developer studio and asked them to create a new character for their comic book and universe. It was because the partnership was so good that the rare opportunity presented itself. The source of IP was now coming from the game developer. Now, that’s great partnership. 
 
 Conclusion

As marketing prices increases, getting players is more and more difficult. Brands both in the East and West are the best leverage points as a marketing partner and a creative partner. But the partnerships must be successful. In order to be successful the game developer must work together with the brand to augment the brand value and deeply integrate the brand essence into the game. When a game developer and brand does that, amazing things can happen.

Consolidation in the Worldwide Gaming Markets

Note: This was first published in August 2015 in Tencent Media in Chinese.

Worldwide, this year the mobile revenue market will make up ~$30B USD, and has grown more than 300% from last year, according to Newzoo. A large portion of this is expected to be from gaming. It is predicted in the Chinese Gaming Market will be responsible for 20% of that revenue in 2015 and will outpace the USA in terms of gaming according to news source VentureBeat. The growth has outpaced predictions, and has leaving many to revise revenue estimates.

We’ve seen this same growth in the US mobile gaming markets between 2011 and 2013. In fact Kabam was not just the Top Grossing Game, but was the Top Grossing App on iOS Apple in 2012. Between 2011 and 2013 there a large amount of capital investment went towards mobile games as companies opened up left and right. Many were moving from the Facebook platform into the mobile gaming platform, including Kabam. This was the renaissance of game development on mobile.

The China Gaming Markets are seeing the same thing. In 2014, there were about 4,000 game developers and by 2015 Happy Universe could only estimate the number of developers to be in the tens of thousands or higher, nonetheless about a 250% increase in content creators.

Currently, raising capital for mobile gaming in China has also been easier than in the West. From the Happy Universe graph you can see the outpouring of capital birthing so many gaming companies. And the revenue is there. 2016 will be the first year China mobile gaming revenue is estimated to surprass US gaming revenue at $6.6Billion USD according to Newzoo. Chinese investors have been excited about the growth and know that the Chinese have been perfecting game making and its business model for the last 10 years. This environment can only yield great fruit if the right tree is chosen.

At some point the Chinese gaming market will mature, much like the Western Markets. For this to happen two things need to occur: (1) the consolidation of channels, which leads to (2) the consolidation of content.

First, a consolidation of distribution channels happened quickly in the west and is also happening in China. While in the West there are really only 2 distribution channels: Apple and Google Play for the Android Phone, in China there are hundreds for Android. With so many channels, a game developer really has its choice. However, the channel is looking for the very best content to generate millions of visitors and in turn that attracts more game developers, thus is the virtuous cycle for game developers and distributors. In China we are seeing the smaller app stores forced to partner or ally with other stores to survive. We are also seeing acquisitions of smaller channels by larger ones. For example Baidu has acquired 91.com.

Once the consolidation of distribution channels occur, then the favor turns to distribution channels. When this happens, then the consolidation will then happen on the game developers side. We see this happening in the US. Below is a chart of the #1 Top Grossing Game and Top 100 Grossing games, the percent increase in revenue sits at the top one or the top few games. Between 2012 and 2015, the top grossing game in the Western world grew 1750%. While the Top 100 games only grew 296% in gross revenue.

This has forced many Western game developers to turn towards brands while also making sure the game is top quality and evolve their game systems design to be world-class. For the West, game systems that are the free to play model is a new business model, so they are learning a lot. Also the cost per install has increased in these markets. So many have turned to brands as a way to stand out from the crowd. Kabam has turned towards all three of these and on the branding front has deeply partnered with Hollywood franchises and movies to make global games such as: Hobbit: Kingdoms of Middle Earth, Fast & Furious 7: Legacy, Marvel: Contest of Champions, and our latest Star Wars: Uprising. We believe that with brands help cut through the noise and the compulsion to install is a lot higher. Couple that with an amazing quality game with incredible systems design and you have a long lasting game franchise.

While there are different market conditions and different market regulations, China mobile gaming market, I believe, will also succumb to the same fate. The reasons are the following: (1) It is well known that games are the best way to monetize online within the China markets. And Chinese companies welcome this business model. (2) Thus publishers will be driven to find the most monetizing games. (3) Once they find the most monetizing games they will continue to feature it (after their install obligations are met) as interests are ultimately aligned between a game developer and distributor via a revenue share deal. This will make it harder for new entrants to make it. Competition is harder as the channels are fewer.

Now, it’s more important than ever for game makers from both the West and the East to globalize their games to ensure that their game can even compete. In this new world of consolidation, new entrants are difficult but not unheard of. Surely, if a new game breaks into the top grossing ranks it should either be a great quality game, leverage brands, or certainly global appeal. Either way it will truly be a great game. So in the new marketplace of consolidation — focus on building great games will be the sure fire strategy of success.

No Women Speakers in Tech?

#productsf found them

This was the second year of #productsf — a one day conference focused on product managers by product managers— as this conference was the brain child of product managers (Josh Elman and Ty Ahmad-Taylor).

I went last year, and there was something noticeably different at this conference:

About 50% #productsf speakers were amaze-balls women!

The gender ratio of women speakers was noticeably up from #productsf 2013 as well as other conferences . Last year, I didn’t recall one woman speaker. The first two speakers were women, and then just general awesomeness from all the speakers followed:

Julie Zhuo
Design Director @Facebook
FUN FACT: Her team was responsible for coming up with phototagging

Mina Radhakrishnan
Product @Uber
FUN FACT: Her team came up with #UberCade — call an uber and you might get a motorcade!

Ellen Chisa
Product @Kickstarter
FUN FACT: Her team used the “art way” — metrics minimzed, inspiration maximized, to re-design Kickstarter’s Landing Page

As you can tell, these were not token females, but women who were leading design and product from amazing companies such as Facebook, Uber, and Kickstarter… !

This conference was aimed at the people that really truly have the power to change the world — product managers. Gender diversity in this profession is both crucial and strategic. I’m glad it was more aptly represented and encouraged this year. Product Managers lead, direct, inspire, and encourage teams to build products that change the world — It’s great to see some of the women who are doing it ;).

P.S. These were just some of the women speakers, not all of them…

Great re-caps of #productSF here:
Twitter https://twitter.com/search?q=%23productsf
Blog posts
http://blog.ellenchisa.com/2014/06/16/productsf/
http://www.adamdsigel.com/2014/06/14/recapping-productsf/
https://medium.com/@tyahma/5102ece984c7

Until next year….