Video games witnessed robust growth in 2020 due to COVID-19. Lockdown in Q1 2020 substantially increased consumers’ time at home and limited their choices of entertainment, paving the way for Chinese consumers to invest in video games for fun and socialising.
The competitive landscape for video games software in China has long been similar to a duopoly: half of value sales are generated by Tencent Holdings and NetEase, with the rest divided amongst medium-sized, well-established gaming companies that focus on already popular signature titles. However, things have started to see subtle changes, with a few local disruptors quickly climbing up the ladder, stealing share from the medium-sized companies.
Aligned with overall video game dynamics, e-sports grew robustly in 2020, with game sales remaining the most significant portion, despite a temporary hit on sales of e-sport match tickets in 2020. Due to social distancing requirements during the initial outbreak of COVID-19, matches were shifted online, reducing ticket sales at offline events.
Post-COVID-19, video games in China is expected to see healthy growth, despite already high sales. Chinese gamers are increasingly demanding, which in turn pushes game developers to innovate harder and monetize better.
Rising newcomers like miHoYo, HyperGryph, and Alibaba have taken share from medium-sized game companies, but they are not yet big or strong enough to take down Tencent and NetEase. Upon the release of a few successful titles, small studios will need to maintain high production quality, diversify their game portfolios beyond nijigen style, and stay relevant in terms of pop culture in order to survive and further grow under the watchful eye of Tencent.
Cloud gaming is a hot topic in China, which gaming manufacturers see as offering strategic future opportunities, as it is a new way to generate revenue and revolutionise the gaming experience beyond the confines of devices. With technology improvements in 5G, edge computing, and virtualisation recently advancing, the gaming world on cloud is robustly mapped out by the leading parties in gaming technology solutions and infrastructure/cloud providers, including giants like Huawei, Alibaba, and even Tencent.
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Understand the latest market trends and future growth opportunities for the Video Games industry in China with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Video Games research and analysis database.
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