Episode 59: Going Global - How Chinese Gaming Apps can succeed on the global stage

Dominating the App Store charts, Chinese mobile games are captivating players worldwide. But what's their secret? 

This episode of the Mobile Games Playbook dives deep with Liftoff’s experts, Kalle Heikkinen, Chief Game Analyst, and Inka Reinola, Game Analyst, to unpack the winning formula behind China's mobile gaming giants. We'll explore how China’s mobile market became a global force and discuss the effective monetization strategies and gameplay mechanics fuelling the success of Chinese games.

Join us as we unpack the secrets of Chinese mobile game success and how developers worldwide can learn from their winning formula.

Remember to subscribe, leave a review, and check out our websites, https://liftoff.io/ and https://gamerefinery.com/, for more information on game development topics and strategies for growing your game.

For more on what's driving the success of Chinese apps, check out Liftoff's Guide to Growing Chinese Gaming Apps Overseas: https://info.liftoff.io/2024-growing-chinese-gaming-apps

Transcript

Jon Jordan: Hello and welcome to the Mobile Games Playbook. Thanks for tuning in for another episode. This is a podcast all about what makes a great mobile game and what works and doesn't for mobile game designers.

I'm your host, Jon Jordan, and I'm very pleased I have two experts joining me again today. They've been on the podcast many times before, so it's good to have them back. We have Kalle Heikinnen, the Chief Game Analyst at Liftoff. How's it going, Kalle? 

Kalle Heikinnen: Excellent. How about you, Jon? 

Jon Jordan: Not bad, yes. We also have Inka Reinola, who is a game analyst at Liftoff. How's it going, Inka? 

Inka Reinola: Great. 

Jon Jordan: Good. You're showing off your microphone there, making me jealous, very impressive. Good. Of course, we're not talking about microphones today.

If you've listened to the podcast before, you will know that Kalle and Inka are Chinese game experts. We have done an episode before on the Chinese market. This time, we're going a bit more international. In this episode, we're looking at the games being developed by Chinese developers and how they are taking those global.

One of the big trends we've seen is that the Chinese games market has probably been the biggest for a decade [00:01:00] now. But what we've seen, more recently, is very high-quality games coming out of Chinese game developers on mobile and other platforms and then really being successful in global markets.

Previously, they may have been limited more to China and Southeast Asia. So that's what we're focusing on today. And Inka, you're going to kick us off. So, what are the key trends that you're seeing as someone who looks at this market very closely? 

Inka Reinola: Yeah, first of all, China takes 31 per cent of the worldwide mobile game market. So it's quite massive, but there's still room to grow. Anyway, it has been successful in global markets. And. I think there are a lot of different kinds of these bigger factors that, from the China side, affect this. Like first of all, there's like a big talent pool of Chinese people nowadays because they are technologically advanced as a country, and it's also very like the state organized this kind of technological development too, and it affects mobile companies.

So there's [00:02:00] that. They also have this global strategy going on from the state level. So it's very much focused that way. And there's also, I can see that Chinese games have some characteristics that Western games don't really have that have affected this success, too.

First of all, I think one thing is the monetization. They're a bit different. They do gachas very well. They do events and live ops really well. And they also have a lot of content. They have massive teams and, like I said, a really great talent pool of people and a lot of people working on those. So they can make these kinds of massive games that are much bigger compared to Western markets, I would say. 

Jon Jordan: It definitely seems to be the case that China would still be seen as a relatively low-cost place to make games. Obviously, these things are all relative. There are obviously cheaper places now, but compared to maybe, the West Coast (of the USA) is still quite cheap, which means they can have bigger teams.

And I guess what [00:03:00] the interesting trend is, is that they've always made really good games that have appealed to the Chinese market, but gradually over time, the quality has risen a lot. I think, obviously, on the mobile side, we've had the Call of Duty-type games that were developed in China and published by Activision.

They've learned very well over the years how to develop that market. It's interesting that you said that at a state level, the global market is now seen as something they, the Chinese developers, are encouraged to enter. Can you talk a little bit more about that?

I didn't know that it was a state level they were doing that. Is there any more detail? 

