Over the past decade, China’s games industry has seen explosive growth, overtaken the U.S. in market size and given rise to global publishing giants like Tencent and NetEase. The tattoo is in part driven by a population that was quickly coming online and gaining purchasing power. But the heyday has come to an end as the market nears saturation and consumers tighten their wallets during economic headwinds.
China’s video games sector posted a ripen in sales for the first time since at least 2005, equal to past reports (attached below) from the country’s top gaming industry association. The market grossed 265.9 billion yuan ($39 billion) from video gaming sales in 2022, a 10.33% waif year-over-year, equal to a new report released by the undertone on Tuesday. The overall user size shrank to 664 million, 0.33% fewer than the year before.
The declines aggravated pressure on an industry that was once struggling. In recent years, China has launched a slew of crackdowns on video games, clamping lanugo on content that is ideologically objectional and limiting playtime among underage users. Amid the industry shakeup, regulators stopped issuing new game permits for months; the process has resumed but now takes longer and financing companies increasingly to be compliant.
To whittle out new growth opportunities, developers from scrappy studios to behemoths like Tencent are going abroad. Chinese games have been exported for years, but in recent times, they started to make a wafer in the West. Toward the end of 2020, China-made titles rumored for as much as 20% of mobile gaming revenues in the U.S., equal to market research firm Sensor Tower. Last July, 39 of the top 100 mobile games by revenue worldwide were from Chinese firms.
The ratio might plane be higher in reality as Chinese game developers, like other types of internet services, are increasingly trying to obscure their origins to stave the saltate of stuff labeled “Chinese”. India, for instance, has vetoed hundreds of Chinese apps in recent years, including the global hit PUBG Mobile, as its relations with China soured.
Made-in-China games recorded flipside rosy year in 2022 regardless, racking up $17.3 billion in overseas sales, equal to the industry report. Though the icon slid 3.7% YoY, the ripen was much less substantial than that of domestic sales.
China has a reputation for making lucrative, haunting mobile games, but its games giants are now would-be well-nigh developing high-budget, global hits that will stand the test of time. Tencent, the world’s biggest games visitor by revenue, has a AAA panel game in the works at its Lightspeed outpost in Los Angeles (Lightspeed is most famous for devising the mobile version of PUBG). Tencent’s nemesis NetEase is moreover rented setting up shop overseas. Having spoken its first U.S. office in Austen last May, the firm recently teased another new studio.
China’s games industry shrinks for the first time in years by Rita Liao originally published on TechCrunch.