Over the past decade, the Chinese games industry has experienced explosive growth, passed the United States In market size and spawned global publishing giants like Tencent and NetEase. The boom was partly driven by a population that was quickly connecting and gaining purchasing power. But the peak has come to an end as the market nears saturation and consumers tighten their wallets during economic headwinds.
China’s video game industry saw sales decline for the first time in at least 2008, according to earlier reports from the nation’s largest gaming industry association. The market brought in 265.9 billion yuan ($39 billion) from video game sales in 2022, down 10.33% year-on-year, according to a new report published by the association on Tuesday. Overall user size decreased to 664 million, down 0.33% from the previous year.
The declines added pressure on an industry that was already struggling. In recent years, China has launched a series of crackdowns on video gamescracking down on content that is ideologically objectionable And limit the playing time of underage users. Amid the industry upheaval, regulators stopped issuing new gambling licenses for months; the process resumed but now takes longer and costs businesses more to comply.
To create new growth opportunities, developers from scrappy studios to giants like Tencent are moving overseas. Chinese games have been exported for years, but lately they have started to make inroads in the West. Towards the end of 2020, titles made in China accounted for up to 20% revenue from mobile games in the United States, according to market research firm Sensor Tower. last July, 39 of the top 100 mobile games by turnover in the world came from Chinese companies.
The ratio might even be higher in reality because Chinese game developers, like other types of internet services, are increasingly trying to obscure their origins to avoid the backlash of being labeled “Chinese”. India, for example, has banned hundreds of Chinese apps in recent years, including the global hit PUBG Mobileas its relations with China deteriorated.
Chinese-made games still recorded another rosy year in 2022, racking up $17.3 billion in overseas sales, according to the industry report. Although the figure was down 3.7% year-on-year, the drop was much smaller than that of domestic sales.
China has a reputation for creating lucrative and addictive mobile games, but its gaming giants are now ambitious about developing big-budget global hits that will stand the test of time. Tencent, the world’s largest gaming company by revenue, has a AAA console game in the works at its Lightspeed outpost in Los Angeles (Lightspeed is best known for designing the mobile version of PUBG). Tencent’s nemesis NetEase is also moving overseas. Having announced his first US office in Austen last Maythe firm recently teased another new studio.