Theoretically, that means that every future download should see Zhang make a profit, but he considers his first product a failure, partly because he didn't raise awareness of the product through marketing and promotional activities.

"More indies are coming to the market. Although that may result in an unprecedented number of new products, there will be many failures and few developers will make it in the end," he said. That's sobering news for the estimated 6,000 indie app companies on the Chinese mainland, for whom generating a single, rudimentary game app usually requires the involvement of four to 10 IT engineers, over a period of three to six months.

One notable challenge facing all game development companies is that Chinese consumers are notoriously reluctant to pay for downloads, preferring to use free products instead.

And although independent developers are making great strides in terms of innovation, many web game developers are also entering the arena.

Wesley Bao is the co-founder of Coconut Island Studio, established in 2009 in Shanghai just one year after Apple allowed independent developers access to the iTunes app store.

Initially, Bao was Coconut Island's sole employee, having ploughed 200,000 yuan of his savings into the idea. However, a partner later came on the scene and the company now has a staff of four.

Since its inception, several of Coconut Island's apps have gained top ranking on the iTunes app store's weekly most-downloaded lists. For example, iDragpaper topped the European and US download charts in the first week it was available.

Having worked for a number of foreign-based Web game companies, Bao decided to develop his own ideas for games applications. Registering the company after the name his wife uses on her personal blog, Bao formulated a clear business plan, based in part on the vagaries of the Chinese market.

For example, because Chinese consumers are reluctant to pay for apps, Coconut Island's pay products, such as iDragpaper and Mister Frog, are only available overseas. However, all the apps the company makes available through the Chinese iTunes store are free, and half of Coconut Island's global revenue comes from selling advertising space at the bottom of the interface of free-to-play apps.

However, most games only remain fashionable for around six months. "We always keep in mind ways of improving the playing experience to intrigue players and keep them coming back for more," said Bao.

Big fish, small pool

Because game companies can't survive on ad revenues for very long, many adopt a second revenue stream, called In-App Purchasing, a practice that has existed almost as long as Internet games have been available.

When customers download one of these apps free of charge, they are only allowed access to a number of basic levels, not the full game. The companies hope that the limited access will get players hooked on the game and they will be happy to pay for access to the higher levels, or for tips, hints and other information.

It's really only when gamers begin to pay for in-app purchases that the smaller developers finally begin to make money from their creations.

The free-to-play/in-game purchasing model has now been adopted by a number of international companies as they seek to introduce their products to the mobile market. The practice is especially popular with so-called console players whose games are usually better known on static platforms, such as Nintendo's Wii or Sony's Playstation.

"We are seeing some very interesting trends in mobile gaming. The smartphone is now well and truly in the hands of mainstream consumers," said Jim Lee, general manager and publisher of the games company EA Mobile China. More than 80 percent of the phones sold in the Chinese market now are smartphones.

"We are learning about a lot of local developers. They have created or perfected many innovations and we will continue to marry these with what we do best; big brands and blockbuster quality. I believe this will be a winning formula."

As bigger fish come into the pool, it's becoming increasingly difficult for local developers to benefit from their products. Giants such as Electronic Arts, the parent of EA Mobile China, and Unisoft Corp, a leading game company from France, are already well known and enjoy strong customer loyalty. That's not the case with independent Chinese developers, who have to work hard to make their products much more visible.

In response, some Chinese developers pay Internet users to post positive comments about their products online as a way to raise the profile and boost the rankings on games' lists. Usually, however, it costs 5,000 yuan to hire a group of "Zombies", as they are known, for a day, a price few smaller developers can afford.

Despite the presence of large and small game app developers and the huge size of the Chinese market, Wesley Bao believes the promised land is still far away. "The Chinese market is just as complicated as ever. While I see plenty of opportunities, I also see plenty of risks."

Contact the writer at zhangyuchen@chinadaily.com.cn.