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Key Findings of In China’s Digital Music Market2012-2013 Digital music service gains continuous popularity.In 2012, digital music subscribers (users) reached 385 million， accounting for 75.2% of China’s Internet users which increased by 3.8% than that in 2011. In the field of mobile Internet Apps, digital music service apps occupied 50.9%, increasing by 5.2% than 2011.

With the existence of online music performance, China’s digital music market has expanded at a rapid speed.

Owing to the creative format of music performance, the annual turn-in of China’s digital music market has seen

vast increase in 2012. The annual online music revenue has reached 1.78 billion RMB, increasing by 300% than the year before, Wireless music service revenue has slightly increased to 32 billion RMB.

The young demographic of China’s digital music consumers exhibits less enthusiasm in purchasing music online.

A survey conducted by Entbrains found that the key demographic of China’s digital music users is younger than those of other online services. Users under 30 take up 65%, Users with bachelor

or higher degrees account for 67%. However, since most online music services in China are free, users/subscribers show less enthusiasm in online music purchasing. Only 8.5% of the respondents are willing to pay for online music downloads. Yet on mobile music apps, about 20% respondents condone to the idea of paying for music downloading. Among them, 70% prefer a monthly subscription fee, while 25% prefer to pay for single purchase.

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Online music video service has developed rapidly

According to the survey conducted by Entbrains, online music video service has developed rapidly since 2012. The monthly active users of such music video online platforms as YinYueTai、Youku、Tudou etc. has exceeded 50 million.

Online music performance format brought in impressive profits.

In 2012, online music performance has a revenue of 00 million RMB. ARPU of monthly subscriber is 243 RMB.

Alternative music contents draw broad attention.

China’s digital music users’ consuming behaviors have been influenced greatly by the popularity and success of such single television shows as “The Voice of China”. The songs featured in the shows are mainstream hits in the music industry. Many digital music service providers are competing for the releasing rights to those key music contents.

Digital music regains popularity among investors.

Mobile digital music application “Changba” received an investment of 15 million US dollars from Series A.

Huayi Brothers and A8 Music respectively invested 3 million and 6 million US dollars in Duomi Music.

Alibaba acquired Xiami Music.

Industrial regulations help China’s music market grow rapidly.

In 2012, the Chinese government imposed stricter regulations on China’s digital music industry. Copyright infringements.

In 2013, Entbrains is working with the Chinese government to draw up “The National Online Music Industrial Standards”. These standards correlate with international music industrial standards. The set of standards will help formulate the business models of China’s music industry and help innovate music services and promote rapid market growth.

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China’s online games market achieved steady growth in 2012.

In 2012, China’s online games market achieved steady growth with revenue reaching 60.3 billion yuan (RMB). The number of online games players exceeded 190 million. The number of client games and web games players slowly increased. The development of online games market relied much more on current clients growth potential rather than client qantitative growth. The scale of mobile online games players continued to expand rapidly with an increase rate of over 100%.

China's online game products supply continues to increase.

In 2012, there were 883 online games that passed government review or filing. China's domestic online game products continued to increase and dominated the market.

Online games export scale continued to expand.

In 2012, the scale of domestic online games export steadily expanded, bringing in 600 million US dollars. Mobile online games enjoyed apparent increase than 2011. Copyright exports increased. On the whole, the revenue share of each exporting mode hasn't experienced dramatic change.

China's online-game businesses showed less enthusiasm in investment activities. There were totally 23 reported investments. Four online-game companies listed in the stock market. Financing was often seen in mobile online-game field.

Client games market is nearly saturated. Web games welcomed another growth breakpoint.

In 2012, faced with the competition of online videos and other forms of entertainment, and with web games and mobile online games attracting the

majority of users, the increase of client games players slowed down. The client games market, especially the markets in the first-tier cities nearly saturated.

Mobile online game market continues to prosper with new opportunities.

Owing to the improved mobile network and the popularity of mobile devices, mobile online games market continues to prosper and mobile online games experienced rapid development.

In the chain of production, more efforts are put in D&R. Product-oriented becomes the mainstream guideline.

The current business models for web games and mobile online games dictate that "winners have it all". Popular games are often among the best on the market.Products that gain high profits will attract more resources through different channels.

Open-platform mode exerts more influence. Small enterprises moving into big enterprises' platform is the mainstream.

The emergence of open platforms indicates that China's online-game market has fully developed. Monopolies dominating the resources on the production chain is hardly seen. Big enterprises are prone to cooperate with small enterprises to achieve win-win by sharing resources.

Entbrains maintained that China's mobile games market is still at its early stage of development. Plagiarism and client frauds still exist. In 2013, the Chinese market will issue certain regulations regarding mobile online games so as to regulate and manage China's mobile games market.

Key findings in China’s online games market in 2012

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About EnterbrainsBeijing Entbrains Consulting Co., Ltd., focusing on information consultation and strategy research of digital entertainment field, has provided professional research report, consultation, strategy consultation and conference activity service for enterprises of digital music, online game, etc.

www.entbrains.com

Contact us:

Terry@entbrains.com