Apple App Store downloads in China triple, but revenues for developers still lag

Foreign gaming firms are recruiting and receiving a growing number of proposals from Chinese developers

Downloads from China on Apple's App Store have tripled from a year ago, but developers in the country must continue to look overseas to generate revenues, because of the prevalence of free apps, according to an app market analytics firm.

"In order to be at the top, you cannot just be focused on the Chinese market. If you want to make money you have to be focused on the international market," said Bertrand Schmitt, CEO of App Annie in Beijing.

Schmitt made his comments on Thursday while speaking at the Mobile Game Summit Beijing, where he showed new data on China's Apple App Store market.

As of May, China had the second highest number of iOS app downloads in the world, right behind the U.S. But the country ranks eighth in total revenues generated from iOS downloads, putting it behind the number one ranked U.S., Japan and the U.K.

Although China has a billion mobile phone subscriptions, the country has also been plagued by piracy. In the case of the iPhone, users sometimes choose to jailbreak their iPhones, allowing them to install paid apps for free.

In China, this means every iOS app download generates about US$0.03 when comparing gross revenue against total downloads, according to App Annie. In comparison, an iOS app download in the U.S. generates $0.28.

Many of China's app developers already target overseas markets. The country's top ten publishers on Apple's App Store get on an average about 90 percent of their revenues outside China, with the range extending from 29 percent to 99 percent, according to App Annie.

Despite the piracy and prevalence of free apps being downloaded, revenue in China from iOS downloads grew by 213 percent in May when compared to a year ago. Download numbers also increased by 305 percent.

Apple's iOS, however, captured only a minor portion of China's smartphone market. In this year's first quarter, Apple's iPhone had a 19 percent share of the market, while Android-based handsets had a 68 percent share, according to research firm Canalys. But in tablets, Apple's iPad continues to dominate sales in China.

Besides Chinese gaming companies targeting markets abroad, foreign companies are also looking at China to get games developed for global markets.

"I'm a little bit shocked and surprised and a little bit afraid of Chinese developers because there are so many good developers coming out from China since last year," said Brian Oh, senior manager for Gamevil in South Korea, which develops games for iOS and Android. "I get tons of emails about proposals. About 30 to 40 percent are from China. So I do see potential there for the market."

U.S. gaming developer Kabam has an office in Beijing, China, which has 65 employees and continues to hire locally, said Michael Li, general manager for the company. Its popular iOS game, "Kingdoms of Camelot: Battle for the North", was developed in Beijing.

"It's definitely a good test case that shows we can build in China games that can be very successful in the West, and not just in Asia," he said.

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Michael Kan

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