Qingci Games Co., Ltd. (hereinafter referred to as 'Qingci Games') was successfully listed on December 16, 2021, with an initial public offering of 85 million shares at a price of HK$11.20 per share, raising a total of HK$86.3 million.
During the Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, investment banks, and other intermediaries in completing relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), facilitating communication with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the company in responding to various questions from the Hong Kong Stock Exchange regarding the industry.
Market Overview of China Mobile Games
market scale
The Chinese gaming market has become the world's largest, reaching a market size of 308.4 billion yuan by 2020. It is expected that by 2025, the Chinese gaming market will further grow to 504.5 billion yuan, with a compound annual growth rate of 10.3% from 2020 to 2025, exceeding the global gaming market's expected compound annual growth rate of 7.3% for the same period.
Market size of the Chinese mainland game market (by category)
2016 to 2025 (estimated)
Data source: Frost & Sullivan report, China Audio-Visual Digital Publishing Association
With the continuous development of mobile communication technology, the gradual increase in the penetration rate of mobile users, and the trend of entertainment consumption shifting towards mobile devices, China's mobile game market has become the fastest-growing segment in the Chinese gaming market. China's mobile game market has grown rapidly with a compound annual growth rate of 25.3%, increasing from 972 billion yuan in 2016 to 2396 billion yuan in 2020, and is expected to reach 4321 billion yuan by 2025. The compound annual growth rate from 2020 to 2025 is expected to be 12.5%. The proportion of the mobile game market size in China's total gaming market size has risen from 55.3% in 2016 to 77.7% in 2020, and is expected to further increase to 85.6% by 2025.
The market scale of mobile games in Mainland China by game category(in terms of revenue)
2016 to 2025 (estimated)
Source: Frost & Sullivan report
In terms of revenue, casual games and RPGs are two of the most important mobile game genres, indicating their importance and market potential. The Chinese casual mobile game market is expected to grow from 46.3 billion yuan in 2020 to 83.6 billion yuan by 2025. The Chinese RPG mobile game market is expected to grow from 67.6 billion yuan in 2020 to 123.3 billion yuan by 2025. In addition, casual mobile games have the largest user base among all mobile game genres in China in 2020 and are expected to maintain this level by 2025.
Placing-based mobile games are typically categorized as a type of casual mobile game. Players can play placement games at any time interval to experience the core gameplay, while the game automatically continues and upgrades player profiles during the rest of the day. Due to this unique nature, placement games can be more flexibly combined with elements of other game types to meet the increasingly sophisticated needs of players and better fit the fragmented entertainment demands of leisure time. In 2020, placement-based mobile games experienced vigorous growth, with many hit games entering the market and becoming popular. The market size of placement-based mobile games increased from 2.5 billion yuan in 2016 to 9 billion yuan in 2020, with a compound annual growth rate of 38.0%. It is expected that by 2025, it will further grow to 227 billion yuan, with a compound annual growth rate of 20.3% from 2020 to 2025, higher than the overall mobile game market.
Rogue-like RPG is a type of RPG game. The rules and design of the game allow players to unlock new content step by step through different adventures. Through treasure hunting, map exploration, and other unpredictable events that bring randomness and surprises, it creates a tense, unexpected, and exciting experience for players. In addition, the game allows players to feel the sense of achievement brought about by the growth of their characters. The market scale of rogue-like RPG mobile games has grown from 300 million yuan in 2016 to 1.1 billion yuan in 2020, with an average annual compound growth rate of 39.2%, mainly due to the overall development of the Chinese RPG market and players' desire for innovative gameplay and novel experiences. Iconic games such as 'Infinimagic' and 'RuneScape' have achieved tremendous success through unique monetization methods and thus become benchmarks for rogue-like RPGs. It is expected that by 2025, the market scale of rogue-like RPG mobile games will further expand to 4 billion yuan, with a compound annual growth rate of 30.2% from 2020 to 2025.
Number of users
The Chinese gaming market has a huge user base, which is continuously expanding driven by growing demand for cultural leisure entertainment activities and the innovative development of the gaming industry. The total number of gamers has increased from 570 million in 2016 to 670 million in 2020, and it is expected to reach 760 million by 2025.
