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China’s game market will reach $55 billion and 781 million gamers by 2025, according to two new reports by market researcher Niko Partners.
Niko Partners said the reports on PC and mobile gaming showed that mobile gaming is by far the bright spot. China’s domestic mobile game revenue was $29.2 billion in 2020, up 30.9% from a year earlier. This is the highest annual growth rate for China’s domestic mobile game revenue since 2017.
Mainland China had 681.7 million mobile gamers as of the end of 2020, up 7% from a year earlier. That is projected to reach 748 million in 2025. Mobile game revenue also grew 31% in 2020.
“The forecast brightened with the increase in pandemic usage and then that level of gaming became the new normal,” said Lisa Cosmas Hanson, president of Niko Partners, in an email to GamesBeat. “Our model covers gaming done in mainland China and we saw an increase in premium PC games and mobile overall. Our model includes use of games on Steam in China even if they are not licensed. It appears Chinese gamers continue to be enthusiastic about this form of entertainment. Challengers to Tencent and NetEase not only caused a ripple, but games such as Genshin Impact expanded the pie.”
The reports show that China’s domestic PC game revenue was $13.9 billion in 2020, down 4.9% from a year earlier. Despite the decline, PC gaming accounts for more than 32% of game revenue and nearly 45% of gamers and is projected to return to growth in 2022. The decline was primarily due to the negative impact of the pandemic on internet cafes in China, which shut down most of those places during the lockdown. Those cafes are coming back to life in 2021.
Mainland China also had 325.4 million PC gamers as of the end of 2020, up 1.4% from a year earlier. Niko Partners expects total PC gamers to reach 335.3 million in 2025 at a 5-year compound annual growth rate of 0.6%. Most PC gamers are also mobile gamers.
A couple of key measures, monthly Average Revenue Per User (ARPU) and monthly Average Revenue Per Paying User (ARPPU) rose in 2020. Export game revenue increased 36.7% in 2020, a higher increase than domestic game revenue.
Tencent and NetEase remained the top two domestic game publishers in China but are facing increasing competition from both large tech companies and medium-sized game companies. MiHoYo’s Genshin Impact had a major impact on the market and more domestically developed triple-A titles are expected in the future.
“2020 was a unique year for China’s games market due to the impact of COVID-19. China’s government imposed stay-at-home lockdown orders nationwide from January 2020,” said Cosmas Hanson. “While China has mostly returned to normal, the pandemic and resulting lockdowns led to major changes in gamer behavior, engagement, and spend throughout the year.”
The COVID-19 lockdown period led to a surge in gaming engagement and spend, Cosmas Hanson said. While growth rates started to normalize at the end of 2020 and early 2021, Niko Partners found that both new and existing gamers are more engaged than they were pre-pandemic.
“We expect this to continue in 2021,” Cosmas Hanson said. “The number of paying users is continuing to grow due to the increased acceptance of new monetization methods, and total ARPPU continues to grow, partly due to increased spending in genres that traditionally had low monetization potential.”
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