China’s video game market is projected to grow despite government restrictions

A five-year forecast from Niko Partners is predicting China’s video game market will grow through 2026. This forecast is based on two separate reports: one focused on mobile gaming and the other on PC gaming.

The number of gamers in China in 2021 was 706 million, which is actually a decrease year over year. But the total is projected to climb to 730 million in 2026. A big factor in the slower-than-usual growth is the regulations on play time China implemented in 2021. The limits on legal playtime ended up pushing a lot of youth gamers out of the market entirely. China also put a temporary freeze on issuing game licenses around the same time, but started issuing licenses again in April of this year.

It isn’t the first time China has put a halt on licenses and then started issuing them again. The Chinese government pulled this same maneuver back in 2018 and 2019 but remained tight-lipped as to why.

Regardless of why, the newly established licenses enable the licensees to start earning revenue, which is a positive sign for the industry as a whole.

The Niko Partners reports also predict an increase in average revenue generated per user. In 2021 the ARPU was $64.44. It’s projected to climb to $75.60 per user over the next few years. With how big mobile games are in China, it’s easy to speculate on that kind of growth. Less time to play can easily mean more money spent on progression.

“In the past year we have watched gamers entertain themselves with nostalgic and new games during the pandemic lockdowns, we have watched youth gamers wave farewell to a primary pastime due to regulations limiting their hours for gaming, and we have watched innovations such as esports hotels and the metaverse emerge,” said Niko Partners president Lisa Hanson. “We fully expect China’s metaverse to develop differently when compared to the rest of the world due to the unique regulatory environment in China. Game companies have started to invest in internal projects and partner with local governments with more than 16,000 metaverse related trademarks filed by Chinese companies. The greatest short-term opportunity for metaverse in China will come from interoperability across gaming ecosystems and collaborative events with brands and IP holders.”

The more than 16,000 metaverse related trademarks is a huge number. China is well on its way towards establishing its own take on the concept. Hopefully the rest of us can figure out what the metaverse actually is. We might just get left behind, otherwise.

Metaverse aside, figures from Newzoo put over half of the world’s gamers in the Asia-Pacific region. A healthy, growing industry in China can only be good for the industry as a whole. Fingers crossed the country holds off on another license freeze and even tighter restrictions on gamers.