Why Chinese App Developers Resort to Overseas Market
Here is a picture for the Chinese iOS App market: ranks No.2 by downloads in the planet, unproportionally comes in 8th when it comes to revenue. At the 2012 China Mobile Internet Innovation Carnival, mobile app analytics service App Annie said that every iOS app download generated about $0.03 on average in China, which is only 1/10 of the average $0.28 generated from every download in the US and half of the $0.06 in Vietnam.
Top 10 Developers Count Big on Overseas Income
It seems that Chinese developers are in a pickle. You can make users happy and satisfied, but you just can’t make them pay. “Many of the developers have accepted this reality and they turn to free apps and try to profit from ads. ” said Yu Junde from App Annie.
The top 10 developers in China or even the world’s leading iOS developers don’t know what to do with Chinese customers. On average, China market only accounted for 1.53% of the Top 10 developers’ total revenue. App Annie’s research also finds that the these top 10 players are mostly game developers, like Boyaa, LV1, HappyLatte, Pinldea, Haypi, RenrenGames, Hoolai, Tap4Fun, iFree Studio and Wistone. Actually in Q1, 90% of the total revenues of these developers come from overseas users. They targeted the whole world as their market, and China is just part of it.
Reasons are complicated. Wang Hua, co-founder of Innovation Works pointed that pricing rules of iOS apps are too restricted. According to Apple’s rule, the minimum payment and scale for an app should be $0.99(≈ RMB6.0). If you happen to be familiar with Chinese culture, you would know that most Chinese prefer price tag like RMB10 or RMB20, for they’ll make the whole thing easier. Having said that, of course this is not the biggest reason for the unwillingness to pay.
And even though, game players remain to be the best consumers, they still contribute a lot to Tencent, Renren and even Qihoo’s eye-popping financial results. A recent report by Niko Partners showed that China’s mobile game players will hit 192 million by year-end, surpassing the number of PC players. Wang said optimistically that, “In the future the potential spending power of Chinese mobile game players should be great.”
Resort to Overseas Market
Hence, more and more local developers are targeting at overseas markets. Photo app Powercam tells a typical successful story. Rarely do people know that this leading photo app actually comes from Shenzhen. Fu Yuquan, VP of the company Wondershare Software explained that ,”We have been making a living mainly on multimedia data products, which usually go towards Japan, US and Europe.” We chose to test Powercam abroad for the marketing effort comes easier and simpler there. Since first being launched in December, the total marketing input for Powercam has been only RMB 80,000, which is an amount impossible in China.
In another scene, 3G.cn(Chinese #1 mobile wap portal) seemed have pulled off an unintentional success. Their desktop product “Goforandroid” doesn’t stand out in its home turf, but surprisingly wins great popularity in the neighboring South Korea. “Currently we have 70% overseas users, 40% from South Korea. We have over 30 different language versions available for 150 countries.” said the VP Cao Ming. The problem with the local market is that the user scale has been overly emphasized. When talking about the differences between domestic and abroad markets, Cao also said “You should be very clear of your business model, and keep on innovating to win the recognition in overseas market.”
On the bright side, App Annie’s showed some good news that the downloads in China are growing at the quickest speed in the world and the market concentration here is still low. If we look at the revenue distribution of iOS apps: In China, 45% of the total revenues come from the top 100 apps, but in Japan, the percentage is already 60-70%. We still have chances.