Q&A: How iDreamsky brings a Western game to China

China's mobile game market is thriving. Trouble is, it's typically a complex market for Western developers to tackle. Jeff Lyndon is the cofounder of iDreamsky, a Chinese company that specializes in partnering with Western developers like Jetpack Joyride developer Halfbrick Studios and Temple Run dev Imangi Studios to localize games for the Chinese market. Here's Lyndon's insight into bringing mobile games to the Chinese market. What sort of games are a good fit for the Chinese market? Jeff Lyndon: You have to take into account the following three elements when you are mulling on whether or not to enter China, either by a go-it-alone approach or by partnering with a publisher. The first element is your familiarity with the Chinese playerbase. Second, your knowledge of China’s business environment and third, whether you have the resources to push forward your plan or not. Those who can pull off [all three elements] are mostly large and well-established developers/publishers that already have some presence in China. Smaller-sized or independent developers with limited resources will need publishers to help them handle business in China. You also need to consider many factors when picking your publisher partner in China. First, the publisher’s capacity, which can be measured by its performance in size, distribution, promotion and operation (of a game). Second, what sort of games the publisher has published before, whether or not it's published similar games in the past and how well they performed in the Chinese market. Third, whether you have the resources and capacity to adapt and localize your products; if you don’t, does your partner? The last but most important factor is your potential publisher partner’s track record, because when you partner with them, you have to fully trust them. The ensuing steps are rather simple. If you want to publish the game on your own, you have to ensure that your games are available on all the major channels, decide what kind of social networks you want to build, select the right payment system, work out a marketing plan and localize your game. However that's easier said than done. If you want to enter the market by partnering with a local publisher, every publisher has its own unique procedure and plan. The advantage of the publishing-on-your-own approach is that you can have your whole business operation in your own hands, boost the profit margin and forge many potential valuable business relationships in the country. The disadvantage is that China’s business environment is rather complicated, with over 300 channels in the gaming market. Therefore you face pretty high risks if you are determined to pull it off on your own. Currently, even multinational publishers with local branches have had very few successes in adopting this approach, yet they haven’t fully maximized the potential China can offer. That’s the reason why even multinationals like Gameloft are picking iDreamsky as their local publisher. In addition, publishing alone demands high maintenance costs because you have to spend lots on distribution channels, marketing, operations and promotions. One benefit of partnering with a local publisher is that your cost to enter China will be very low. Generally speaking, the publisher will give you some kind of minimum revenue guarantee, ensuring that you will make money once you proceed in China, which means your risks will be relatively low. I've never heard of this "minimum guarantee" before; it's certainly not something that's common among North American publishers. Can you tell me more about such a minimum guarantee works, and why it's common in China? Is it typically only offered to foreign developers looking to bring their game to China, or is it common in all Chinese game publishing? JL: Generally speaking, publishers all offer minimum guarantees for the games they are distributing. In this way, the mobile gaming market is now increasingly resembling the MMORPG and browser games of the past. Minimum guarantee is calculated by publishers on their estimate of potential revenue likely to be generated from the particular game. In general, If publishers don’t commit to minimum guarantee, it means they have no confidence in their ability to distribute the game very well and indicates they are not very serious about the game. Minimum guarantee of AAA games in 2013 was around 350,000-500,000 USD per title; I think in 2014 it could go up to 1 million USD. Those who give out such minimum guarantees are mostly pure publishers, not the distribution platforms such as 91 or 360, which [in China] are very similar to Google Play. However, given in China everyone plays multiple roles the platform side [of a company] might not be paying but if they have a publishing arm they could be paying instead. The disadvantage of this method is that reliable publishers in China are a rare breed, so you may have to spend lots of time searching for a good partner and in some cases it will be a fruitless endeavor. Furthermore, your profit margin will be relatively lower under this approach. How can you tell if a publisher is reliable or not? What's the typical difference in profit margins between working with a Chinese publisher as opposed to going it alone? JL: Objectively speaking, you can judge a publisher's reliability by researching its past track record, such as what kind of games it published before and what sort of developers it has cooperated with, and also take into account factors such as [the publisher's] position in the industry, its market share and revenue. First-hand feelings from the negotiations, like whether they are willing to share with you their plans and data, are also a very important matrix used to assess their reliability. Unless your game’s target audience must be fully versed in Western culture, you have nothing to lose if you enter China, which could increase your source of revenue and expand your game’s player base. What kind of numbers are you seeing on Western games that come to China? What sort of success are you seeing, and how long do you think it's sustainable? JL: The Fruit Ninja and Temple Run series are some of the most successfully-operated foreign games in China. Fruit Ninja has been running in China for three years and still holds a top position in the market; Temple Run is currently the most downloaded foreign game and is also one of top revenue drivers in China. In terms of user numbers, a successful casual game should have at least 80 million players and in terms of revenue, a successful game should have at least a 10 million yuan monthly cash flow. Fruit Ninja and Temple Run both have more than 200 million users respectively, and they have also been constantly occupying prominent slots in revenue tables published by the major channels. If managed well, one game’s lifespan could be very long, such as Fruit Ninja, and I see no reason why they cannot outlast 3 years.