Chinese-developed mobile games are predicted to generate greater demand overseas, particularly in the United States and Europe , as tightened industry regulation and slowing growth dampen further expansion in the domestic market, according to a new report. The US and Europe will be the “primary focus” for Chinese video gaming firms’ expansion overseas, a vast market that is forecast to reach 100 billion yuan (US$14.9 billion) over an unspecified period, according to a report published over the weekend by the research arm of technology media 36Kr. It expected China’s video gaming market, the world’s biggest , to record slower growth because of the government’s rigid licensing process and restrictions on playing time for young gamers across the country. The US and Europe, by contrast, have fast-growing smartphone penetration rates and higher consumption, according to the report. It also indicated that the “mobile gaming [industry] has not been deeply developed” in those markets. The smartphone penetration rates, for example, in the United Kingdom , France , Germany and Italy – countries that are part of the Group of Seven most advanced economies of the world – reached 79.8 per cent, 78.8 per cent, 78.8 per cent and 77 per cent, respectively, in 2021, according to market and consumer database Statista. Smartphone penetration in the US, the world’s largest economy, was 82.2 per cent in the same period. The 36Kr report reflects the growing trend for international expansion among Chinese video gaming companies, which recently endured an eight-month freeze in new game licence approvals that left small developers struggling to survive . That lengthy suspension resulted in the slowest revenue growth in three years for the domestic video gaming industry. Total market revenue reached 296.5 billion yuan in 2021, up 6.4 per cent from a year earlier. It marked a sharp decline from the 20.7 per cent year-on-year growth in 2020. When the National Press and Publication Administration resumed new game approvals last month, only 45 titles received licences. Over the past five years, the trend has been for fewer new game titles getting approved on the mainland. There were only 679 new titles licensed last year, compared with 2,055 in 2018. China’s resumption of video game licence approvals may be too late for some studios “While regulations are strict in the domestic market, the more established companies have set their sights and strategy [on expanding] overseas,” said Zeng Xiaofeng, Shanghai-based vice-president of market research and consulting firm Niko Partners. “Acquisitions and investments in foreign development studios have provided Chinese developers a tremendous window to see what may be in demand outside the domestic market.” Shenzhen-based Tencent Holdings , which runs the world’s largest video gaming business by revenue and China’s biggest social media platform WeChat , already holds a 100 per cent stake in League of Legends creator Riot Games and a 40 per cent interest in Fortnite developer Epic Games . In 2016, Tencent spent US$8.6 billion to take over Finnish mobile game developer Supercell . NetEase , China’s second-biggest video gaming company, last week launched its first US studio – Jackalope Games – in Austin, Texas . “We see these strategic moves continuing in the future, leading to a broader set of genres, styles and gameplay for gamers around the world to enjoy”, Zeng said. Chinese games set global records amid crackdown at home Chinese-developed games generated total overseas sales of US$18 billion last year, up 16.6 per cent from 2020, according to data from Shanghai-based consultancy Changer. The world’s top-grossing mobile games already come from China, which shows the increased sophistication of Chinese game developers and the potential for expanding their business beyond the mainland. Tencent’s Honour of Kings and PUBG Mobile were the world’s two top-grossing mobile games in March, generating US$272.4 million and US$199.8 million, respectively, in player spending, according to app analytics firm Sensor Tower, which surveyed Apple’s iOS App Store and Google Play sales data. Those numbers exclude revenue from third-party Android app stores, such as those found in mainland China. About 96.6 per cent of Honour of Kings ’ March revenue was from China, while PUBG Mobile saw a 56.4 per cent contribution from the mainland, according to Sensor Tower. Genshin Impact , developed by Shanghai-based miHoYo , is credited with having the biggest international launch of a Chinese game in history in September 2020. China, Japan and the US represent the mobile game’s major markets. Asia, however, accounts for nearly 70 per cent of Genshin Impact ’s total iOS revenue to date, according to Sensor Tower. The US made up 19.7 per cent of the game’s overall sales in the same period.