Supportive regulatory policies offer a better environment
Foreign companies are seeking opportunities in the world’s largest video game market as China implements supportive regulatory policies and provides a better environment for global stakeholders, analysts said.
The nation licensed 27 foreign online games in March, including titles to be published by major Chinese internet and technology companies such as Tencent Holdings, NetEase and Bilibili.
It was the second batch of foreign online games to receive publishing licenses since December, when the National Press and Publication Administration approved the first batch of 44 foreign games for last year.
Analysts said the latest move marks a break from the past, as the NPPA typically licenses foreign games in the second half of the year, especially in November and December.
In contrast to moves by the United States to crack down on Chinese tech products and apps like TikTok, analysts said China is committed to opening its doors more to the outside world, sending a positive signal for foreign companies seeking opportunities. in the ultra-large Chinese market.
Zhang Yi, CEO and Chief Analyst of iiMediaResearch, said: “Compared to the US actions to suppress and even blacklist leading companies from other countries, the Chinese government has shown its trust and tolerance.” .
China’s latest move to import new video games shows that the country sticks to the reform and opening-up policies, which are also part of the ongoing efforts to deepen reforms, Zhang said.
“As long as the game contents are appropriated and operated legally, China is always open-minded to welcome foreign companies to develop in its cultural and entertainment market,” he said.
“With such a large market, China welcomes high-quality products from around the world to serve Chinese consumers. It is beneficial for foreign online gaming companies to expand their presence abroad and seek business opportunities in China. This will also benefit their Chinese counterparts by increasing competition in the market, which leads to improving the levels of development and management of China’s gaming sector.”
Zhang said China is sending a positive signal that it will open up more to the outside world, offering huge growth opportunities for stakeholders around the world.
With China heading for a steady recovery this year, Zhang said the nation will play an increasingly important role in stimulating global economic growth and its huge consumer market will also benefit global businesses.
The economy picks up
Data from the National Bureau of Statistics show that China’s economy is stabilizing. It recovered in the first quarter of this year, driven mainly by a gradual recovery in consumption.
The nation’s GDP growth rebounded to a stronger-than-expected 4.5 percent year-on-year in the first quarter after reaching 2.9 percent in the final quarter of 2022.
Retail sales, a key gauge of consumer spending, grew 10.6 percent on-year in March, compared with 3.5 percent growth in the first two months.
In the first quarter, retail sales increased 5.8 percent compared to the same period last year, while in the last quarter of 2022 they fell 2.7 percent from a year earlier.
Wu Baokang, an analyst with data intelligence service provider iDigital, said China will most likely import more lots and sets this year than in 2022, given the nation’s expedited approval process for such imports.
“I think this implies a more supportive regulatory policy towards the gaming industry, and China will welcome more high-quality imported foreign games,” Wu added.
In addition to the nation’s accelerated approval for imported games, 347 domestic games were approved in four batches from January to last month, and the monthly number of approvals was basically flat at more than 80.
The COVID-19 pandemic sent shockwaves through the global gaming market. It saw growth in 2020 and 2021, but last year the market saw a year-on-year decline of more than 4 percent for the first time since industry consultancy Newzoo began tracking global gaming market revenue.
Meanwhile, China’s gaming market also contracted for the first time in years in 2022. A recently released industry report said the market generated revenue of 265.88 billion yuan ($38.85 billion), registering a year-on-year decrease of 10.33 percent amid a complicated and gloomy national and international situation, weakening market confidence and the pandemic.
Released during the China Game Industry Annual Conference in Guangzhou, Guangdong province, in February, the report says some companies had to reduce investment in game research and development, with the entire industry entering a pressure phase. financial and commercial last year.
Analysts said the significant drop in game revenue last year was mainly due to mobile games, which generated revenue of 193.06 billion yuan and accounted for more than 70 percent of the Chinese market.
Mobile game revenue in China fell 14.4% year-on-year in 2022, compared with an increase of 7.57% a year earlier, according to the report.
China also reported its first drop in the number of gamers in nearly a decade, down 0.33 percent on-year to 664 million last year. The number of mobile game players stood at 654 million last year, down 0.23 percent year-on-year.
Wu of iDigital said that while China’s game market experienced a downturn last year due to the sluggish economic situation and a weakening desire to buy games during the pandemic, it is likely to recover and see strong growth this year. year amid the resumption of production and the rapid recovery of consumption.
“There will also be more market opportunities for foreign game companies that develop high-quality products,” Wu said.
ambitions abroad
With the nation encouraging imports of higher quality game products, Chinese game developers are expanding their presence abroad, seeking new growth opportunities in emerging markets around the world.
“Facing fierce competition in the domestic gaming market, Chinese companies are actively expanding their business abroad,” Wu said.
While overseas sales of Chinese-produced games fell 3.7 percent on-year to 17.35 billion U.S. dollars last year, sales in the domestic market fell 13.07 percent on-year to 222.38 billion yuan, according to industry report.
Despite being affected by the pandemic in recent years, China has made considerable progress in becoming the world’s most developed mobile market, with Chinese mobile publishers ranking among the best in the world.
China overtook the US for the first time to dominate a list of the top 52 app publishers worldwide. A total of 17 national companies earned spots on this list, which was published last year by data.ai, a US-based mobile analytics company.
China’s top gaming and social networking operator Tencent and China’s leading gaming company Net-Ease held the top two spots on the list for the fifth consecutive year.
NetEase Games said its products are played in a total of 200 countries and regions, including 140 that have joined the Belt and Road Initiative, or BRI.
Naraka: Bladepoint, a combat game from the company, has become a huge hit in the global market.
Within 30 days of its release, the game was being played in 126 countries and regions involved in the BRI, and as of June, it had sold more than 10 million copies worldwide, NetEase Games said.
It added that revenue from foreign markets accounted for more than 10 percent of its revenue. The company aims to further expand its business abroad, with 40 percent to 50 percent of its revenue coming from such markets.
Zhang said Chinese game companies have gained a competitive advantage in the global market and their overseas business has become an increasingly important part of their operations.
Despite these notable achievements, Zhang said some Chinese gaming companies seeking opportunities in global markets still lag behind their international counterparts in areas such as marketing channels and methods.
“They need to operate in a more professional way in foreign markets, especially in terms of attracting more global talent,” he added.
“More efforts should also be made to increase the acquisition of overseas talent and teams. This would be beneficial to local operations and absorb top-class talent from different countries and regions in terms of creative culture, game design, and localization channels. , among others. “
