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Tencent and NetEase generated over 80% of revenue among the country’s top game makers

The two companies were China's top developers by revenue in Q1
Tencent and NetEase generated over 80% of revenue among the country’s top game makers

Tencent and NetEase are among the world’s biggest mobile game makers, and now Yicai Global reports that the two companies accounted for more than 80% of revenue generated by China’s top ten gaming companies in the first quarter of 2023.

2022 proved to be a turbulent year for the mobile gaming industry, thanks in part to the normalisation of the market post-Covid and changes to IDFA regulations. China was hit particularly hard, experiencing a lengthy hiatus on new game licences and grappling with new restrictions on playtime in an attempt by the government to curb "youth game addiction". This saw operating revenue shrink in every one of the country’s top ten game developers in Q1, with the exception of Tencent and NetEase.

Additionally, seven of China’s top ten mobile games in Q1 were published by NetEase or Tencent, showcasing the powerful position each company has in the world’s biggest mobile gaming market.

Market Dominance

Tencent accounted for roughly 50% of domestic market revenue for the quarter, compared to 40% in Q1 2022. The company’s operating revenue rose 11% to 48.3 billion yuan ($6.8 billion), while domestic revenue rose 6.4% to 35.1 billion yuan ($4.93 billion). Overseas revenue rose by a record 25%, hitting 13.2 billion yuan ($1.86 billion).

NetEase, meanwhile, saw a 7.6% year-on-year increase in operating revenue from games, reaching 20.1 billion yuan ($2.86 billion). Gaming represented 80% of the company’s total revenue, highlighting the mobile gaming market’s resilience in the face of turbulence in the market.

However, Yicai Global notes that the release of more licences could see this current dominance challenged, offering more opportunities for local game makers to increase their market share by releasing new titles. Notably, the recent launch of MiHoYo’s Honkai: Star Rail broke records with 20 million downloads in its first two days, with the Financial TImes stating that the company is aiming to challenge Tencent for the crown of China’s gaming market.

We listed NetEase, Tencent, and MiHoYo as three of the top 50 mobile game makers of 2022.