Inka Reinola: At least in China, the States usually have a lot of these kinds of plans, like on a state level that we will do this in five years or something. They have put a lot of effort into technology, such as developing 5G technology, which affects mobile gaming because of the more stable and better internet connection. But maybe Kalle can add something to this if you have it in mind. 

Kalle Heikinnen: Yeah, just on the go [00:04:00] global initiative that you already mentioned, just to elaborate on that a little bit further. So this includes all kinds of like financial incentives and tax breaks and whatnot to encourage Chinese companies and not only gaming companies, by the way, but this applies to many other industries as well, but that includes gaming too, so to encourage them to go overseas, expand their businesses.

And in gaming, what we see this translate into is, for example, these big investment deals with Western companies. So we've seen Tencent acquiring pieces of different kinds of gaming companies, for example, from Remedy and stuff like that. So that's definitely one thing, but then what I would also add is that it's like an encouragement for Chinese companies to go overseas, but there's also kind of a need to push elements to it as well. So they, the domestic [00:05:00] market in China, as many of you probably have heard, is extremely competitive and launching a new game there has been very difficult. It has been difficult for Western companies as well as local Chinese companies.

So, in many ways, you could argue that Western markets are easier, and the competition in many of the genres—especially in mobile games—is a bit softer than it is in China. That's why we see a lot of Chinese games finding success, especially in 4X strategy, for example, and in many subgenres in the RPG genre, for example.

Jon Jordan: Is that sort of playing into what Inka was saying about having a large team based on LiveOps? We probably mention LiveOps every time in the podcast. And it's not, I guess it's not that, Western developers are not good at LiveOps. When you have LiveOps teams that are, sometimes LiveOps teams are like hundreds of people, which are bigger than the dev teams or the complete teams for [00:06:00] Western developers. It just seems to be a different scale when it comes to LiveOps. And I guess when you're talking stuff like 4X, those games are very driven by LiveOps and events and monetization, aren't they? So I guess that certain genres that play well with LiveOps are particularly going to be relevant for Chinese developers to push globally. 

Kalle Heikinnen: That's very much true. So we, like everyone, talk about Genshin Impact, which has a huge dev team to support the enormous LiveOps machine that it operates. But we see this also in genres that might be a little bit surprising. We always talk about Chinese mid-core games being very big domestically and overseas. Something that we are seeing right now, which is very interesting, is their expansion into many casual genres. So there are examples like in the Merge2 space is actually a very good example. Merge Mansion was the king of the hill for a long time, but nowadays, if you look at the markets, Travel Town and then Gossip Harbor from [00:07:00] China have actually overtaken Merge Mansion and I would argue that one reason behind that is the masterful execution of LiveOps when it comes to, for example, Gossip Harbor. Seaside Escape is another Chinese Merge2 game from the same publisher as Gossip Harbor. But Inka, I know you're the expert on Gossip Harbor. Do you have anything to add? 

Inka Reinola: Yeah, I just wanted to add that as some background; Gossip Harbor copied the idea from another merge game called Love and Pies. So the kind of art style and the story and everything is the same, but what they did differently is that they added a ton of different LiveOps things and more monetization in the game, and they started doing this at the beginning a bit more gradually, and they still like frequently add still new kind of events, and they are like looking at the market all the time like what's new and what's fresh, and they are adding that [00:08:00] in there and then Gossip Harbor has been really successful and a lot more successful than Love and Pies which was the original game so they really know how to monetize and how to engage the players.

Kalle Heikinnen: Yeah, if someone asked me about live event trends in the casual space, I would advise them to download Gossip Harbor or Seaside Escape and look at the latest. 

Jon Jordan: Do you think Western game developers are still very focused on what I call the game, the title, the feel, and the characters? I remember I don't think I played Love and Pies, but I remember it being quite fresh and a very, pretty small team. I think it was out of London, or was it Helsinki? I can't remember. 

Inka Reinola: It was London, yeah. 

