China’s video gaming market shows signs of recovery in 2023 as Beijing continues to relax regulatory crackdown
- Overall industry revenue fell 2.4 per cent in the first half of 2023 from a year earlier, but surged from the second half of 2022
- ‘China’s gaming industry is gradually getting out of the trough and showing an upward trend’ says China Audio-video and Digital Publishing Association
China’s video gaming industry, once criticised by state media for churning out “spiritual opium” that poisoned the country’s youth, has shown signs of recovery in the first half of 2023 as Beijing continues to ease a regulatory crackdown.
Overall industry revenue fell 2.4 per cent in the first half of 2023 from a year earlier, but the combined amount of 144.3 billion yuan in the January to June period was up 22.2 per cent from the second half of 2022, according to a report released by China’s Game Publishing Committee, the state-backed association, at the ChinaJoy expo on Thursday.
The association said there was a “significant increase in revenue” in May and June. “According to this trend, we expect that there will be a relatively strong bottoming out in the second half of the year,” Zhang Yijun, first vice-chairman of the China Audio-video and Digital Publishing Association, said at the event while delivering the report.
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“China’s gaming industry is gradually getting out of the trough and showing an upward trend,” said Zhang. He added that it was still necessary to “boost confidence in the industry” and “deepen the protection of minors”.
The Chinese government manages the domestic video gaming market in the same way as it treats films and television programmes. In addition to censorship of “unhealthy” content in video games, authorities also run a strict licensing system for new titles. Foreign gaming studios, meanwhile, have to access the Chinese market through local partners.
The Chinese government imposed an eight-month freeze on game approvals in late 2021, dealing the industry a heavy blow with video game sales slumping over 10 per cent in 2022. China resumed games licensing in 2022 and normalised the pace in 2023 with over 86 titles approved each month. The country has granted more licences in the first half of 2023 than it did in all of 2022, in a clear sign of renewed support for the industry.
The report states the number of gamers in China increased 0.35 per cent year-on-year to 668 million during the first half, reaching “a record high” and reversing a fall in 2022.
Mobile game sales, which account for over 70 per cent of total sales, declined 3.41 per cent year-on-year to 106.7 billion yuan. That narrowed from a 14.4 per cent decline seen in the full year of 2022.
Sales of Chinese-developed games in overseas markets declined 8.7 per cent year-on-year to US$8.2 billion, according to the report, which attributed the decline to multiple factors including “economic downturn, international conflicts, fluctuations in exchange rates, as well as increasingly fierce market competition”.
The US remains the top destination for overseas expansion of Chinese gaming companies, accounting for 31.8 per cent of total overseas mobile gaming revenue. That was followed by Japan and South Korea, with shares of 19.7 and 8.5 per cent respectively. Emerging markets from the Middle East, Latin America and Southeast Asia continued to maintain an upward momentum, the report states.
The country’s biggest gaming companies have seen their revenue gradually recover this year. Tencent Holdings, which operates the world’s largest video gaming business, reported an 11 per cent jump in revenue for the first quarter of 2023, driven by growth in advertising and game sales, while NetEase’s revenue increased by 6.3 per cent in the same period.
