Gaming firms gearing up for overseas edge

Report finds more developers seeking entry into developed, emerging markets

Expanding business in overseas markets is becoming a strategic trend for more Chinese game developers, although overseas sales of the country's self-developed games declined last year, according to an industry insider.

"Chinese game enterprises have actively promoted their businesses overseas, facing fierce competition from their international counterparts," said Zhang Yijun, vice-chairman of the China Audio-Video and Digital Publishing Association.

According to a report released at the China Game Industry Annual Conference in Guangzhou, the capital of Guangdong province, on Tuesday, Chinese game developers' businesses were largely affected by the global COVID-19 pandemic in 2022.

"Some companies had to reduce investment in gaming research and development, with the entire industry entering a stage of financial and business pressure," said Zhang.

Trade barriers, together with relatively underdeveloped mobile internet technologies in some countries and regions, have also affected Chinese game enterprises' overseas business expansion, Zhang said.

Sales of Chinese self-developed games in overseas markets were down 3.7 percent year-on-year to $17.34 billion last year, with the United States, Japan and South Korea still being the major target markets, according to the report.

"In addition to major markets, the proportion of Chinese games sales in other countries and regions also increased significantly, indicating that Chinese game developers are expanding their businesses in emerging markets," he said.

The overseas sales decline rate was much lower than that of the domestic market, which was down 13.07 percent year-on-year to 222.38 billion yuan ($32.62 billion) in 2022, according to the report.

The global game market was also down by 6.96 percent to about 1.11 trillion yuan in 2022, it said.

"Exports of more self-developed games with high-quality content, as a market choice for more game developers in the near future, will help greatly promote Chinese culture in the overseas market," he said.

Sources with the China Audio-Video and Digital Publishing Association indicated that the domestic game market has developed rapidly in the past decade, with actual sales revenue increasing from 60.2 billion yuan in 2012 to 296.5 billion yuan in 2022.

The number of game players and developers in the domestic market also increased to 666 million and more than 390,000, respectively, according to the association.

Additionally, actual overseas sales increased 30-fold from $587 million in 2012 to $18 billion last year, with products expanded to North America, Europe and emerging markets related to the Belt and Road Initiative, according to the association.

Currently, 64 out of the top 80 most popular mobile games in the market have developed distinctive Chinese cultural elements and up to 68 percent of overseas game users have widely accepted games that contain Chinese culture, according to the report.

Guo Weiwei, chief executive officer of Xishanju, a game developer based in Zhuhai, Guangdong province, said Chinese games, as a symbolic cultural carrier, have developed great influence among users at home and abroad over the past few years.

"Building games with high-quality content based on Chinese culture, as a way of telling Chinese stories, has become one of the guidelines for game production and creation," said Guo.

Citing the Cantonese opera Fighting for the Great Tang Empire, which is based on Xishanju's popular electronic game Jianwang III, Guo said the company would focus on developing self-innovated games highly integrated with Chinese culture.

Xishanju, which was established in 1995, entered the Southeast Asia market in 2003, with the number of active daily users in Vietnam reaching 200,000, according to Guo.

After opening its research studio in the United States, which helps the company to learn cutting-edge gaming technologies, Xishanju also plans to export its games to the North American and European markets, Guo said.