China’s Game Industry Sees Business Opportunities Overseas

By Lily Wang

According to the recently issued 2022 China Game Industry Report， the actual sales revenue of Chinas game market in 2022 reached RMB 265.884 billion， down by 10.33% year on year. The number of game users was 664 million， down by 0.33% year on year. After the evident slowdown of market growth in 2021， the year 2022 witnessed the first decline in the past eight years， and the game industry has entered the phase of focusing on stock market. As the blue ocean of the market shrinks and the market competition becomes increasingly fierce， the significance of “going overseas”will be more and more important for the game industry.

Sluggish market

The report shows that the actual sales revenue of self-developed games in the overseas market reached USD 17.346 billion， down by 3.7% year on year. The sales revenue has been exceeding USD 10 billion for four consecutive years， and the declining rate is much lower than that of the domestic market. In 2022， among the top 100 self-developed mobile games in the overseas market， strategy games accounted for 38.76%， role playing games accounted for 12.76%， and shooting games accounted for 12.35%. From the perspective of overseas markets in recent three years， these games are still represents the mainstream of the market.

The report points out that in 2022， the United States， Japan and South Korea will remain the main target markets of Chinas game enterprises. The United States， Japan and South Korea contributed 32.31%， 17.12% and 6.97% for the sales revenue of self-developed mobile game overseas market. The proportion of other regions is also increasing year by year， indicating that Chinas overseas enterprises are expanding their businesses in emerging markets.

Regarding the domestic market in 2022， the actual sales revenue of mobile games accounted for 72.61% of the total revenue， showing the first decline in recent five years； client games accounted for 23.08%， slightly higher than the previous year. In 2022， the actual sales revenue of Chinas mobile game market reached RMB 193.58 billion， down by 14.4% year on year. The number of mobile game users was 654 million， down by 0.23% year on year. The growth in the number of users has faced stagnation.

Among the top 100 mobile game products in terms of sales revenue in 2022， role play， card and strategy games accounted for 24%， 12% and 11% respectively. The role play games contributed most of the revenue， accounting for 18.17%； online multiplayer tactical competition games took the second place， accounting for 15.31%； the shooting games took the second place， accounting for 14.94%. To sum up， the role play game features the largest number and market share among top mobile game products.

Among the top 100 mobile game products in terms of revenue in 2022， original IP accounts for 53% of the number of games， the largest source of IP. The mobile game IP accounts for 36%， with client games， literary works and console or stand-alone games contributing 23%， 7% and 6% respectively. Meanwhile， among the top 100 mobile game products in terms of revenue in 2022， original IP contributed 45.39% of the total revenue. The client games， console or stand-alone games or literary works games contributed 37.32%， 7.65% and 3.71% of the total revenue. The data shows the number of top mobile games with original IP has been increasing markedly in recent three years.

Among the top 100 mobile game products in terms of revenue in 2022， the top three theme games are fantasy/ magic， weak theme and historical theme， accounting for 25%， 18% and 13% respectively. The themes with the highest sales revenue include fantasy/ magic， modern and cultural integration， accounting for 22.26%， 18.09% and 13.82% respectively. In the past three years， fantasy/magic theme games have kept the first place in the number of products and the proportion of sales revenue.

In 2022， the actual sales revenue of Chinas client game market reached RMB 61.373 billion， up by 4.38% yearon-year； The actual sales revenue of the online game market was RMB 5.28 billion， down by 12.44% year on year. In the past three years， the market share of client games has increased year by year， showing a good development trend against the background of the downturn of the whole industry； web games have been shrinking for seven consecutive years， and their market share has further declined.

The report pointed out that due to the decreasing number and weak performance of new game products in 2022 when compared with previous year， the actual sales revenue of Chinas console game market reached 2.353 billion， down by 8.80% year on year. In 2022， the actual sales revenue of Chinas e-sports game market reached RMB 117.802 billion， down by 15.96% year-on-year. The COVID-19 pandemic has led to the downturn of the market. Due to the lack of new hits， the decline of market revenue has been inevitable.

