A market outlook on China Mobile Gaming Industry based on the job done for one of my client in 2010. Much of the data is based on 2006 market data and 2008 forecast market data.

1. China Mobile Gaming Market Outlook
Independent Studies
For Entering The Market

2. Mobile Gaming : Global Market Overview
Global Mobile Games Impetus For Growth Globally
Download Revenue ($ Million)1
• “Faster network (3G) and devices with larger
3349 screens will help improve the discovery process” –
2003 2004 2005 2006 2007
Paul Goode, Vice President, Product
2592
Development and Senior Analyst, M:Metric3
1,669
• “One thing driving mobile gaming in developed
1,070 market is the availability of faster processor in
mobile device, which enable faster response
469
times, 3-D graphics and advanced sound
capabilities, as well as less-expensive and bigger
$0 $1,000 $2,000 $3,000 $4,000 $5,000
storage capabilities for memory-intensive game” –
Future Outlook Nick Ingelbrecht, Research Director at Gartner,4
(In $ Million)2 photocontent.com
7,350 • Maidy, Shane A, “MobileCorner:Gaming Goes
2011
Mobile”,Licence!, July. 2006. 9(6),p:123.
• “Gartner Say Worldwide Mobile Gaming Revenue To Grow 50
Percent in 2007”; available from
6,500
http://www.phonecontent.com/bm/news/1855.shtml;
2010
accessed 17 April 2008.
5500
2009
$5,000 $6,000 $7,000 $8,000
• Armitt Claire, “Global mobile game downloads set for six fold increase by
2010”, New Media Age, 4 November 2004, p:15.
• Ibid.

3. Foreign Participation On Mobile Data Services Was Capped At 50% On
“Accumulated Basis For Investment” Under WTO.
• Mobile Service Offering
China Mobile Industry Structure5 – Customer get three different services:
­ Mobile handsets
­ Mobile access
­ Mobile content
Upstream • Mobile Content
Equipment – Describe as value added services, other than
Activities
voice. China identify their mobiles service into
two different offering:
Downstream Activities
Software Developer
­ Basic telecommunication services.
­ Value added telecommunication services.
Network Services Included in this categories were, wireless
Key Learning
(Access) value added services e.g. SMS,MMS, Mobiles
Games.
• Foreign Involvement In Mobile Data Services.
– As China accession into WTO in 2001, for the
Focus Mobile Data Services value added sectors, foreign ownership was
capped 50% on “accumulated basis for
Area (Content) investment”.
– WTO Agreement does not cover game developer
which currently need to be 100% owned by
local.
• Availability of 3G licenses by 2009
– By 2009, all four major Chinese telecom
operators – China Mobile, China Unicom, China
Telecom and China Netcom.
1. Lam, Michelle, A Value Chain Study Of China’s Mobile Industry (Tekes. • Unbalanced of development
December 2003) p:16 – Exist unbalance development in China, National
Penetration rate is 19.5% but in Beijing over
70%.
• China Mobile controlled 65% of the China mobiles
market with total subscribers amounting to 360
Risk
Stage
million (as Dec 2007). Market entrant had to certain
extent dictated by China Mobile.

4. Mobile Gaming and Online Market In China Will Depend On Selecting The Right
Partner and Audiences As China Accession To IPTV On The Introduction Of 3G
Service by April 2008.
Mobile Game Revenue Online Gamer Demographic Matrix
(in $ Million)6 For China Market8
65200
$60,300
Age Group Gender
$50,300
• Below 30 years old • 41.7% of all gamer
$40,300
with relatively are women.
$30,300
higher education and
$20,300 income.
14700
$10,300 • From this group,
4258
$300 298 923 31.3% between 18-25
2008
2004
2005
2006
2007
and 19.7% between
• “IDC Predict Steady Growth in China’s Online Gaming Market Over The Next 5 Years” 26 and 30.
Computerworld Malaysia 12(12), 21 April-11May 2006; available from
http://www.computerworld.com.my/printerFriendly.aspx?articleid=536&pubid=4&issueid=90
$ Spending Other profile
Market Player Based on Revenue • Single represent • 50% of online game
(In $ Million)7 dominant group of were professional
online gamer with
20% 10.6% are those with
50% 13%
a monthly income of
more than USD400.
11%
Shanda
Giant
The9
60%
Perfect World 1. Entertainment Asia,”Survey Show Mainland’s Online Gamers are
Others Mainly Singles With Higher Income”, available at
1. RedlineChina,”Games Market In China Up 60% in 2007 to $1.66 billion”, available from http://www.entertainmentasia.com/news_detail.php?ct=1002&nid=894
http://redlinechina.com/main/?q=node/745; accessed on 28 April 2008 accessed on 19 April 2008.

