Hong Kong, 27 July 2016
- The global video game industry saw total revenue of US$71.27bn in 2015, which is forecast to increase at a compound annual growth rate (CAGR) of 4.8%, to reach US$90.07bn in 2020, according to PwC’s Global Entertainment and Media Outlook 2016-2020. China is the world’s third largest video game market by revenue, following the US, the largest market, and Japan, the second largest.
According to PwC’s Outlook, in 2015, China’s gaming revenue was US$8.98bn, and is expected to rise to US$12.85bn by 2020, at a CAGR of 7.4%. The growth has been supported by an escalation in the number of gamers, which the Chinese Game Publishing Committee (GPC) has stated reached 534mn in 2015, an increase of 3.3% from 2014.
“We are seeing some major opportunities and challenges for companies active in the value chain, with the expansion of Virtual Reality (VR) and Augmented Reality (AR) serving as lively examples. The phenomenal global impact stirred up by Pokémon Go is likely to lead to an upsurge in enthusiasm for AR, particularly with mobile gaming.” Said Wilson Chow, PwC China and Hong Kong TMT leader.
Currently, PC games make up the largest sub-segment in China’s video gaming landscape, though the rate of growth in China has been declining since 2010, not least due to a reduction in the frequency of new product launches. Concurrently, there has been an increase in PC games launched as mobile games, particularly in 2015.
China’s console market experienced a boost in July, 2015 as regulatory changes were implemented, allowing foreign players to manufacture and sell anywhere in the country. The move has brought fresh opportunities for console makers, though they will be operating from a disadvantaged position as a result of the last 15 years without the regulatory approval. Additional issues, including piracy, censorship, and competition also pose substantive, though not insurmountable challenges to future growth.
App-based gaming growth in China slowed in 2015, with the Outlook recording revenue of US$2.61bn for the sub-sector over the year. The slowdown reflected a maturation in the nation’s mobile gaming sector, stemming from a sequence of mergers and acquisitions in prior years.
Looking ahead, competition in China’s mobile games arena will be increasingly contingent on competition of distribution channels. Browser based games have also seen a slowdown in revenue growth with a levelling off of engagement by active gamers. By the end of 2015, there were 373mn browser gamers, a figure that is expected to remain relatively static over the next 5 years.
“One of the positive stories in China has been the rise of video game streaming and e-sports competitions over 2015. Rising popularity of competitions will enhance appeal of both PC and mobile games for gamers in China, leading to a commensurate rise in advertising revenue, while also enlarging the fan economy over the forecast period,” said Jianbin Gao, PwC China TMT Leader.
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