Development space still exists for the foreign market

Ao Ran， Executive Vice President and Secretary-general of the China Audio-video and Digital Publishing Association， said： “the scientific and technological attributes of games can bring spillover effects. First， the development of games will stimulate scientific and technological innovation. Second， the games will advance the development of real industries. Third， the games will promote infrastructural construction and the building of talent teams in the realm of science and technology.”

He said that although Chinese game companies “going overseas” may face uncertain challenges， the longterm development remains on a positive trajectory. There is still much room for Chinese game companies to grow in overseas markets.

When looking at the global game market， the emerging markets like the Middle East and Southeast Asia have huge developmental potential and are expected to become new growth points for Chinese game companies； from the perspective of industrial construction， the Chinese game companies going overseas will help improve the business ecology of the game industry； also， user preferences in overseas markets are also changing. The IP adapted games and leisure games will provide new opportunities for Chinese game companies.

For example， in the current mobile game market of Indonesia and Vietnam， about 50% game products are developed by Chinese game companies. Chinese game products have become an important part of the mobile game market of both countries.

The report points out the future trend of the game industry： the first is to strengthen the guidance management and content construction， with the primary goal of promoting the healthy development of the industry； second， when choosing between product quantity and quality， we should focus more on the improvement of product quality of the whole industrial ecology； third， overseas business expansion is bound to become the strategic choice of more enterprises， and the global operation of Chinas game industry is becoming increasingly clear； fourth， the “game+”mode will promote the cross-sector integration of game technology with richer functional value； the fifth is to deeply explore the connotation of the excellent traditional Chinese culture and concentrate on creating high-quality content. The positioning of the cultural carrier of the game will become established.

Ao Ran believes that in the future， the game will guide more technological innovation through the “valley of death”. The digital scene created by the games is gradually approaching and even replacing the physical scene， providing a “l(fā)aboratory” for the application and transformation of more new technologies. It will ensure security， reduce the cost of trial and error and improving the survival rate of new technologies in the market competition. Also， the games will create the basic environment for mutual inspiration and promotion for technological innovation. For example， in order to verify the graphics and interactive characteristics of computers， electronic games were “accidentally” invented； Alan Turing wrote the chess game code， which became the starting point for the development of AI and decision intelligence.

As going overseas has become an inevitable choice for more and more Chinese game enterprises， how to grasp the opportunity of “going overseas” and achieve growth in the fierce competition will become the focus of Chinese game enterprises.

According to Xiang Yong， President of the Institute for Cultural Industries， Peking University， the international popular cultural products online， including online games and literature， have become the mainstream channel for people around the world to perceive Chinas development and accept Chinese culture.

Online games can show the perceptual， rational， spiritual and empathetic beauties of Chinese culture through the extraction of cultural element and content and connection with cultural spiritual scenes.

37 Interactive Entertainment， a domestic-listed cultural and entertainment company， has seen its overseas business growing in the past two years against the downturn of the whole industry. “Now there are fewer opportunities in the market. The companies shall strengthen their fundamentals to achieve long-term development，” said Yin Tianming， Vice President of 37 Interactive Entertainment. Although the work is tough and requires a lot of thinking and long time， it will make the corporate business more sustainable. Now the company is transforming from picking fruits to enhancing capabilities. It is trying to extend the product life cycle by carrying out refined operation.

Ding Wenhua， a CAE academician and Dean of the College of Electronic and Information Engineering of Shenzhen University， discussed the possibility of digital content industry represented by games in the future technology system from the perspective of the multiverse.“In the construction of the entry device， digital environment， digital avatar and other elements of the multiverse， the game will provide important technical support and application scenarios. China should seize the opportunity to develop key technologies that determine the industry trend and create an open multiverse system.” He pointed out that at present， Google， Meta， Microsoft and other international enterprises are seeking to formulate industry standards. Chinese game enterprises should give full play to their own strength to help the country seize the commanding heights of technology of the multiverse.”

“At the moment when the games are being recognized more rapidly around the world， China shall fully tap the advantages of the game industry， seize opportunities of the next generation of internet， and enhance the discourse power and influence in the international cultural field，” Ao Ran said.