Jon Jordan: Basically, they were associated with, I think, Supercell back in the day, and I don't know if that still is the case, but they were very much a, what I call a typical sort of, say, UK-based startup. Quite small but really passionate about what they were doing. Very high quality. But probably for them [00:09:00], the game was their focus. You can imagine if you're starting up a game studio, LiveOps is not the thing that gets you outta bed in the morning, Whereas I think that maybe not just in China but in other places in Asia. they've understood very quickly that LiveOps is the thing that is the game, the framing of it, the theme is good, that can be, it's not unimportant, but the things that can make your game successful financially is getting those LiveOps in there, and actually the players want a game that's alive, they want that.

But is that too obvious a sort of a characterization, do you think? Or is there still some truth in that sort of Chinese developers just, we're gonna go for live ops, and that's how they're winning?

Kalle Heikinnen: I totally agree with that statement, and with this, we come back to what we were talking about earlier about the team sizes and, you know, the resources that they can just throw at the LiveOps-ing the hell out of these games and then some of the Western competitors that just might not have [00:10:00] those resources to build the kind of structure that these Chinese publishers and the Chinese games have, and that is actually something that is really important for all the Western developers to remember that no matter what genre you are in, it's very likely that you already have Chinese competition. If not, you will have some very soon, and when that happens, they will have very different kinds of resources to build LiveOps schedules, cadences and the event portfolio. So that is a very good thing to remember when thinking about potential competition in the future and how that might affect how you need to stand up to that competition.

Inka Reinola: Yeah. Sorry. I just wanted to add that. I think Chinese developers also know how to balance forced and optional purchases. It's also related to the fact that there's a lot of fly-off content. So, for example, there are things that you can purchase, but you're [00:11:00] not really forced to do that in order to develop in the game. For example, if there's an event and a character, you can try it out, and then you don't really have to purchase it. It's encouraged that you can purchase it, but it doesn't really matter in your gameplay if you don't, and also if there are live events that need progression through like a currency or something. You're not really forced to do that, but it's encouraging this more like doing the purchases. 

Kalle Heikinnen: Yeah. I would say the monetization toolkit that the Chinese developers have is just more expansive. There are different ones, and there's a big variety of things that they are able to do. They've been able to test that out in the Chinese domestic market already, and they can then utilize that with their overseas expansion. Now, of course, what we sometimes see is that they might take into account the Western markets. The audience here [00:12:00] might have different perceptions when it comes to how aggressive the monetization can be and stuff like that.

But as Inka said, they're also very good at making the monetization feel like you don't necessarily have to engage with the monetization side of things. I can also just engage with the game without paying any money. So yeah, they're very good at that. 

Jon Jordan: And I think it's a good point that we sometimes have the perception that everything coming out of, say, China or Southeast Asia is all pay to win, but clearly, as you pointed out, it's masterful LiveOps, and obviously players who are playing those games are not turned off by the LiveOps, they're excited by it, and they monetize more, and it's finding out what your audience wants, and I think we also clearly, have to say that Western developers, it's not like they're stupid and can't do it. Clearly, I guess Supercell again, the great example of someone who realized they had a problem not doing LiveOps very well and have really focused, the last couple of [00:13:00] years on LiveOps and have massively accelerated the monetization of some of their most popular games by really taking this seriously and finding out what they needed to do.

We've mentioned some of the genres and stuff, but obviously, for me, who doesn't play so many Chinese games, the sort of ones that come to mind are still very focused on what we might, what I might call Chinese IPs. There's certain genres that are very popular in China, and the games we're seeing being popular globally, such as Black Myth: Wukong, is it partly that Western audiences are now more open to that sort of culture? Or are we seeing it more to do with Chinese developers finding their own IP? Obviously, Genshin Impact is just a totally invented IP that happens to appeal globally.

Any thoughts on that? 

Kalle Heikinnen: Yeah, we actually discussed this with Inka before the podcast recording. It's a very interesting topic because [00:14:00] It feels like, at least for a long time, that Chinese developers have thought that utilizing Chinese cultural elements or Chinese cultural heritage is maybe not something that they want to bet on when expanding to overseas markets.

But then again, as you said with the Black Myth: Wukong which definitely taking advantage of these Chinese characteristics. I think part of that reason is that they really wanted to do that for that game to be a hit in the Chinese market as well. So obviously catering, if you want to credit that audience, then using the Chinese cultural elements makes a lot of sense, but as we have seen, this game has been a massive hit also in the Western market.

