Growing market

Games are seen as one of the most promising sectors of China's mobile Internet industry. At the recent Global Mobile Internet Conference Beijing 2014, Xiao Jian, chief executive officer of the Nasdaq-listed China Mobile Games and Entertainment Group, said that with an annual growth rate of 200 percent, China will overtake Japan as the world's largest mobile-game market in the next two years. Industry insiders estimate that the value of the market will reach between 25 billion and 26 billion yuan by the end of this year.

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Given the prospects, it's hardly surprising that the sector is attracting an increasing number of manufacturers, operators and other market players from home and abroad. The Chinese Internet giant Tencent Holdings Ltd started its mobile-game business in the second quarter of 2013 and quickly accrued a market share of 22 percent. At least 400 mobile-game content providers are registered in the southwestern city of Chengdu alone, said Zhang Xiangdong, CEO of Shanda Games, at the conference.

However, while welcoming the growth of the sector, Zhang expressed concerns that the "gold rush" - a large number of market players of various sizes, hot money rushing in, and a low product success rate - will result in a mad dash for profits that will see a flood of low-quality products and, more worrisome, copyright infringement and improper competition, all factors that may harm the development of the industry.

China is home to between 2,000 and 5,000 mobile-game content providers. They produce thousands of games every year, but only about 200 will be successful, said Hu Bin, joint-CEO of the game developer and marketer Ourpalm Co. "As a result, after six months to a year, many startups face huge pressures," he said.

To survive, some content providers either copy other companies' ideas or develop products based on popular stories, cartoons or movies. Crucially though, they don't pay royalties.

Well-known novels, cartoons and animated films find an audience among game players, who are attracted by the familiarity. The market is huge - in January, an authorized game adaptation of Disney's Frozen was downloaded more than 6 million times in the four weeks after it was released, according to Legal Person magazine.

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