GDC Mobile March 2003

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GDC Mobile March 2003
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Agenda

• Why are all eyes on China?
• What is so unique about China?
• How do you make money in China?

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WHY ARE ALL EYES ON CHINA? China Market
Background
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What is all the fuss about?
Profitable Business Model
Massive Market
Enormous Growth Potential
Rapid User Migration
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Interesting Facts and Figures
200 million mobile phone users in China, 15
penetration
Operators continue to add on average of 4.5
million users each month
4.41 million CDMA users on Unicom as of December
2002
47 of CMCC subscribers used mobile data services
between Jan and Sept, 2002
95 billion SMS messages were sent in China during
2002
7 billion SMS messages were sent in China during
Chinese New Year 2003, generating more than 60
million USD
1 million MMS messages were sent in China during
Chinese New Year - 2003
Combined, the top 3 SMS players made more than 15
million USD during Q4 2002
Sources CMCC, China Unicom, CCID, SCMP
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Chinas Wireless Network and Platform Migration
current
Est. Q2 2004
GSM - CSD
GPRS
W-CDMA? or TD-SCDMA?
CMCC
SMS, WAP
WAP, Java, MMS
current
Unicom
GSM - CSD
CDMA One
??????
CDMA 2000 1X
Brew, Java
SMS, WAP
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WHAT IS SO UNIQUE ABOUT CHINA ? China Market
Characteristics
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Its Just Two Operators.
Users Network Data Standards ARPU Prepay Subs
43,114,000 GSM, CDMA SMS, WAP, Brew, Java CDMA
12.87 GSM 8.68 46
117,676,000 GSM SMS, WAP, MMS, Java 14.87 58
Sources China Mobile, China Unicom
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. And Yet Its Not Just Two Operators

• Localized Decision Making launch, marketing,
  promotion all done on the provincial levels
• Market Trends Vary What is hot in Guangzhou may
  be boring to Shanghai
• Preferred Status Good relationship in one
  province does not equate to a good relationship
  in a rival province
• Billing Platforms Different networks feature
  varying billing platforms

WAP Nationwide Billing SMS Nationwide Billing WAP
Provincial Billing SMS Provincial Billing
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Aiming for Multiple Targets
Todays Mobile Data Users
Are Rapidly Evolving

• Rising socio-economic standards
• Aggressive new technology adoption
• Broadening user base transcends gender and age
  demographics
• Strong foreign cultural influence on whats
  hot
• Significant cultural differences between cities,
  provinces, and regions

Chat
Games
RT, Icons
Other
CMCC WAP Stats
As of 12/2002
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On-target Products
X-Platform, Global Community
WAP Community
Multiplayer SMS
SMS Quiz
Increased complexity began to build a solid gamer
community Products grew due to superior quality
and game play rather than prizes
Community element build a consistently loyal fan
base Community applications developed around
popular themes mapping to popular genres
Cross-platform community is a natural evolution
of services and discourages usage
stagnation Inherent product characteristics has
strong Asian appeal
Cultural-specific content and ease of use
appealed to broad audiences Developers offered
large incentives and prizes as marketing tools
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Products That Miss
Lessons Learned
Failures Game Characteristics
Games and applications that merely copy original
ideas are never well received Games relying
merely on brand name recognition or famous people
rather than game substance or plot have a short
life-cycle Complicated plots, confusing
interface, and unclear game objectives have been
met with indifference Unexciting games receive
unexciting responses from the user
Maintaining open communication with users help
minimize mistakes and maximize strengths Sometimes
the best game design and marketing techniques
can have unintended consequences Never
underestimate cultural factors While experience
helps to discern what products and launches will
be big and which wont, the market is as diverse
as it is large, and there are no guarantees
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confidential
HOW DO YOU MAKE MONEY IN CHINA? Developing a
Successful China Business Model
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The Fair Share Monternet Revenue Model
Eternal Miracle
Revenue Model
Enorbus WAP Game Channel Example
Monthly Subscription Fee Less China Mobile
Revenue Sharing (15) Enorbus revenue
RMB 5.00 Less (0.75) RMB 4.25

• Enorbus charges the user 5.00 RMB for one month
  of game channel access. Users have unlimited
  access to the game.
• Revenue sharing model and underlying billing
  support system already implemented at China
  Mobile
• Enorbus generates 4.25 RMB from the transaction

Source Enorbus, China Mobile
Sign Contract
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A Case Study of Red Tape Business Challenges in
China
1.
Establish Chinese Company
Company Application Process
Individual Product Applications
2.
Sign Contract
ICP License
Technical Testing Network Compliance Billing
Integration
Product Testing
3.
Launch
Telecom Value Add License
6 months
3 to 6 months
4 to 6 weeks
Time
Pre-License
Operator Relations
Product Apps
Sign Contract
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Getting Games to Market Technology Challenges in
China
Backend Integration
Evolving Protocols
Handset Requirements
Technology Challenges
QA and Testing
Human Interface
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Contact information
Tel [phone] Fax [phone] norbert.chang_at_
enorbus.com
www.enorbus.com www.5wan.com