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China & Videogames

China is a country with a huge population: with about 1.4 billion people, it has a huge potential for good quality products and service.
In 2019 the gaming industry in China, becoming the first market worldwide, has a value of more than 36 billion and half USD (26,3% of the world market), registering a 177-fold growth since 2003, when value was 180 millions USD (a bit more than 0,5% of the world market in that moment), far above the growth rate of other countries.
While in the western side of the Anglosphere (USA, Canda and United Kingdom) the percentage of gamers in the total population is of 50,7%, in China it’s 45,7%: the average expense of each gamer per year is 199$ vs 57$.
We prepared two graphs to analyze the market:

1. The Chinese market is almost mature: the amount of gamers will not increase by far, probably will reach 50% in the years to follow, so it is time the offer becomes more and more competitive. South Korea and Japan, the two most developed asian countries, are taking third and fourth places by income of the gaming market, while having much more less people when compared with China and USA. This is thanks to the average spending, which is much higher in those two countries: Japan, for example, has an average expense of 276$ per gamer, while USA just 213$. China is even worse, with 57$, far lower than most other countries. This implies that, while the gaming culture will develop with time, the player will probably get passionate with more complex and difficult games as the market stabilize itself.

2. The chinese market beats the USA one, which is more than twice of the Japanese market. Japanese market, on the other side, is triple of the Republic of Korea. Republic of Korea itself, which is similar to Germany in size, is more than double of Spain and Italy. The enormous potential shown in point 1, given by the low per person spending, combined with the economic growth of China, makes it possible to forecast even a three or four times bigger market in China, compared with the current value, in the next years. This is considered by taking into factor the asian markets in the top 10: Japan and South Korea, which have a per-person spending up to almost 5 times bigger than China; furthermore, those countries have a very close relationship with China, socially, geographically and culturally speaking, especially when compared with other countries. Of course, this will require long time – the gaming culture in Japan and even in Korea have a longer history than the one in China, which is relatively new in the market – but this and other reasons imply that China is the most interesting market in the gaming industry.

But why, since China is such a flourishing market, so few foreign companies invest there?

The other factor to consider is the shifting interest of the users. While on one side, those who can afford will even purchase power ups, in order to win the game as fast as possible, this creates a chain effect that will make people move onto another game, and so on. Being a popular multiplayer game in China for a long time is not easy at all.

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Mobile gaming is extremely diffused in China: much more than in other countries. A reason is the high quality access to the internet, available virtually everywhere.

There are several reasons:
1. Chinese law: China has a reforming approach, which means its regulations may change as time passes, and keeping the pace is not always so easy. This creates a sense of insecurity in smaller developers, as well as in bigger firms, who usually associate with big local brands, such as Riot Games and Paradox Interactive, who entered in partnership with Tencent;
2. Cultural divergences: what hurts mostly the Chinese consumers’ interests is the geographical and cultural distance from the rest of the world, with the special case of Japan: their feedback is less likely to be listened to and the preferences of Chinese market are very different from those in other markets. Regardless of this, many gamers like foreign games (especially the japanese) when compared with the local ones, which are favored mostly thanks to their multiplayer titles, especially since you can find more players.
3. Mobile gaming: Chinese usually spend a lot of their daily life on the subway, with full access to 4G (and soon 5G) network, and several workers – especially those in the gig economy – need to find some way to spend time between a job and another. This creates the need of lighter games, easy to interrupt or with a short game duration, perhaps with multiplayer functionalities.
4. Pay to Win: in China Pay to Win is not a bad thing, actually. Several players like to save their time to get some bonuses, so they won’t have to do massive grinding – which is to repeatedly play several hours to get a specific item or raise their level. In this kind of sense, their methodology is very different from western mentality: but we are still talking about a small portion of gamers.
5. Market trends: competition in China is so strong that a game can not be popular for long, especially if multiplayer. This is also influenced by the fact the interest of gamers shifts easily, so software houses tend to advertise their game everywhere, so they can maximize the results in the short term.
6. Censorship: although in videogames market censorship is not only a problem in China – for example, Germany, Japan and USA all have their censorships, with all the consequences. China, though, tends to be sensitive on few topics, and the time required by censorship bureau will make the delay unsustainable at times. But it’s not something impossible to sort out: knowing well the market it is possible to avoid many errors while not compromising the gameplay of the product. It is far more difficult, though, for those who cannot afford a team dedicated to Chinese market.
7. Marketing: marketing in China is so different from the rest of the world: the social media are not the same, and the popular contents are also very different in style. A short term effort will not bring much advantages, as others did in the past – creating a lack of trust from the Chinese customer base. A long term effort will be far more effective, and it will not need to be over the top – just constant, so that the interest of Chinese gamers can be raised.

More useful info about China:
– Single player games are usually foreign, especially Japanese. Those extremely unknown sagas in the West, such as Persona, are pretty famous in China, although not like in Japan.
– Although on computers, Steam helps to market games in China, smartphones have much more issues: Google Play Store in China will not work without a VPN, and nobody will use it for this reason (especially those games that require update through the Store will be hard to deal with), while Apple loses more and more customers in China due to the availability at low cost of Android smartphones with the perks of a GUI more and more similar to iPhone. In order to reach chinese customers, it is needed to upload the game on different stores, specific for the brand of the phone, and other generic marketplaces.

For more info, contact us at marco@sinoactive.com

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