State of Play: How China's games industry is building a global powerhouse

• China accounted for 27% of all consumer spending on games in the world during 2025.
• 720 million people play games in China, just over half of the country’s population.
• Matthew Ball’s State of Video Gaming in 2026 report noted Chinese publishers have claimed approximately half of all global player spending growth since 2019.

This feature is part of our China region report, published in association with Xsolla, which you can download for free here. Get insights in-person at PGC Summit Shanghai on July 29th.

For some time now, China has been one of the biggest and most influential players in the global games industry.

The growth might be slowing as the country’s interactive entertainment sector matures, but it is still one of the most valuable markets in the world, challenging the United States for the top spot – and its top publishers are making inroads on the international stage.

Tencent and NetEase have long expanded and invested globally – though the latter may have stepped back some of those ambitions. Game Science’s Black Myth: Wukong is credited as a breakthrough success story in the PC and console realm.

Meanwhile on mobile, companies like Microfun, Century Games and First Fun are dominating categories like merge and 4X strategy. Then there’s cross-platform sensations in recent years including Hoyoverse’s Genshin Impact and Honkai: Star Rail, NetEase’s Where Winds Meet, Kuro Games’ Wuthering Waves and, more recently, Perfect World’s Neverness to Everness.

Such is their success, that Matthew Ball’s State of Video Gaming in 2026 report back in February this year noted Chinese publishers have claimed approximately half of all global player spending growth since 2019. Competing with team sizes, levels of investment, expertise and sheer scale has become a major talking point for the global industry.

In China itself, between 2024 and 2025, revenue rose by 5.4% to hit a record $51.8 billion, according to data from Niko Partners. That’s the first time China’s games market has brought in over $50 billion. For 2026, Niko forecasts 4% growth to hit $53.9bn.

Newzoo’s model shows slightly different figures, saying that the Chinese games market generated $54.6 billion in 2025. Regardless, according to the company’s global report for the year, China accounted for 27% of all consumer spending on games in the world during 2025.

At the moment, 720 million people play games in China, just over half of the country’s population.

“We have a more positive outlook for China’s games market compared to last year,” Niko Partners’ director of research and insights Daniel Ahmad says.

“Part of that is driven by stronger than-expected performance of both new games and legacy titles, and also, we are seeing new growth areas. China’s games market was predominantly mobile before; now we are seeing more cross-platform releases where the games are succeeding on both platforms.” 

Small but mighty 

One sector of particular note is mini-games. These started as small and simple experiences that sat within other apps, such as the WeChat everything app.

Ahmad says that 80% of gamers in China have played one of these games and that they account for around 20% of mobile games revenue, three to four percentage points higher than 2024.

“In the past, going back five or six years now, many of these were one-tap games where you touch the screen. There were no real complicated inputs,” Ahmad explains.

“They were funded through in-app advertising, so you’d just watch an ad every now and again. Now they’ve evolved very similar to appbased games. You can find RPGs, full-on strategy simulation games that are mini-games and run instantly.

"They now have in-app purchases and are monetising at a higher level and accounting for a growing share of spending in the country.”

An executive at a top Chinese game developer, who has opted to remain anonymous, adds: “This shift indicates a critical evolution in user demand: non-traditional gamers, initially introduced to gaming via the frictionless entry of mini-programs, are now upgrading their gaming literacy. They are actively seeking deeper, more immersive experiences and transitioning to sophisticated, app-like mechanics.

“For overseas developers looking to enter the Chinese market, mini-program platforms are no longer a niche side-channel but a highly strategic, viable entry point to onboard and convert this massive, rapidly maturing user base.” 

Mobile is still king of the Chinese games industry, but Ahmad notes that new PC titles are also seeing a strong performance in the country. Foreign-made titles like League of Legends, Diablo and Valorant have historically found a strong audience in China but native titles are not only becoming more popular, they are also more lucrative.

Many of these are cross-platform, and while often designed for mobile first, PC is where the developers make the bulk of their money.

“Perfect World recently released Neverness to Everness, their anime-style open-world modern RPG action game,” Ahmad says.

“60% of revenue is coming from PC gamers as opposed to mobile. That’s partly because the publisher does push players towards PC – there are better deals on the PC store as opposed to mobile, where they have to share commission fees with the Android stores.

