China

Mobile gravity, and what it may mean for games (part 2)

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Link to Part 1

In hindsight, a lot of my first post was about mobile gaming as the classic low-end disruption to PC&console gaming – mobile devices may be more constrained across the board (power, storage, screen size, input precision etc.), but they can compete along other dimensions (almost universal availability to play, wherever your are; hardware that’s not available to PC&console, e.g. camera, motion sensors etc. that unlock new design space; etc.). And also using the disruptive innovation analytical framework, it may very well be possible PC&console are over-servicing the player needs – e.g. it’s nice to have ever-more realistic graphics, but there’s probably a case of diminishing returns for actual player value delivered by these graphics. (The rest of the framework applies nicely after this setup – I won’t bore you with writing out the conclusions.)

I ended the first post with a quote from The Terminator series – “there’s no fate but what we make for ourselves.” In my view it is by no means a fore-gone conclusion that the PC&console product category will be sucked in by mobile gravity. It is possible they can thrive at an arms’ length. Again, to think this through we can look from the lens of “jobs to be done”. Some examples here:

  • The cinema business is thriving in the digital age, and IMHO suffering minimal to no impact from online piracy. One big reason is the industry has convinced the audience that going to the cinema is a fun and unique experience compared to other film-viewing experiences – it is the aggregate of the high-tech audio-visual hardware (e.g. IMAX screen, Dolby surround), the mood & atmosphere of the cinema, the social event characteristics (group activity with friends / family, it is almost socially unacceptable for someone to go to the cinema by him/herself), as well as any differentiating service the cinema tries to provide (e.g. adult-only viewing in laid back seats with food&drinks service)
  • The arcade business in Japan. I’ve not visited Japan yet, so this is mostly hearsay, but my impression is that there is still a rather lively arcade business in Japan, and it has been ingrained somewhat into the cultural fabric. It’s worth pondering why people still go to arcades when there’s likely a better selection of games at home on their consoles – what are the jobs being done?
  • Similarly, the PC cafe ecosystem in Korea, and other developed Asian economies (e.g. Taiwan, and the coastal area of China). As a ballpark figure there are still something like 10,000 PC cafes in Korea with probably a million PCs. As far as I understand it, it is a social norm in Korea for people to go to a PC cafe after work/school and play for a couple of hours, just like how they may go to bars / restaurants / clubs. It is a quite mainstream social activity – with emphasis on social being a primary job being done here. This is why Korea is probably the most advanced country in the world in terms of internet connectivity (fiber to the home, 4g networks etc.) and yet people still flock to PC cafes.
    • If you are wondering what effects smartphone adoption has had on Internet cafes – in China actually there’s a renewed growth of Internet cafes (largely driven by government removing stringent license requirements), and a new wave of more sophisticated cafes – WYWK for example has customized hardware/software as well as a mobile social app that generated headlines previously for being a hook-up tool (sex has consistently been a primary “job to be done” of social apps). Also if you visit any PC cafes in China, you’ll notice that the primary application (by far) are games, similar to Korea

To go on a bit of a tangent – in the specific case of PC cafes, I think there’s a strong argument to be made that a PC games developer can be financially viable by focusing on this channel. I don’t mean just using biz-dev tactics to ensure an install base / player-base in PC cafes – most competent publishers know how to do that already. Instead, I’m thinking about game experiences that acknowledge the PC cafe setting and strategically leverage them in the game design, e.g.:

  • Core gameplay that really takes advantage of keyboard+mouse input method
  • Strong multiplayer focus, if not multiplayer only. PVP or team-based PVE
  • Preferably session-based play, with minimal setup & downtime in between sessions
  • In-cafe location-based-services which also scale online, e.g. in-cafe tournaments/game-modes, local social features, local leaderboards, cafe vs. cafe leaderboards etc. Also provide incentives to repeat play from the same cafe (e.g. cafe-based reward loops – this aligns the developer’s interests with the cafe’s interests, and also makes sense for players because it creates a more stable local scene)1

The first 3 points are super generic and pretty much applies to all the top PC PVP games right now (League of Legends, DotA 2, CS:GO etc.). They can be enjoyed in any setting but they are clearly best enjoyed when you and your friends are physically sitting together. The last point has not been done well for any game developer (none that I know of)2, probably partially because PC cafes are not a thing in North America and that’s where most of these games are developed.