You could then make the argument that utilizing those assets can actually be super interesting for the Western audience as well. So it's going to be very interesting to see now, looking at the future, whether we are going to see more [00:15:00] games that take advantage of or explore these Chinese cultural elements.

I don't know, Inka. Do you have anything to add? 

Inka Reinola: Yeah, I wanted to add that I feel like overall, people are maybe a bit more open to having different kinds of cultural products than just like US culture-based products in mainstream things too. In the past everything in games was targeted at the US, but now I think they're like we have seen more things that can also happen somewhere or in some other part of the world too.

And it's maybe because people are more aware of diversity. I don't know, like they just have different kinds of tastes and like to explore new things that are not just the same kind of thing. 

Kalle Heikinnen: And I would say that one interesting thing is that Chinese developers, for example, with Genshin Impact, I think one interesting thing about that game is that [00:16:00] they have these different regions or areas in the game, and one of them called Liyue is very much rooted in the Chinese culture. If you look at the architecture and art there, the festivals, and the characters that occupy the area, it really has that kind of Chinese feel. Then there's also another area called Mondstadt, which definitely draws inspiration from medieval Europe. It's quite clear, particularly like Germanic culture, and that is reflected in the architecture there and the characters and stuff like that. So I think that's a very clever way to take into account the sort of global audience that you have. By having these sorts of targeted elements in your game that can really resonate with specific geographical areas cultures, or countries. So, that has been very clever. 

Inka Reinola: And I also would like to add that, like in the mobile game market, I think, in general. At [00:17:00] least in the art styles, like, for example, in Chinese mobile game markets cartoon art style is not very popular, but in the US, It's very popular, and many of those Chinese company games have a cartoon art style, so they're like catered for the US audience, so it's not like they make the Chinese type of games in the US market, but they certainly look at what is hot in the US market already and then try to do that mostly.

Kalle Heikinnen: Yeah. Yeah. I think there's been a big anime boom in the Western market. So they definitely also like taking that into account when thinking about their art style decisions. And also, it's good to remember that overseas markets do not equal Western markets. So markets like Korea and Japan are hugely important for Chinese developers. They're big markets. So also, if we think about anime art style and stuff like that is something that we all know that resonates very well in Japan. So there are reasons to [00:18:00] explore that kind of art style also, even if you're not. interested in the Western markets at all. 

Jon Jordan: I guess a game like, Gossip Harbor, you wouldn't know, unless you looked at it, that it was a Chinese game. It's just a typical casual game. 

Kalle Heikinnen: Yeah, that's true. That's true. Yeah, I guess in the casual space. It might, now that I think about it, be a bit harder to spot.

Inka Reinola: But also, actually, in the mid-core, because there are titles like Top War and Kingdom Guard, and those have this cartoon look, too. They're 4X games that also have some casual elements. So yeah, a lot of Chinese games do this. If there's some kind of casual element, at least, they use the art style that resonates. 

Jon Jordan: And I guess, more generally, I think the culture and IP are becoming more global. I was just thinking, I've never played one of the games, but I know there's like a big, I guess it's a card game called Fight the Landlord, which is like a, just a big genre in China. And I don't know how successful those games have been outside China, but you can imagine as, in terms of cultural exchange, if [00:19:00] a game is big, in a different country, then some people will be like, Oh, I don't know what that game is, it's probably very heavily based on Chinese culture. So maybe that one is not a good example. I don't know how well it would translate. But, it'd be interesting to play that game. It's gives a feel for what other sort of cultures are playing. 

Kalle Heikinnen: Yeah, that's true. There are these games like that Fight the Landlord which is a good example. Chinese players love to play gambling games, which are like, 15 of the top 200 grossing in China, but they would make no sense in the US.

Jon Jordan: We used to talk a lot when the Chinese market was opening up for Western games about localization and all that sort of stuff. And the same thing for Japan and Korea as well as those big markets and how Western games needed to be localized. I get the feeling we don't talk so much about localization anymore, but is that just a blind spot for me, or, when these Chinese games are going global, I guess everyone now treats or certainly Chinese developers treat the market as a global market, then you don't have to localize it because you've designed it to be global anyway, or is the [00:20:00] localization an important thing? 