“There’s a shift in where players are monetised and how companies are going full circle, from a market that was predominantly PC gaming in the early 00s to one that is seeing more spend on PC games in the 2020s.” 

Sleeping giants 

While some call the market mature, others point to a more stagnant feeling in the Chinese games space. Big Bang Accelerator founder Wenfeng Yang argues that the sector is dominated by established giants, which makes it tougher for newer companies to break into the space.

“The industry is still largely controlled by the post-80s generation and younger challengers don’t have many real opportunities,” he says.

“One key reason is the lack of a good exit mechanism. If there is no clear IPO or M&A path, capital simply won’t be very interested in backing new game studios. “So overall, the market is very stable.

"The old players are strong, capital is cautious and challengers need something truly disruptive – probably AI or a new content/platform paradigm – to break the current structure.” 

Ahmad agrees that the market is “very mature” and “dominated by very large publishers”, but says that there is still room for success.

“We’ve seen it from games launching unofficially on Steam or officially in the market from mid-to-large publishers. There’s opportunity for success,” he proposes.

“In China, it’s just about whether your game is right for the country and how best to launch it there.”

Alongside consolidation, there is a degree of fatigue in the market, too, especially when it comes to open-world or anime-style games. One example is Tencent’s open-world RPG Honor of Kings Worlds, based on the blockbuster MOBA franchise and one of the most popular IPs in China.

“It did well for the first month, but the second month performance has been a little underwhelming,” Ahmad explains. “It hasn’t performed to the same standard as some of their games or even competitor games.

"That’s not to say that Tencent is struggling; they have plenty of other successful launches. But there’s definitely some open-world or anime-style game fatigue. That’s why we’re seeing new genres start to grow.” 

The AI boom

Real opportunities, according to Yang, will come from outside of the games industry. “The more interesting possibility is nongaming companies or AI-native teams entering the market and using the AI wave to disrupt the old model,” he says.

"If AI can change how games are produced, distributed, and experienced, new entrants may have a real chance to break through.

“AI’s open-endedness, unpredictability and ability to generate dynamic, personalised experiences could be integrated into gameplay itself. Instead of everyone playing the same fixed content, each player could get a different version of the experience based on their behaviour, preferences and real-time context.

"That could create a new entertainment paradigm – not just more efficient game production, but a fundamentally different kind of interactive experience.”

The anonymous Chinese games development exec argues that while AI content is unlikely to “dethrone the incumbents”, the tech is a “real wild card” that “will significantly accelerate the production velocity and reduce the cost barriers for mid-sized studios”.

They continue: “This will likely catalyse an explosion of commercially viable, mid-tier game companies, enriching the diversity of the global market with a higher volume of polished, niche-targeted titles originating from China.”

Another challenge facing the Chinese industry is a shift in the types of new experiences domestic consumers want from their entertainment.

“In China’s hyper-competitive societal environment, we’re observing a significant psychological pivot in player motivations,” the anonymous Chinese exec explains.

“Some studies show that the core demand is moving away from the traditional competitive adrenaline – the ‘conquering others/systems’ thrill – toward emotional fulfilment, such as inner peace, warmth and meaningful social/ emotional connections.

“This presents a unique challenge because it is not the traditional strong suit of industrialised game giants, which excel at technical fidelity and systemic depth. How studios adapt their design philosophies, narrative structures and live service content to cater to this softer, introspective demand will be a critical strategic test over the next few years.”

As with most countries around the world, the Chinese games industry is now also competing with other forms of entertainment for peoples’ time and money.

“Platforms like Douyin, short dramas and other entertainment apps are taking more and more user time,” Yang explains. “In many cases, they are even more addictive than games, because the entry barrier is much lower – users don’t need to learn rules, make decisions or invest much effort. They can just keep scrolling or watching.

“So games are not only competing with other games anymore. They are competing with the entire attention economy. That makes it harder for new games to acquire and retain users and to justify the production cost the industry has become used to.”

Calmer waters 

For foreign companies entering China, business has been somewhat more predictable in recent years. There haven’t been any seismic changes in regulations and Ahmad says that the country’s media regulators have a “much more positive outlook” when it comes to games.

