The future looks bright for China’s overseas gaming market, according to a report by domestic industry insiders. But dramatic policy changes over the past two years may mean a rockier road ahead.
The China Audio-video and Digital Publishing Association (CADPA) released the 2022 Report on China’s Games Overseas at a conference in Guangzhou on February 13th. The report highlighted a decline in the industry’s revenue from overseas markets, but asserted that these figures do not signal any change to the overall “positive trend” expected for sales of China’s games abroad.
Overseas game revenue, which fell for the first time since 2018, dropped to 17.346 billion USD, a 3.7% year-on-year decrease. Revenue from Germany and the UK saw the biggest decline in growth. However, the number of Chinese games companies that released games abroad increased, suggesting that the domestic gaming industry’s penetration into the global market is steadily on the rise.
Ao Ran, executive vice-chairman of the CADPA, commented, “In the future, the Chinese gaming industry will continue to uphold the mission of spreading Chinese culture to the outside world via more channels and on deeper levels.” Video games and mobile games are an important potential form of soft power for China given that its exports in film and television have long been overshadowed by those of Taiwan and more recently South Korea.
The report referred to unforeseeable global events as reasons for the overall decline in revenue, but did not mention the government crackdown on the gaming industry, which significantly slowed the launch of new games in China throughout 2021 and 2022.
The gaming industry has come under tighter control due to concern among political elites over widespread “youth gaming addiction”. Regulations on who can play games and how often, as well as stricter criteria for deciding which games receive publishing licenses all form part of the government’s mission to curb this phenomenon.
To win publishing licenses, games must now be reflective of the government’s values and have educational value to players. This presents huge challenges for domestic games companies, who must work harder to figure out how to satisfy the increasingly strict requirements of the government – a goal which is often in in conflict with creating products that appeal to overseas players.