China overtakes US as number one gaming market

Consistent growth in China’s gaming industry will see it become a $40 billion market in 2020 – the largest in the world – as activity has surged on gaming platforms due to limited mobility in a pandemic-stricken world.

The gaming industry in China is expecting 2020 revenues to exceed $40 billion to overtake the US, at $36 billion, as the global leader in the gaming market, according to SafeBettingSites.com.

The 2019 Newzoo Global Games Market Report shows an 11% year-on-year growth in China’s gaming industry. The industry, now valued at $152 billion, is dominated by mobile games that account for nearly 75% of China’s total gaming revenue.

While still a massive market, the US gaming industry is forecast to barely grow in 2020. Japan is in third place with annual revenue of $18.6 billion. South Korea ($6.5 billion) and Germany ($5.6 billion) round out the top five in an industry that has experienced explosive growth in its brief existence.

A key contributor to the rise of gaming in China is the major growth in mobile gaming. Phone or tablet-based gaming accounts for nearly three-quarters of China’s gaming market, which has more than 870 000 smartphone users.

Mobile games generated $15.5 billion or three-quarters of total sales revenue in China, a report from the Game Committee of the Publishers Association of China shows. Web and client network-based games accounted for 20% while console makes up 2.8% and PC games 1.9%.

Another factor in China’s gaming revolution is increased in-game transactions. Games such as Genshin Impact, a roleplaying game created by Shanghai-based developer Mihoyo, use a controversial paid-to-win system often found in Japanese or South Korean titles.

The ‘Gacha’ sales system uses real-world currency to obtain loot boxes or other similar randomised rewards to encourage users to carry on playing. Much like gambling, the odds of obtaining rewards are notoriously low and the games are criticised for encouraging spending.

The system is becoming increasingly more accepted in the West in part due to the popularity of titles like FIFA and NBA 2K that feature similar micro-transaction systems.

Statista Key Market Indicators data shows that the number of active gamers in China exceeded one billion in 2019. In 2020 the number is projected to reach 1.14 billion.