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Little app, big China: can Dots top the charts in the world's largest mobile market?

Little app, big China: can Dots top the charts in the world's largest mobile market?


The American startup is partnering with Alibaba to try and translate its US success

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Like many of the best mobile games, Dots is deceptively simple. Take four or more circles of the same color and connect them to make a square. The app was created in the spring of 2013 by Patrick Moberg and Paul Murphy as part of a Hackers in Residence program at Betaworks, a four month development session meant to create new projects and see which ideas are worth pursuing. From those humble beginnings the game has gone on to be a worldwide sensation, hitting the top of the charts in over 20 countries.

But in the world’s biggest mobile market, China, Dots hasn’t had an impact at all. While copycat games have been raking in the cash, Dots was basically ignored by Chinese consumers. "It’s much bigger than North America, yet makes up less than 1 percent of our install base," said Dots CEO Paul Murphy. And so today the company is trying to succeed where so many companies, from Zynga to King, the maker of Candy Crush, have failed. It’s launching a Chinese version of its game and it's bringing on a big partner, arguably the biggest, in Alibaba, the Chinese web giant with more sales than Amazon and eBay combined.

American apps are increasingly looking to China

Kelland Willis, a Forrester analyst focused on China, says Dots' decision to attack the Chinese market highlights a much bigger shift among American tech companies. "I would say that there are definitely more American apps as a whole looking to expand into China today, driven by the massive mobile market in China, the ease of scaling digital products today and likely reaching saturation in the US," says Willis. "The difference between now and five years ago is massive."

"China represents a massive business opportunity, one that a lot of tech companies can’t resist," says Eric Jackson, managing partner at Ironfire Capital, a technology-focused fund that has invested in both US and Chinese gaming companies. The region has three times the paying customers of the next-largest sector, North America, and the highest ratio of players who pay, at 47 percent. China’s mobile-gaming market is projected to equal or surpass the US in gross sales with $3.2 billion this year. It’s no wonder app developers are drooling at the idea of entering China, but Jackson warns it's not as simple as translating a few phrases or tweaking the design.

"There are a lot of dead bodies left behind by American consumer companies that thought they could go into China and keep doing things the way they always did," says Jackson. eBay, Amazon, Facebook, Google, and Twitter have all tried their hands at the Chinese market and been crushed handily by local competition and a political climate that favors local incumbents. Crush maker King failed for years to get traction, prompting it to call a do-over last month. "If you’re going to take on three or four native copycats that understand how to talk to consumers, you’re going to need some local help," says Jackson.

There is a long list of American companies that flopped in ChinaDots learned this lesson before launch and today it’s debuting in China with the help of Alibaba, the world’s largest e-commerce company and a titan of the Chinese internet. "They were in the process of launching their gaming platform, and had recently recruited all-stars from the gaming world that offered to advise us," says Murphy, Dots’ CEO. "They also happen to have a massive audience of hundreds of millions of daily users."

A lot of mobile consumers in China don’t download their apps from the stores run by Google or Apple, but from homegrown app stores instead. Dots will be featured in Alibaba’s Taobao store. It’s the same trick Candy Crush is trying this time around by partnering with Tencent.

Another challenge for apps launching in China is getting connected with local infrastructure to assure speed and quality on the backend. Big service providers like Amazon, Rackspace, and Google aren’t available in mainland China. In-app payments are another challenge, as many Chinese consumers don’t use Paypal, Apple, or Google to make their mobile purchases. Alibaba solved all that in one stroke for Dots. "We're hosting our backend on Alicloud, their equivalent of Amazon Web Services," says Murphy. "And we’re using their ubiquitous payment platform, Alipay, for payments."

There is little stigma around bootleg versionsThe second part is crucial, as most Chinese consumers won't make in-game purchases unless the process is trusted and seamless, says Willis, the Forrester analyst focused on China. "Even on official computer systems, the majority of the software is bootleg. The culture there has trained them to expect software to be free, and they don’t see any stigma in owning a counterfeit handbag or a bootleg app." The genuine, article, in other words, has to be much better than the copycats, and priced within reach.

While China has more mobile gamers than anywhere else, individual consumers mostly aren’t willing to pay the same prices as their American and European counterparts. Dots reduced their lowest price items from $1 to roughly 30 cents for in-app purchases. To make it up they will need a big audience, and unlike in the US, that’s not on iOS. "It's a scale game, and most of the scale is on Android," says Murphy.

The scale, and sales, are on Android in ChinaOf course Android, in China more than elsewhere, has its challenges. "The Android device market is even more heavily fragmented there," says Murphy. "The top five devices in China each only have about 2 percent market share. And one of the most popular Android device makers, Xiaomi, isn't even available in the US. We had to call in a favor from a friend to get a few to take home with us."

The final challenge was cultural. Dots decided to change the name. "We came up with 点点, pronounced dian dian which doesn't directly translate, but is a more affectionate way to say 'dots', like calling a dog a puppy," says Murphy. The team created a new tutorial and handled all the translation themselves, relying on three employees who luckily speak Chinese. "A lot of the changes are subtle like the tutorials, trophies, and in-app purchase mechanics," says Murphy. All told, he thinks of 点点 as a new app in it own right. "You would definitely notice that they are related. Fraternal twins, not identical ones."