5. China Mobile Games Industry Focus On W-VAS Content Delivery.
Device • Content Provider
Manufacturer – Provide content to
(Equipment Monternet/Uni-Info
Provider) – Provide development platform by
collaborating with Terminal
Provider.
– Provide content to Service
Key Learning
Provider
Publisher • Consumer
(Service Carrier Consumer – Get the mobile phone from
Provider) terminal provider.
– Subscribe for mobile service from
the carrier.
• Device Manufacturer
– Provide all the equipments to
Monternet / carrier.
Uni-Info • Monternet, operated by China Mobile
• Uni-Info, operated by China Unicom.
• China Mobile require that all games
Stage Risk
need to be submitted to Monternet
before it can be approve.
Developer Porting Service • Approval process can take up tp 6
(Content (Terminal month.
Provider) Provider)

6. W-VAS Content Delivery Business Model mirror NTTDoCoMo’s business
model and revenue sharing principal.9
• Content Delivery (1A and 1B)
– Service provider provide content
to Monternet/Uni-Info.
– The available content (on-deck
4 selection) then offered to the
consumer.
• Consumer (2)
Key Learning
– Get the monthly statement from
Publisher 3 2 their carrier.
(Service Carrier Consumer – Made 100% payment to the
Provider) carrier.
• Revenue sharing (3)
5 – China Mobile take 91% or 85%.
1A
– China Unicom take 90% or 10%.
1B • Off-deck alternative.
Monternet / – On occasion, if consumer get
Uni-Info content direct from the service
provider, consumer will be direct.
• China Mobile require that all games
Stage Risk
1. Juniper Research, “China – The 3G Opportunity” Hampshire, UK, 2007 p:6. need to be submitted to Monternet
before it can be approve.
• Approval process can take up tp 6
month.
Sources: Juniper Research.

7. China Mobile Games Development Platform Use Similar Development
Platform As In The US.
Platform Characteristic Devices
J2ME (Java-based) • Enables Java-based games to be played on mobile phones and PDAs Nokia Series 40 and 60 Devices
• Allow mobile device makers, wireless carriers, and enterprise to N-Gage
quickly develop, install, and run new games on wireless networks. Motorola T720
• Widely accepted standard that works with multiple platforms
• Improves graphic and multimedia capabilities to suit mobile
devices.
BREW (C-based) • Optimize memory allocation, making suitable for mobile devices Motorola T720
with limited resources. Samsung A530
• Support game operators with such capabilites as secure over-the- Samsung A610
air distribution of applications, billing and payment, and service
monitoring and support.
• Allow games to be played more quickly because it runs on C rather
than Java
Mophun (C-based) • Enables rich gaming experience with advanced 3D graphics, Sony Ericcson
enhanced audio, and multiplayer capabilites. Motorola
N-Gage
ExEn (Java-based) •Provide good graphical capabilities and fast processing speeds Philip
•Enables additional game-development capabilities (such as sprite Alcatel
zooming, parallax scrolling, ray casting, and rotations) Mitsubishi
Panasonic
1. O.B.Soh, Jason, and C.Y. Tan, Bernard; Mobile Gaming, Communication of The ACM, March 2008 (Vol 51-3).
Notes:
1. Both Monternet and Uni-Info had been notably accepted both Java and C-based development platform.

8. New Market Entrant To China Need To Follow The On-deck Approach.
• Market Entrant Alternative
– Directly through the carrier.
­ Content Provider can choose either to
partner with China Mobile or Chi
Key Launching Strategies
Unicom.
– Through Monternet
­ Operator does the delivery, billing and
revenue collection.
­ Content provider focuses on marketing,
content production and brand creation.
Publisher • Have a local presence
(Service Carrier Consumer – On Dec 17, 2007 joint regulation from
Provider) MII/SARFT stating that video download
services must from now on be state-
controlled, it is aimed at both Internet and
Mobile Internet content providers.
– Establish a local business and technology
team controlled by your “own-man”.
Monternet /
Developer Uni-Info
(Content • China Mobile require that all games need to be
submitted to Monternet before it can be
Provider) approve.
Stage Risk
• Approval process can take up tp 6 month.
• Collecting the cash and getting money out of
China can be difficult.
• Protecting your IP right can be extremely
difficult.
• Competition companies is about 800
companies.

9. Success Cases Of Entrant To China Mobile Gaming Market – Australian Based
Company1 Focused On Mobile Sport Games Based On Java Platform.10
• Market Entrant Alternative
– Through Monternet
­ The company makes strategic alliance
with local ISP provider in this case
Monternet.
Key Launching Strategies
• Have a local presence
– Top management transferred from Sydney
to Beijing.
– Establish a local business and technology
team controlled by your “own-man”.
Publisher • Protect IP right
(Service Carrier Consumer – Makes agreement with China basketball
Provider) superstar to gain exclusive right for content
related to him.
• Retain money and re-use for expansion
– The company used back the fund generated
from the operation to expand their
operation without taking the money out.
Monternet /
Developer Uni-Info
(Content • China Mobile require that all games need to be
submitted to Monternet before it can be
Risk
Stage
Provider)
approve.
• Approval process can take up tp 6 month.
1. Siponmaa, Ari. “How To Fail and How To Succeed in China”, available from
http://websrv1.tekes.fi:8080/opencms/opencms/OhjelmaPortaali/Kaynnissa/NETS/fi/Dokumenttiarkisto/Viestinta_ja_aktivointi/Seminaarit/Kiina_mobiili/Mobile
; accessed 20 April 2008
Notes:
1. The Company wants to remains anonymous.