Market scale of China's digital entertainment industry (in terms of revenue)
2013 to 2022 (estimated)
Data source: Frost & Sullivan report, China Audio-Visual Digital Publishing Association
Industrial chain
The main participants in the value chain of China's mobile game market include IP holders, game developers, game publishers, distribution platforms, payment channels, and gamers.
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IP holders: Usually, these are game developers or publishers who own the intellectual property rights to mobile games.
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Game developers: Usually responsible for game design and development, pre-release testing, post-release operations, and technical support. Some game developers also operate their own distribution channels.
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Game Publisher: Mainly responsible for the market promotion of mobile games. Some publishers may have the capability to develop games.
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Distribution channels: These include hardware app stores, third-party game distributors, and vertical distribution channels. All these channels are responsible for the sales and distribution of mobile games to end-users.
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Marketing Channels: Online channels (such as social media platforms like Douyin and Kuaishou) and offline channels can both be used for marketing and promoting mobile games.
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Payment channels: mainly include online third-party payment service providers such as Alipay, WeChat Pay, UnionPay, VISA, MasterCard, and Apple Pay.
driving factors
Gamers' demand for diversity and quality is increasing:In recent years, in order to meet the diverse market demands, various types of mobile games have emerged in an endless stream. Games with originality or high quality usually attract more gamers. Compared to other types of games, games like RPGs have a competitive advantage in terms of creative and high-quality game content, thus being able to attract a large number of players and maintain a stable user base.
Players' willingness to consume and pay has increased:With the continuous growth of per capita disposable income and the trend of consumption upgrading, Chinese players are increasingly willing to purchase virtual items in games. The younger generation is usually willing to share their gaming experiences with other players on various game community platforms, making these platforms increasingly important gathering places for gamers. In addition, they usually respect copyrights and are willing to pay for in-game items and game peripherals, making IP a focus of industry growth.
Continuous internet coverage and reduced communication costs:By the end of 2020, China's 4G network had covered 98% of administrative villages, and broadband had reached 96% of households. The three major telecom operators in China have reduced 4G services and broadband charges, making it easier for people in rural and remote areas to access and afford mobile internet and broadband. At the same time, China has successfully achieved 5G network coverage in all prefecture-level cities. With the acceleration of internet connection speed and expansion of internet coverage, reasonably priced mobile games will be available to a wider audience, which is expected to further drive the growth of the mobile game market.
The continuous improvement of gaming technology has enhanced the gaming experience.:New technologies such as AI, VR/AR, and holographic technology are changing people's work and life, and are gradually being applied to mobile games. These technologies can create immersive environments, providing users with a higher level of interactive experience and making game play more attractive. With the increasing popularity of smart devices, especially wearable devices as technological carriers, these technologies are maturing. Users are willing to spend more time playing mobile games, thereby driving the growth of the mobile gaming market.
Frost & Sullivan has extensive research experience in the culture and entertainment industries, assisting well-known enterprises in successfully accessing capital markets. Successful listings include: CPOP.NASDAQ, Rice Krispies (02125.HK), KUKE.NYSE, XJB.SGX, Glory Tomorrow (01351.HK), YALA.NYSE, LeXiang Interactive (06988.HK), Zu Long Entertainment (09990.HK), BLCT.NASDAQ, Liantian Film & Television (09958.HK), Nine Spirits Digital Entertainment (01961.HK), Yusheng Culture (01859.HK), Lujing Technology (01745.HK), New Stone Culture (01740.HK), Heartbeat Company (02400.HK), Travel Orange Culture (08627.HK), Friend Times (06820.HK), Wanda Sports (WSG.NASDAQ), Tuyi Holdings (01701.HK), Hometown Interactive (03798.HK), Feiyang Group (01901.HK), Huoyan Holdings (01909.HK), Lingbang Group (02230.HK), Haitian Tianyue Travel (01832.HK), Zen Travel Technology (02660.HK), Ruhuan Holdings (RUHN.NASDAQ), Fosun Tourism Culture (01992.HK), Dream World (01119.HK), IMVU Interactive (03700.HK), Huya (HUYA.NYSE), Lei She (01337.HK), Readview Group (00772.HK), Meitu (01357.HK), China Digital Video (08280.HK).
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