The above side-discussion is to illustrate one area where PC developers can use an existing infrastructure to hopefully sustain against mobile gravity. At the end of the day, players will continue to seek fun / engaging gameplay experiences, and if these experiences are conveniently available and part of an accepted lifestyle (as PC cafe gaming is in Korea), then PC gaming as we know it today can continue to thrive.

To go full cycle back to the start of this discussion series though, developers should be super conscious why they made a platform choice in the first-place. Is it because your existing skill-set / dev-tools / infrastructure are tied to a platform? Or is it because the gameplay experience you are going after are best suited to that platform’s strengths? The chances of success in the former case are much lower than the latter.

And perhaps one other take-away, for all developers regardless of their platform choices – be conscious that with regards to the general internet, the mobile internet IS the internet and to a first approximation everyone should probably be thinking mobile first when it comes to around-the-game experiences (like community forums and other social engagement).

  1.  Take note what Magic: The Gathering did for its hugely successful local play programs, and recreate that experience digitally with PC cafes as the venue ↩
  2. Interestingly, ecosystem developers in China have made serious attempts at this space – but because of lack of integration with the core game, and sometimes malicious intent, the results are shaky from the players’ perspective ↩

App Store “10x” download speed boost in China

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A bit of news that has got minimal English coverage in the past couple of days: Apple seems to have rolled out a CDN update for their App Store in China, with folks talking about as much as a “10x” download speed increase for end-users.

This is the type of unsexy but critical infrastructure work that at the end of the day will make a big difference for the user experience, and therefore, a company’s top line (and bottom line). I tried updating some apps while in China a few weeks ago – it was painful to say the least. Hopefully this dramatically changes things. And this is also the kind of stuff local entrepreneurs in emerging markets need to agonize over – how do you make do with poor infrastructure, be it broadband penetration, availability of credit cards (and other payment methods), or just poor end-device computing power (cheap PCs).

I think this story is interesting for potentially another angle – I’ve always wondered how much of the iPhone sales in China are driven by luxury goods buyers, the type that are usually late tech adopters. I’ve noticed anecdotally that many owners of early version iPhones in China were the well-to-do who used it as a status symbol – I doubt these folks likely explore the App Store that much. On the other end of the scale, there was and has always been a active scene of sideloaders, and I suspect iPhone jailbreak rates are much, much higher in China. These two opposite groups of users both have little use for the official App Store – and that could be why they’ve put up with slow App Store speeds for so long.

The “Others”

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Techrice has a good recent post on China’s army of hardware vendors creating competitive Android smartphones. Benedict Evans has also written about this some weeks ago, and I will borrow the category name from his eye-popping chart as the name of this post.

Having spent a week back in China, I’ve had a chance to witness first hand the Android devices commonly tracked as “Other” in market share reports. A good friend of mine showed off his Jiayu G3 and quizzed me on the price. I guessed 2000 RMB (a bit over $300), since this was the price point for a mid-high level phone in my memory, and the production quality of the device (I didn’t know the brand at the time) seemed quite high. I lowered my bid a number of times before he finally said, “it’s under 1000 RMB.”

When I got home that night, I did some quick browsing of Jiayu’s website. Interestingly, this small vendor from the west of China (registered in Shaanxi province, hardly a place renowned for consumer electronics, as far as I know) is on the brink of releasing its latest flagship device in its most premium line, the G series. The upcoming G4 boosts a quad-core CPU, a gorgeous 4.7″ screen, and a 13MM pixel back-camera. It’s not exactly the Samsung Galaxy S4, but it will be on sale at a fraction of the price – I couldn’t find the exact price, but based on the marketing positioning, it should be around 1000RMB (roughly $150).

Jiayu is obviously not the only game in town. On its community forum, enthusiastic supporters of the brand were quick to dismiss the upcoming iocean X7, which seemed to be a hot competitor of the G4. So I went over to the iocean site for the product to check it out. The X7 boosts some equally impressive specs – the same quad-core 1.2GHz CPU and a 1920*1080 resolution 5″ screen (which is a PPI of 443, even higher than the Galaxy S4 I believe?).

