China's Limits on Games Will Change Monetization
This is a single insight from This Week in Apps #77 - That's Not Going to Happen!. Check out the full article for more insights.
Last week China announced a new set of laws that aim to detach kids from the claws of technology by limiting the amount of time they can play video games.
Kids (under 18) are now only allowed to play video games for 3 hours a week. That's not even it. They can only play during the weekend and holidays, and only during certain hours of the day.
Much like my take on the laws in Korea, this has many implications. One of those is a shift in how games monetize.
Specifically, I expect to see more games switch to a subscription model in China. Let me explain.
If fewer people play games, there will be fewer opportunities to spend money in-game. Most games monetize with consumable in-app purchases, which will now take longer to "consume". Limiting the potential of in-app purchases will mean revenue for many games will become less stable and more unpredictable. Two words founders and investors hate.
Also, two things that subscriptions solve. The total might end up being lower because there's a reasonable limit to what people will pay on a recurring basis considering they'll only be able to enjoy it for a very short amount of time, but it will make for a predictable and stable revenue stream.
Looking purely at numbers, the top 10 games in the Chinese App Store earned $170M (that's USD) of net revenue in August, according to our estimates. The top 10 apps, which include two entries from TikTok, got close, with $143M of net revenue in the same period.
Now, this total isn't just from games, so the impact may not be as drastic as fast. But... over time, there will be a shift to play fewer games—probably what the Chinese government is hoping for as well—which will have an impact.
We've seen a massive shift towards subscriptions from apps over the last few years (which is why we're constantly working to improve our subscription analytics for developers) so people are already primed to accept this type of monetization. Primed != will, so how this evolves is going to be very interesting.
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All figures included in this report are estimated. Unless specified otherwise, estimated revenue is always net, meaning it's the amount the developer earned after Apple and Google took their fee.
