Apple requires a license to run games in China. What do market participants think about this?
To release the game in the Chinese App Store, it is now required to obtain a license from the State Administration for Press and Publications (SAPP). This became known at the beginning of the week. We asked Nekki, Playkot and Pixonic working in the Chinese market to comment on the situation.
Background
Apple has announced that from now on, to launch a game (paid or with IAP monetization) in China, a license number (ISBN) from SAPP is required. Without it, the game will not be allowed to release in the App Store. Everyone who is going to work in the Celestial market must provide a license number by June 30.
It is unknown what will happen after June 30 with existing games in the store that will not grant Apple their license. The platform does not answer this question and asks to contact personal legal advisers. According to the Chinese financial publication SINA, if the licensees are removed, then many projects will be put under the knife.
The possible scale of the purge is explained by the fact that until recently, the release on the Chinese App Store was one of the easiest and most popular ways to enter the local market. Other local stores have required a license number since 2016.
What do market participants think
Nikita Korzhavin, Business Development Director of Nekki, critically assesses the situation:
Of course, it's unpleasant. But I wouldn't say it came as a surprise. Over the past year, it has been said that the number may begin to be required for iOS versions in China.
Nekki
Vasily Smetanin, Director of Strategic Marketing at Playkot agrees with him:
Technically, this is not exactly news. Since 2016, ISBN is mandatory for all premium games and games with monetization through IAP. All this time, Apple was protecting the interests of developers, so the gaming companies had three years to get an ISBN in time.
Playkot
Georgy Egorov, CEO of Pixonic, is not surprised by the current situation either. Although he notes that it was impossible to prepare morally for the situation:
The position of Steam and the App Store in the Chinese market for many years has been special, if not abnormal, so that such a development of the situation has been predicted for years. The August announcement of Steam China together with Perfect World became an important signal for the market, informing that the local government is eager for changes, which means the App Store was next in line. But such news, of course, always comes out of the blue.
Pixonic
Egorov also does not believe that for the remaining period many teams that have been working in China on iOS for a long time will have time to get a license:
The developers have only 4 months left, so those who have not yet started the process of entering the Chinese market are unlikely to have time to get a license by June 30. Our experience suggests that this is a long, painstaking process with a large number of iterations of version preparation, and with the introduction of not only technical, but also localization edits. At the moment, War Robots is in the process of obtaining an ISBN — this is a priority for us.
Pixonic
Nekki, which has been successfully operating in the Chinese market for a long time, is also waiting to receive an ISBN for its latest blockbuster Shadow Fight 3:
We have been getting it for a year and a half together with a Chinese publisher. But it's not enough to find a publisher, you also need to prepare a special build that will meet all the requirements of the state inspection body. Moreover, these requirements change, so you have to do several iterations.
Nekki
Korzhavin does not believe that it is possible for a foreign team to obtain a license promptly before the summer:
It is unrealistic to do this in 4 months. Although it is officially stated that the review period is from 80 working days after receiving the application. Colleagues told me that in the fall of 2019 they received a number based on an application that was submitted in February 2018. So much for a minimum of 80 working days. And so far there were no prerequisites for the queue to move much faster. Now imagine what will happen to the queue when the latest requirements for the Chinese App Store are found out all over the world? Either the procedure needs to be simplified, or the staff involved in the review needs to be increased, otherwise we can forget about the money from China for a while.
Nekki
Smetanin looks at the situation philosophically:
As our experience has shown, obtaining a license is a formal procedure, long, but simple.
Playkot
He also notes that not all market participants should worry about the future in the Chinese market:
Hypercaused games without IAP with their video ads can still live in peace and not worry that they will be removed from the stores or other sanctions will be applied to them.
Playkot
Korzhavin, although he says that there is no certainty in the future, agrees that if the application does not have an IAP, it can work without an ISBN:
There is no exact answer to what will happen to the projects that did not have time to get a license before June 30. Therefore, we can only assume. Our publisher says that, perhaps, if the project applied for a number before this date, it will not be removed from the store. So the sooner we register the application, the better it will be in every sense. Or no projects will be removed from the store, but IAPs will simply be disabled on the platform side. After all, games in China can be published without an ISBN, if they do not need to make purchases for money.
Nekki
Egorov is less optimistic about the situation:
Apple's fulfillment of the SAPP requirements will hit not only small and medium-sized companies, but also a number of large developers who did not have time to get a license for their products, but launched the game on iOS in China. Including domestic ones.
Pixonic
He also believes that the innovation once again complicates the entry into the Chinese market:
Given the stagnation in the issuance of licenses in 2018 and the accumulated backlog of applications, as well as the number of licenses issued by the Chinese government to foreign companies in 2019, it seems to me that the threshold for new developers to enter this market will be extremely high.
Pixonic
Smetanin also sees the event as part of a consistent strategy of the government of the Celestial Empire:
China continues to strengthen the regulation of the gaming market, so only those who are willing to work in a regulated market will remain there.
Playkot
At the same time, he notes that Chinese companies are also suffering from the new policy:
Not all Chinese developers were ready for this, and small gaming companies do not have licenses yet, which caused unrest.
Playkot
On the other hand, Korzhavin admits that the event may be part of the trade confrontation between the United States and China:
Perhaps politics is involved. And such a step is the US response to the restriction of the activities of Huawei and other Chinese companies. I do not exclude that the current decision on numbers is not final, but only another call for a new stage of negotiations between the two countries.
Nekki
In the situation, Korzhavin sees a win for the Chinese side, because it is easier for local companies to get an ISBN. Closing the App Store for foreign companies increases the demand for their services as local publishers:
Surely in China there has been a boom in requests for publishing and obtaining a number in recent days, colleagues have a lot of work, congratulations to them.
Nekki
A little bit about the market
According to Sensor Tower, in January 2020, the Chinese App Store accounted for 31% of all mobile gaming revenue (excluding third-party Android stores). The share of downloads generated by him was 21% of all downloads made in a month on iOS.
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