China’s mobile gaming market is set to decline by 5.5% year-on-year, it's first retraction in two decades.
An overall slide in revenue of 2.5% for video game software and services revenue has been predicted, covering all platforms including console and PC. However, PC games will be up slightly by 2.1% YoY. This data was gathered by Niko Partners who’ve previously reported on subjects such as how mobile is pushing game tech forward and the consumer profile of female gamers in Asia.
Their analysis indicates how, “Downward macroeconomic factors, restrictive regulations, a lack of new licences and underperformance of newly launched titles fed the decline.” China still pursues a “zero covid” policy that many have seen as extremely disruptive to their economy, this, in conjunction with tightening restrictions on games has likely stifled the sort of growth seen in gaming and online play during pandemic restrictions in other countries. This echoes earlier reporting this month, and indicates an even more severe forecast for China.
All falls down
One potential element that could be observed is the lower amount of overall gamers, due to new restrictions on youth gaming introduced in late 2021, however their reporting denies that this could be blamed saying, “the impact on revenue is minimal compared to other factors.” These other factors include the ongoing zero covid policy in China which sees many communities and areas of major cities locked down with little to no-warning. More powerful are the stifling restrictions on the approval of games – including those from major developers and publishers such as Tencent – which mean that the potential capitalisation of a captive audience is nullified.
This however, isn’t the end for China’s games market by any stretch. Despite these setbacks, Niko Partners also forecast the overall market to grow by a little under $10bn in revenue and add around 54m gamers. However, these numbers would likely put them behind other rising stars in the gaming markets, especially in Asia, with India already jostling for the top position by 2025.
Whether or not China's mobile games industry begins to bounce back could depend entirely on how effective, or not, their zero covid approach is. At a time when many people are getting used to the “new normal” for better or for worse, significant criticism has been levied at the Chinese government’s approach to controlling the spread of covid-19 within their borders. It’s a sobering reminder as to how larger factors can affect production and growth in the entertainment industry.