The world spends US$109 billion on video games, and the Chinese are the biggest players

Mainland market predicted to be worth US$27.5 billion this year, making it the world’s leader

PUBLISHED : Tuesday, 20 June, 2017, 11:02pm
UPDATED : Thursday, 22 June, 2017, 10:51am

The global video games market is forecast to cross the US$100-billion mark this year, driven by the huge appetite for online and mobile content of mainland China’s more than half-a-billion gamers.

The mainland market is predicted to be worth US$27.5 billion this year, making it the world’s leader as global market revenue advances to US$109 billion from US$99.6 billion last year, according to a new report from research firm Newzoo.

It said nearly half of the mainland’s estimated 565 million gamers this year are expected to be playing on all three gaming platforms – console, personal computer and mobile.

“The phase that the [global] games market is now entering is redefining how we talk about our industry, audience and future,” said Newzoo chief executive Peter Warman in a statement.

The Newzoo report pointed out that Chinese gamers “remain very interested in the top Western personal computer [video game] franchises, even though the majority of the most popular games [on the mainland] is home grown”.

Internet giant Tencent Holdings, the world’s largest games company by revenue, was credited by the report for opening the door for popular Western games on the mainland, which ensures that “the success of Western intellectual property [in terms of games] in China will lead to new truly global franchises”.

Shenzhen-based Tencent reported 22.8 billion yuan (US$3.3 billion) in online games revenue in the first quarter of this year. That was spurred by the strong growth of its mainland-developed smartphone games like Honour of Kings and personal computer-based titles such as League of Legends, which was created by Tencent-backed US game developer Riot Games.

“[Tencent] management believes ... personal computer games have become a centre for game content innovation for many games developers,” Alicia Yap, the head of regional internet research at Citi Research in Hong Kong, said recently.

“Management [was also] confident on the mobile games growth trajectory, thanks to ... overseas opportunities.”

The Newzoo report said the state of the global games market “has given Chinese games companies confidence to export their successful games to the West”.

It said initial overseas expansion efforts by Chinese games companies five years ago were unsuccessful, which led them to take an alternative route: investments and acquisitions.

Tencent, for example, has significant interests in a diverse group of Western game developers that include Epic Games, Glu Mobile, Activision Blizzard and Supercell, which was taken over by the mainland firm for US$8.6 billion last year.

“This year, we expect to see new attempts by Chinese game giants to launch games into Western markets,” the Newzoo report said.

Jefferies equity analyst Jessie Guo said popular Chinese smartphone games like Tencent’s Honour of Kings and Onmyoji from Hangzhou-based NetEase are examples of titles that could make inroads in overseas markets.