It's no secret that the Chinese market is hard to crack. Government regulations make it scary. The language makes it a challenge. Dealing with commerce -- how do you get your money out? -- is not simple, either. Then there's social networking: entirely local, as the government often blocks Twitter and Facebook. Henry Fong's Yodo1 is working with developers like Robot Entertainment (Hero Academy) to launch Western smartphone games in China. The company offers everything from localization to dealing with the headaches of the country's dizzying array of Android app stores (Fong says that Yodo1 works with the region's "top 30" stores. Yes, 30.) While the government currently turns a blind eye to Western smartphone games, the same regulations that apply to MMOs are technically in effect. Western studios could be squeezed out of the market with the flip of a switch, as only Chinese companies can get the licenses required to operate games and earn money from them. But just as important as the business end is convincing a Chinese audience to be interested in your game.

The Culture of Games in China

Fong says that it's important Chinese gamers "think it's a local game." While this isn't a big deal with casual titles, it can be a major situation for more complex games. In the hardcore genres of strategy and MMO -- which are blowing up on tablets in China, says Fong -- his company, based in Beijing, strives to work to instill localized games with authenticity. "Even the tone of the story, background, the whole use of Chinese slang that even Taiwanese Chinese or Hong Kong Chinese wouldn't understand; you really have to be a local Chinese gamer in order to appreciate the nuances," says Fong. "If you're talking about a strategy game or an MMO, unless the local gamer in China has context about the storyline and background, and the type of items you can buy in-game," the game won't work, he suggests. "Even the monetization mechanics could be totally different. What works here [in the U.S.] doesn't necessarily translate to China." Yodo1 provides "fairly deep culturalization of the game content as well," he says. "We actually create some of the content as well in conjunction with the game studio." His company is even building in social hooks that not just allow for plug-and-play sharing on Chinese social networks but also enable community building and discovery from within the games themselves, which he demoed to Gamaustra.

The Secrets to Monetization in China

But back to business. "One thing that we tell all of our game studio partners: With [in-app purchases], design a really, really broad range," says Fong. He suggests pricing both low and high -- with packs offering from one dollar to 60 or 80 dollars of virtual currency -- because the demographic is "really fragmented." A small percentage of players will "just buy the most expensive item because they can. And they do it blind." He also says that while you should let players play completely for free, make sure they can "spend a lot of money and unlock everything day one -- it's really all about choice." Why? Chinese gamers are "just impatient," says Fong. "If your game has RPG mechanics that provides leveling, designing in booster cards that accelerate experience game over time is a good microtransaction mechanic." Fong has another big point of advice In terms of monetization mechanics. "Make it so that it's designed flexibly," he says. "Your game can be monetized from paid download, or it can be easily changed to be monetized from IAP. Have a virtual currency system, even a simple one, that you can create and really easily introduce new IAP tiers if needed." Chinese gamers also differ drastically from Westerners in another way: they love conspicuous consumption. "Western gamers on social games and MMOs don't like to be seen as paying even if they are," says Fong. "China, it's different. They don't mind... They want to show they're spending a lot of money on this." Players even buy items that "look cool" but don't provide any meaningful advantage in gameplay. "People like to stylize their gameplay, and they kind of like to boast about it," says Fong. "With the MMO or online strategy, it's more about designing consumable monetization mechanics and IAP that drives competitive play," says Fong. While this sounds like a hardcore audience, Fong says that it's a compelling one on Chinese smartphones and tablets. Clans and guilds compete on the games on these platforms. "We're actually seeing a big shift," says Fong, "and a lot of the investment from traditional PC online gaming companies entering into our market as well. I don't think that the old gamer base is moving there; I think they're expanding the market overall." This transition is "probably even faster in China" than in the U.S., he says.

The Piracy Question

The Chinese market is notorious for piracy, but that situation is changing, Fong says. Recently, Fong took over distribution of a portfolio of games from a Western developer, finding that its five games were represented by 191 pirate versions on various Android stores. "What we then did was we went out and contacted all the app stores," says Fong. The stores moved the pirated copies to Yodo1's account. "We then own the pirated install base, and once we've converted the game and fully localized it, we push an update," he says. "It's poetic justice." Meanwhile, he says, the instance of jailbroken iPhones has dropped from 70 to 80 percent of the market a year ago to the reverse. "It wasn't about the money, it was about the entire user experience," says Fong. Apple's store didn't used to accept Chinese currency, and the localization of the interface wasn't up to snuff. "Nowadays, it's so much easier to do it via the App Store," he says. Those who can afford an iPhone, he says, can also afford to pay for games -- and will. Dealing with the Chinese market is clearly a very daunting question, and though mobile remains more open than the MMO market, it's complicated enough that Western studios are going to be looking for partners. Fong seems sincere in his desire to be a good partner, but like his country's government, developers may have no choice to work with him, or someone like him.