Oh ChinaJoy!

Shanghai – a city in the distant corner of my imagination, a vision in my brain formed by the generally negative press China receives from US news organizations. It was the destination for this year’s ChinaJoy video game conference, a consumer and B2B show taking place in the dead heat of summer, featuring the top Chinese online game companies with select international players looking to make additional headway into the country. TriplePoint attended to see what the growing market has in store for us, and why a Google search for ChinaJoy images yields nothing but showgirls. We joined a list of our clients in attendance on the show floor and off, including Snail Games, SmileGate (SG Interactive), Papaya Mobile, Sollmo (Company 100), and GUNNAR Optiks, whose Chinese distributor had a small but dedicated presence in the business area.

Shanghai’s Financial District in Pudong

Shanghai Financial District skyline

Shanghai’s Nanpu Bridge

Shanghai's Nanpu Bridge

The innards of Super Brand Mall

Shanghai's Super Brand Mall

Joe and Quinn at the entrance to ChinaJoy

Quinn & Joe at ChinaJoy

The line to get inside (in the dead heat of Summer)

…and the crowd once you get inside

Snail Games’ booth in the B2B area

Snail Games’ booth in the B2C area. Go big or go home.

TriplePoint client GUNNAR Optiks with distribution in China

TriplePoint client SmileGate in the B2B area

TriplePoint client Papaya Mobile in the B2B area

Showgirls, and the photographers that harass them

…and lots of McDonald’s

 

Trends

As console gaming remains absent from the market and PC games continue to dominate, various mobile platforms can be seen making a strong presence at the show, particularly those with support for iOS and Android. With the rise of mobile comes a wave of casual experiences that seem to complement the typically hardcore PC market, catering to consumers of different tastes. Yet, a close relationship between PC and mobile can be seen in free-to-play experiences, much like markets worldwide are experiencing. As fixed broadband and smartphone penetration continues to progress in the 1+ billion populated country, we can count on seeing those brands rise to leadership around the globe in revenues and innovation.

 

Growth

Everything is big and new in Shanghai, and things were no different on the show floor. What was once a rice paddy 15 years ago is now a financial district of skyscrapers, anticipated to double in size over the next 10 years. Head to the expo center and walk the consumer floor to witness towering exhibit booths from every major player in China, from Tencent to Blizzard and TriplePoint client Snail Games.

Though the console business remains absent, the popularity of PC and mobile games driven by an immense and prospering population fueled the size of exhibits. Imagine the usual exhibitions that we’d expect from the likes of Sony, Microsoft, EA and Nintendo every year at E3, and now imagine 25 companies with booths just as large, the majority of which belong to companies that are unknown in North America. It’s a sign of the scale of China’s growing video game industry, and of its growing economic prosperity and power.

Ever heard of ’em?

Baiyou attracting a crowd with a cosplay performance

 

Regulation, Showgirls, and Regulation

Not only are the show’s exhibition booths mammoth in size and scale, but the show has gained a reputation for staffing them with hundreds of showgirls. Perform a Google image search for “ChinaJoy” and you’ll quickly find that the showgirls serve as the main front for all but a select few companies participating in the show.

This year’s ChinaJoy was no different, with one rumor pegging Tencent’s showgirl staffing at 1,000+ and “showgirls” stealing many of the headlines related to the event, albeit for an unexpected reason. The Chinese government issued a clear mandate to exhibiting companies in an effort to crack down on “vulgarity” and prevent “pornography” in the online games space. The newly issued policy prohibits showgirls from wearing outfits that show more than two-thirds of one’s back, and bans the application of printed logos on “sensitive positions” of the body. Still, that didn’t stop exhibitors from parading scantily clad showgirls in front of thousands of spectators, but with a little less visible skin being shown.

It’s a showgirl’s show

A showgirl wedding

 

Attending the show also gave us a new level of insight on the regulation that video game companies face while operating in the country – regulating time spent in-game and fighting “addiction”. We’ve heard whispers before, but faced the reality while speaking with others at the show – developers must reduce rewards earned in an online game by 50% upon hitting the 3 hour mark within a 24 hour period, and 100% at the 5 hour playtime mark. It’s inconceivable for a Western developer to imagine operating under these constraints, as the “whales” are publicly and clearly identified for spending the most amount of money over extended daily gaming sessions (see Zynga’s Quest for Big-Spending Whales, Daily Forex and Stock). Yet, despite these hurdles, Chinese online game developers continue to thrive and find ways to monetize, perhaps moving faster and innovating how a game converts more people to pay in free-to-play games.

 

 

In closing, our time spent in Shanghai was an exciting opportunity to view a rising superpower not only in economic activity but in the technology and video game sector as well. The city’s busy development and growing skyline is met by the rising technology and video game companies fueling the jobs and prosperity. One must see it to believe it, and you can count on us making a return to Shanghai next year.

 

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