Now, both of these devices are not live on the market yet, so the exact price points are not known, and whether they actually are as advertised remains to be seen. However, there are already a few things worth commenting on.

First, the heated e-commerce wars in China of the past few years, as well as the prevalence of Taobao (which popularized shopping online), has meant that it is legitimately possible for a Chinese hardware startup to try direct selling smartphones online, as opposed to navigating the deeply complex offline handset retail landscape. This doesn’t mean that offline handset retail is unimportant; it just means the entry barrier has been significantly lowered.

Second, in my opinion these devices reaffirm the argument that it is near impossible to achieve differentiation in Android manufacturers based on hardware. It seems that any vendor worth his salt can create sexy devices, with design inspirations from the leading brands such as Apple and Samsung. And the moment the top brands reveal their latest hardware design, you can be sure that players like Jiayu / iocean (of which there are many) will take note. (After all, the current hardware paradigm revolves around a big piece of touchscreen-glass – how different / unique can your design be?) This is why Samsung is trying so hard to introduce software features unique to its hardware, as the specs alone do not justify the price premium.

Third, it’s exciting to see Chinese companies pick up so quickly the marketing execution skills of global brands. Both Jiayu and iocean’s websites were clean and minimalistic, which could be taking a cue from Apple. It was also funny to see these local brands copy each other in terms of marketing tactics – Jiayu and iocean used the same icons where they list out their shipping and return policies (7 day free return, 15 day exchange etc.). But beyond website design, these companies are also savvy enough to build and leverage their consumer community – both companies’ discussion boards seem to be quite active, with vocal posters discussing topics ranging from software/games to debating how their phones stack up against the competition. Jiayu’s discussion board gets 10,000 posts a day, which is not a trivial number by any measure – and this community approach is certainly distinctive compared to the big brands (which usually don’t offer a general discussion forum, and instead only a customer support board).

To sum it up – I will enjoy following up on this topic and watching to what extent these scrappy Chinese hardware companies can impact the market. This could be a very exciting year.

“Google controls too much of China’s smartphone sector”

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Reuters published an article that summarizes a recent white paper from China’s Ministry of Industry and Information Technology. In the white paper, the ministry expressed concern that Android has too much market share in China, and that Google has discriminated against local companies in the ecosystem, as well as restraining their development in certain cases.

The white paper is early signs of a regulatory threat, but that’s not what I’m interested in discussing – Google has long had a tumultuous relationship with the Chinese authorities, and this development would also further reinforce the stereotypical view (in the west) that the Chinese government favors local companies and discriminates against western tech companies.

I have not used Android much in China, but I’m having some ongoing experience as I have a temporary Android phone while I’m currently in China. This device is a sample of one, of course, but it paints a very different picture than the notion that Android has too much control over China. The phone is a Samsung phone (model number GT-S5820) deeply customized for China Mobile. It runs a heavily modified version of Android 2.3.6. There are no Google services installed on the device; instead, it comes pre-loaded with 5 different browsers, courtesy of all the local Internet giants (a browser from Sina, a browser from Tencent, Opera, etc.). The map application is from Autonavi, the major local player (which Google also sources data from, if I’m not mistaken). What I was surprised at was the lack of any pre-loaded apps from Baidu – perhaps they didn’t get a deal with China Mobile?

I wonder how many Android phones in China are like this one – yes, it is running Android, but for all intents and purposes, Google has no say / no gain from this device. It merely provides a free OS on which all these other players provide their own value add. Samsung is the gate keeper for OS upgrades – it seems I’m locked on 2.3.6, unless I hack the phone and gain root access. There are one-click apps that help do that, but probably the majority of users will not go through the hassle of rooting their phone and loading the latest and greatest from Google, especially when the phone is deeply customized for them already – all the services are very local.

When Google made its high-profile exit from China a few years ago, it also burnt all bridges for profiting from Android in what is probably Android’s largest market. If the Chinese government piles on regulatory action on top of this, the irony would be too rich. Regulatory fireworks aside, I expect local companies to continue to thrive off of forking Android – what will be really interesting is if any of those local players can gain enough domestic traction to start pushing their version(s) of Android in international markets.