In recent years, Chinese mobile game developers have made significant strides in the global gaming market, capturing the attention of players worldwide with titles like Genshin Impact and Honkai: Star Rail.
However, as competition intensifies and market dynamics shift, there are growing concerns about whether these Chinese game giants can maintain their stronghold on the international stage.
The Rise of Chinese Mobile Games
The success of Genshin Impact, developed by the Chinese gaming company miHoYo, is a testament to the global reach and popularity of Chinese mobile games.
According to data from Sensor Tower and data.ai, the game generated an impressive $1 billion in revenue within just 171 days of its launch in September 2020, becoming the fastest mobile game to earn $5 billion in just 40 months.
This remarkable achievement was driven, in part, by the game’s appeal among overseas gamers, with nearly 60% of its revenue in 2023 coming from markets outside China, as reported by the market intelligence website AppMagic.
Challenges on the Horizon
However, the glory days of Chinese mobile games may be waning.
According to a report by the China Audio-video and Digital Publishing Association Game Work Committee, China Gaming Industry Research Institute, and CNG,
- The overseas earnings of Chinese games peaked at $18.013 billion in 2021
- But subsequently declined by 3.7% to $17.346 billion in 2022
- And further by 5.65% to $16.366 billion in 2023.
Even the phenomenal Genshin Impact has shown signs of losing its global appeal, with data from mobilegamer.biz indicating that the game’s global revenue plummeted from $112 million in February 2023 to a mere $51.9 million in June of the same year.
Ivan Su, a senior equities analyst at Morningstar, attributes this bottleneck faced by Chinese mobile games in 2023 to:
- Shortage of high-quality new titles from game developers
- Sales-based games losing their competitiveness
- The entry of European and American game developers made the mobile gaming sector more competitive
European and American Game Developers Reclaiming the Mobile Gaming Landscape
Indeed, European and American game developers have started to make their mark in the mobile gaming market, leveraging their wealth of experience in console gaming to reconfigure the global mobile gaming landscape.
The success of American game developer Scopely’s Monopoly GO!, which ended Tencent’s Honour of Kings’ 22-month streak as the most popular mobile game worldwide, exemplifies this shift.
An industry insider told Lianhe Zaobao that:
“In the last five years, European, American, Japanese, and South Korean gaming companies did not place as much emphasis and were slower to learn than their Chinese counterparts in the R&D phase of mobile games, allowing Chinese companies to reap the dividends during the period.”
However, this advantage may be short-lived as these developers are now paying more attention to mobile gaming and leveraging their experience to compete effectively.
Recently, the gaming PC/console giant Xbox also set its sights on mobile gaming. In a statement that underscores the growing importance of mobile gaming, Xbox head Phil Spencer stated:
“To be relevant in gaming at a global scale, you’re going to have to find a way to be relevant on the largest platform, which is mobile”
Entertainment powerhouse Netflix is also making strides in the mobile gaming space through its cloud support, offering 90+ games for mobile gamers, with hit titles like the GTA Trilogy, Sonic Mania Plus, and Hades.
Recognizing the vast potential of mobile gaming, many iconic gaming franchises have announced plans to bring their blockbuster console titles to mobile platforms.
Notably, CD Projekt Red, the studio behind the critically acclaimed console games The Witcher and Cyberpunk, has recently unveiled its ambitious strategy to bring these beloved franchises to mobile devices.
The Southeast Asian Market: A New Frontier for Chinese Game Developers
As domestic market saturation and regulatory uncertainties persist in China, Chinese game developers have increasingly turned their sights to overseas markets, particularly Southeast Asia.
Singapore has become a gateway for these companies into the region, with at least 12 Chinese gaming companies, including miHoYo, Lilith Games, Hypergryph, and Papergames, setting up operations in the country over the past couple of years.
According to a report by Niko Partners, the PC and mobile gaming market in six Southeast Asian countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam) is expected to reach $5.8 billion in 2023 and grow further to $7.2 billion by 2027, presenting a significant opportunity for Chinese game developers.
Oliver Ye, who oversees Southeast Asia publishing and esports at Level Infinite, a Tencent gaming brand, shared that the company’s global overseas revenue in the Southeast Asian region has maintained a steady growth trajectory, with its flagship title PUBG Mobile garnering over 650 million views from Southeast Asian viewers for its esports events held in 2023.
The Path Forward: Prioritizing Quality Over Quantity
While Chinese game developers have competitive strengths in liquidity, short lead times, and low labor costs, industry insiders warn that these advantages alone may not be enough to sustain their dominance in the global gaming market.
Ivan Su from Morningstar emphasizes that:
“In game development, speed is no guarantee for quality. On the contrary, outstanding titles often require long periods of R&D and meticulous fine-tuning.“
He cautions that:
“In the long run, game developers that rely on quantity instead of quality will gradually lose their market share and be replaced by major developers that focus on producing top-quality gaming titles.”
Source: The article is based on news published in the Chinese media outlet Lianhe Zaobao
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