Kalle Heikinnen: I think it's important, and in one way, this does not apply just to the Chinese developers. What we see as a successful strategy with LiveOps, for example, is that you have these seasonal events that resonate with various cultures and countries around the world. So you have the Diwali celebrations. You have Chinese New Year, you have Halloween, et cetera, et cetera. I feel that is very important for many games to address the different players that you have in different geographical areas. And it makes sense, even if you weren't just targeting, let's say, the US market, but there are very big minorities inside just, for example, the US, for example, very large, like Chinese-based minority there.

So addressing that audience can be very important for your game. So I would [00:21:00] say that is one aspect where I would say that we see, I don't know if that is how much that is localization or culturalization, but that is definitely a way to address different kinds of audiences.

Inka Reinola: Yeah, and I can add that, in general, if you compare the Chinese mobile games to the top games in the Chinese market, they are very different from the games that China has brought to the US. For example, Chapters, which is an interactive story game, is certainly catered to the US audience. At least, I feel it's very US cultured. The studio is based in Silicon Valley, but it is a Chinese-based company. So it looks like a Chinese game, but if you look at how they do the content, the content itself is very US-based. So, for example, they have also made this really short app, which has these micro dramas, that one is something that [00:22:00] Chinese people have developed, and it's a very big hit there, but they have just brought this to us, and the themes and everything in those stories are very US-based. 

Jon Jordan: And that's a good point that maybe we've been talking in a slightly monolithic sort of idea of there's these Chinese companies, and then they're going globally, whereas actually a lot of, the bigger games companies now may have their development teams in certain lower-cost places, but they'll have maybe publishing teams or certain services will be in their core market. So as you said, I imagine lots of companies have a US headquarters or that's their sort of corporate headquarters, but their development teams throughout China, In that sense, you get the best of both worlds because you get the larger teams who are focused on live optimization, but you have the local knowledge that you need for the big markets.

The US is the second biggest market after China, so that's probably what they go for. Is that something that you think they particularly focus on? So when we're saying global, actually, they mean US and a bit of Western Europe because those [00:23:00] cultures are the same? 

Kalle Heikinnen: I would say it depends. As I mentioned, Japan is one of their neighboring countries, and there is a sort of cultural overlap that doesn't exist with China and the US but does exist with Japan and China. One concrete example of that is this Chinese historical era called the Three Kingdoms era, there are many different kinds of entertainment products based on that era, but 4X strategy games set in the Three Kingdoms era are particularly successful in the Japanese market. If we look at the Top Crossing 200 in Japan, we can see several of them, and usually, and maybe even most of the time, they are made by Chinese developers.

So I would say that there are genres, and there are certain themes that just more naturally resonate with the Japanese audience. And also when [00:24:00] we talked about monetization, stuff like that, it might still be that, for example, gacha monetization is something that is still popular with the audience in Japan, as opposed to many Western markets. Chinese developers know a lot about gacha monetization. So there are a lot of natural synergies when it comes to publishing, when it comes to Chinese publishers publishing their games in Japan, and both in terms of monetization as well as theming.

Jon Jordan: As we're coming to an end, it's always good to give people a bit of homework. We've mentioned a few games. What games do you think people should be downloading and playing to get a sort of taste of what we've been talking about?Maybe the ones we've already mentioned?

Inka Reinola: Gossip Harbor is a really good example, and it's very successful and one of the top games in the merge genre, so that one definitely. And then I would [00:25:00] say the Chapters games are also very interesting. It's very different from many other games in the market, so worth checking out.

Jon Jordan: Maybe you could download Gossip Harbor and Love and Pies and then do a comparison between the two. That would be for advanced-level homework. 

Inka Reinola: Yeah. 

Kalle Heikinnen: Let's go with those that Inka mentioned. Yeah, I think those are good. Good. 

Jon Jordan: Thank you very much to our experts for their conversation today.

Thank you, Inka. And thank you, Kalle. And thank you for watching and listening to the podcast. However, you consume it every episode. We are talking about what's going on in the mobile game industry, the biggest part of the games industry, globally! There is so much going on all the time. Please subscribe. Don't miss out. And we will see you next time. Bye bye.