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This year, revenue from PC, mobile and console games is predicted to reach more than US$26 billion

On its recent 14th anniversary, Asian games market research company Niko Partners launched its top predictions for the digital games industry in China.

The result reveal that China will once again be Asia’s biggest market for digital games with revenue from PC, mobile and console games predicted to reach more than US$26 billion.

For Chinese mobile games alone, the US$5.5 billion revenue generated domestically in 2015 surpassed that of the US market. The report also predicted that the market will generate US$11.1 billion by 2019.

However, despite the good prospect, businesses still need to be careful about the challenges facing the Chinese gaming market. 

One key point to note.

“Revenue from mobile games will continue to rise, but so will the cost to acquire new gamers due to their increasingly sophisticated demand in a very crowded market,” according to a written statement that accompanies the report.

e27 compiled key findings from the report below:

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Exercising without breaking a sweat

The report defined ‘e-sports’ as professional or amateur tournaments and organised competitions involving specific game genres, but it also noted that the category will keep on widening as developers try to latch onto the trendy moniker of ‘e-sports’.

According to the Chinese Game Publishers Committee, e-sports include Massive Online Battle Arena (MOBA) games, Action, Shooting, Casual, Poker and Trading Card games.

Hundreds of millions of Chinese gamers play and watch e-sports, and its popularity is expected to rise with the entrance of Virtual Reality (VR) and Google Play into the market. Google Play might boost Android game downloads and advertising campaigns, while VR games might push Chinese companies to build products to compete against VR leaders such as Oculus and Sony.

In fact, the ChinaJoy committee is already planning a special VR section at this year’s annual trade show.

Another aspect that impacts the growth of e-sports in China is the existence of Internet cafés, which play a crucial role in the growth of MOBA titles and other competitive games, as well as the viewing and participation in eSports. Investment in such business rose in 2015 –including in Tier 1, 2, 3, and 4 cities– and the report expected this number to continue to climb.

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Putting the eggs in baskets

At the moment, there are 171 publicly traded Chinese game companies, with 136 of them traded on local Chinese exchanges, 17 in Hong Kong and 18 in the US. Most of the companies traded in China are on the National Equities Exchange and Quotations, an over-the-counter market in China known as the “third board domestic stock market”.

According to the report, the ‘third board’ already has more listings than China’s other two major exchanges, and it will continue to increase because the other two exchanges have a temporary ban on IPOs.

“However, volume on the third board is thin and volatility is high, so we expect more regulations to be forthcoming,” as written in the report.

Meanwhile, Chinese game and game-related companies are expected to invest more capital in growth and market share. One name that came up on top of mind is Tencent, which is predicted to continue dominating the local games industry. However, the report noted that the company will begin market pressure for the first time in a long while, since competitors such as NetEase are starting to gain market share.

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Where we play

The report also includes predictions about hardware trendr that will be championing the Chinese digital games market in 2016. This year, cross-platform play from PC to mobile is expected to become more heavily emphasised.

“Even more interestingly, we anticipate a trans-media entertainment approach, where games turn into books and movies and TV shows, and movies and TV shows turn into books and games, and books turn into movies and TV shows and games … You get the idea,” said the report, highlighting the intersecting aspect of the entertainment industry.

It also noted growth rate of PC online game revenue will continue to decline. That being said, sales of consoles and console games will be flat, while domestic TV-based gaming boxes will see modest growth as technology progresses.

With this prediction in mind, industry players are expected to develop a lean and effective strategy to enter this particular market.

Image Credit: Christopher Campbell on Unsplash.com

The post Action! 2016 will be the year China embraces e-sports appeared first on e27.

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