At a glance:
China games revenues projected to decline 2.5% to $45.44 billion
Mobile to shrink 5.1% to $30 billion, represents 66% of total market
PC up 2.% to $13.6 billion, first year of growth since 2017
The Chinese video games market is expected to shrink for the first time in two decades, due to a combination of mobile spending decline, increasingly restrictive regulations and more.
That’s according to analysis and research firm Niko Partners, which revised its April 2022 forecast for the market. Previously projecting “very low growth,” the company now estimates China’s domestic gaming revenues will drop 2.5% year-on-year to $45.44 billion.
This will be the first time Niko has recorded decline in China since it first began tracking the market 20 years ago.
The company attributed the expected downturn to lower spending on mobile games, although this was partially offset by growth in PC and console revenues.
The revised PC forecast says the sector will rise by 2.1% year-on-year in 2022 – the first year of growth for the sector after four consecutive years of decline. It will account for roughly $13.6 billion, 30% of the total market.
Meanwhile, the forecast for console revenues remains unchanged, expected to account for $1.8 billion (4% of the total market) and marking an increase of 14.7% when compared to 2021.
Mobile will remain the biggest sector of China’s games market, accounting for 66% of all revenue. However, this is now forecast to reach just shy of $30 billion – a decline of 5.1% year-on-year.
As mentioned, lower spending on mobile games is cited as a key factor in decline, as well as the ongoing impact of changes to Apple’s app-tracking policies.
Other factors impacting the overall market include the lack of new releases (Chinese regulators continue to be stricter when granting publishing licenses), the underperformance on titles that do launch, and restrictive government regulations.
Last year, the government introduced limits for young people, capping their spending and restricting them to three hours of playing online games per week.
A study by Niko Partners back in August found that 54% of China’s young people have abided by this, resulting in a dramatic decrease in play time and potential spending.
Alongside its revised forecast, the company estimated that 39 million young people have stopped playing altogether.
“China’s economy, Zero COVID policy, impact of youth gamers regulations, and a lack of new game ISBN licenses have contributed to the adverse changes in the domestic games market.” said Niko founder and president Lisa Hanson.
“While 2022 is a down year for mobile, we forecast recovery and CAGR of 2.6% from 2021 to 2026 based on anticipation for new games augmenting portfolios of legacy titles and industry stakeholder adjustments to youth regulations. We observe momentum in the economy, esports, PC gaming, and enthusiasm among China’s 700 million-plus gamers.”