China has even rolled out a pilot programme whereby foreign companies can submit new games via the domestic approval process if they have an office in Shanghai. Foreign companies still need to have a local partner, but the waiting times are lower. 

“Unlike the import approval process, which has a cap on the number of games approved every year and longer approval times, if a company sets up in Shanghai, they can go through the domestic approval process and benefit from shorter approval times and higher caps,” Ahmad says.

That’s not to say that it’s entirely smooth sailing for foreign companies. Nintendo Switch 2 hasn’t launched in China yet, but Niko Partners says the console has already sold one million units in the country, “significantly higher” than its predecessor. While that’s a positive sign for console adoption, it is still tough for such hardware to launch in China.

Only around 50 games for the original Nintendo Switch were approved for release, and thus, only that number could be bought in partner stores.

“The hassle of going through that to get a small number of games approved is not worth it,” Ahmad says.

Looking at China in a broader global context, the country is subject to the same macroeconomic trends as everyone else. Its relationship with the United States is one area of instability, while the region is also facing headwinds from the AI boom and the war in Iran.

But the way in which China’s games ecosystem operates means that while it isn’t immune to macroeconomic shifts, like the global chip shortage, it can weather them differently.

“One thing that insulates China somewhat is that because it’s more mobile heavy and mobile is ubiquitous in a sense, console and PC pricing aren’t necessarily having the same impact as you’d see in the US, for example,” Ahmad explains.

“Even when PC prices do increase, internet cafe culture is still quite big in China. We’d expect attention to shift to there rather than people not playing games or staying on their existing devices. That is one aspect where some of this is offset.”

He continues: “It’s the same factors affecting everyone else in the world, but there are alternatives to home PC gaming. It’s not having the same impact right now.” 

What the future holds 

Looking to the next five years, by 2030 Niko Partners forecasts that the Chinese games market will generate $59.8 billion in consumer spending and that 769 million people will be playing games. To achieve that growth, Chinese games companies are looking into new ways to engage and entertain players. 

“There’s a deep investment in what I would call ‘direct-to-fan’ monetisation,” Ahmad explains. “That’s blurring the online game and offline real-world environment through collaborations with resellers or fast food brands, offline events like concerts or in-person meet-ups or tournaments.

“There’s a lot more emphasis on community-building. These games are live services, they aim to build audiences for the long term, the marketing spend isn’t just dedicated to online ads or social media.

"They’re dedicated to building a community in real life. That can include TV shows, movies and transmedia efforts as well.”

Another area that could yield growth is, unsurprisingly, artificial intelligence and user-generated content. 

“More titles, live service games, are trying to replicate Roblox or Fortnite, even Minecraft to some extent, and being able to monetise their own creations within the game as well,” Ahmad offers.

“China is also very big into generative AI right now from a development perspective, more so, but also from a player adoption perspective. Those tools are being used to enable some of that.”

Much of Yang’s outlook for China is focused on AI, too, arguing that the increasingly adopted technology “may create a new wave of opportunities and possibilities”.

“AI could allow ordinary users to express themselves through games,” he says. “In our view, indie games and premium games are essentially a form of self-expression.

"Historically, making games required professional skills, teams and budgets. AI may lower that barrier dramatically and allow more creators to turn their ideas, emotions and personal stories into playable experiences.”

He adds that AI could make “true personalisation” possible in free-to-play games, giving a unique experience to all players. That’s on top of the technology, possibly leading to the creation of “new forms of interactive entertainment”.

“In five years, I hope China’s games market will not just be a market of bigger budgets and better graphics,” Yang says.

“I hope it will become more open, more creator-driven and more experimental – with AI helping both professional studios and ordinary users create new forms of entertainment.”

Globally, the anonymous Chinese development exec says that China will have a greater place in the global games industry. “I anticipate a marked increase in Chinese-developed games capturing a larger share of global players’ time and mindshare,” they argue.

“We will see a significant uplift, particularly in the premium single-player/standalone game space, as developers leverage their accumulated technical expertise to build high-quality narrative-driven and open-world experiences that resonate globally, challenging the historical dominance of Western and Japanese studios in this genre."

This feature is part of our China region report, published in association with Xsolla, which you can download for free here. Get insights in-person at PGC Summit Shanghai on July 29th.