China Is Finally Becoming A Lucrative Market For App Makers

Two years ago, while traveling in Beijing, the big surprise for me was how badly local mobile developers wanted to get U.S. customers. They wanted out, not in. Fraud, piracy, way too many Android stores and a still small installed base of iOS and Android devices made the local Chinese market financially nonviable for many developers. Today the picture is starting to look very different. Why? The market is now huge: two months ago, mobile analytics company Flurry reported that China finally surpassed the U.S. in terms of active installed Android and iOS devices.? Local payment options and restructured carrier billing choices with the big operators like China Mobile, China Unicom and China Telecom have made it easier to charge mobile app users. It’s also helped give Chinese consumers legal alternatives to acquiring fraudulent credit card data on Taobao, the eBay of China. The number of alternative Android app stores — while still overwhelming — is consolidating. “Two years ago, a lot of people were getting downloads, but they weren’t making a lot of money,” said Henry Fong, the CEO of Yodo1, which helps foreign mobile game developers enter the Chinese market. “This changed in late 2012 when the big mobile operators kind of reset their carrier billing programs. Monetization on Android has gotten a lot better.” That has meant that local app developers are starting to see their revenues per month soar. Beijing-based mobile game developer and publisher CocoaChina/Chukong said a few weeks ago that their flagship game Fishing Joy is now making $6.28 million per month, mostly from China. “We fully expect that sometime in 2013 that there will be a $10 to 15 million-per-month game in China. This should be not ignored by the Western market,” said Lei Zhang, who is the U.S. general manager for CocoaChina. CocoaChina estimates that the entire size of the Chinese app ecosystem will reach $1.2 billion this year (see below). They add that three games have now reached runrates of $4.5 million per month in the country this quarter. It doesn’t mean that the Chinese market is a cakewalk though. ?The distribution channels and payment methods are completely different than in the U.S. market. There are more than 200 Android app stores as the standard store Google Play isn’t widely available in China. Yodo1 shared this slide at the Game Developers’ Conference last week. You can see the craziness. Two stores

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