Distribution platforms may see flurry of consolidation, say experts

Big players will continue to dominate the mobile gaming turf in the next few years with their rapid market consolidation moves and aggressive marketing strategies, leading industry experts said.

With mobile games continuing to gain in popularity, an increasing number of mobile game distributors, large and small, have now jumped into the fray. In China, they are often seen as the vital market link for mobile game developers because of the huge traffic and number of users these companies have at their disposal.

"For game developers, reaching out to users is more about making use of the far-reaching distribution platforms for marketing purposes," said Xue Yongfeng, an analyst with research company Analysys International.

While Apple Inc's App Store and Google Inc's Google Play dominated mobile application downloads in the United States market, jointly taking up 92 percent in terms of revenues in the first quarter, according to market researcher Canalys, in China, the market is much more fragmented.

There are about 100 mobile distributors in China spread over three main categories: telecom carriers, mobile phone makers and Internet companies that provide game downloads through their mobile applications.

The rapid popularity of mobile games will lead to more mergers and acquisitions among distributors, analysts said.

"Although there are many distribution platforms, it is seven or eight players who actually control the market," said Qiu Lin, an analyst with Guosen Securities Co in Hong Kong.

"Right now the market is still big enough, everyone is growing and there is still a long way for activities such as frequent takeovers," he said.

Chen Xiangyu, chief executive officer of Chinese mobile game publisher iDreamsky, said although big players dominate the gaming market, large distributors still remain "cautious" on M&A activities. IDreamsky is the operator of several hit mobile games in China, including Fruit Ninja and Temple Run.