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Game markets: Asia and China

In recent years, the Asia Pacific gaming industry has attracted the attention of investors, developers and analysts. Within Asia, Japan, South Korea and China are the leading markets. The Asia Pacific remains the largest games market and is expected to reach USD71.4 billion in revenue, with a spectacular 39 per cent growth in 2018. By 2021, domestic market revenue in China is poised to increase from USD27 billion to USD35 billion. Asia’s gaming market is being transformed by Augmented Reality (AR) and Virtual Reality (VR) technology as well as gaming on social media platforms. Above all, Esports looks set to transform the industry. These were the findings from a study conducted by Spire Research and Consulting in Q3 2018.

Gaming market in Asia Pacific (APAC)

The Asia-Pacific region has been leading the global electronic game market. In 2017, total revenue from the gaming market reached USD51.2 billion, almost twice the revenue of the second-ranked North American region.

Electronic games have a broader audience due to the adoption of free-to-play gaming along with rising Smartphone penetration. Mobile gaming continues to see tremendous growth within the region. AR and VR are examples of new technologies that could transform the sector within the region.

Gaming market in China

In China, more than 500 million gamers generated over 56 per cent of APAC gaming revenue and 28 per cent of global gaming revenue in 2017. Games like League of Legends have a vast following in China.

Approximately 36 per cent of the world’s game market uses mobile devices, with nearly 183 million mobile players in China alone.

The field of Esports also promises to transform the industry. Esports refers to the public playing of electronic games by professional or semi-professional players, along the lines of conventional sports. Business and institutional eco-systems are emerging around Esports, mirroring those that exist around conventional sports like football and basketball. In China, Tencent-owned Arena of Valor and Clash Royale are the top mobile Esports games. China accounted for 15 per cent of global Esports revenue in 2017, nearly USD660 million.

Among Chinese consumers, mobile VR games are very popular, augmented by affordable and cost-effective VR devices . Chinese consumers prefer low-priced VR devices such as Samsung (Gear) and Google (Cardboard), over costly VR devices provided by HTC (Vive) and Facebook (Oculus).

The rise of mobile gaming

Mobile gaming in Asia is taking off, in contrast to the West where desktop gaming continues to play a major role in the industry.

Over the past five years, the structure of China’s online gaming market has changed drastically, with more share going to mobile games over PC games.

Out of the overall gaming sector in China, the total revenue share of mobile games increased fivefold from 11.6 per cent in 2011 to 63.2 per cent in 2017, as shown in Table 2. This figure is projected to get even bigger, with mobile gaming revenue expected to reach 76.5 per cent in 2022.

The rapid expansion of cheap Smartphones with high performance and the rise of female gamers are some of the key drivers behind China’s booming mobile gaming market.

Big players in China

China’s mobile gaming market is highly competitive and currently dominated by Tencent and NetEase.

The world’s top earning mobile game publisher is Tencent with 147 mobile games , including blockbuster titles like Arena of Valor that has over 80 million active gamers each day on an average weekend.

WeChat, a mobile messaging application of Tencent, currently has more than 1 billion monthly active gamers in 2018 and serves as a vital distribution channel for games.

Tencent’s WeChat Mini Program has also seen rapid development, with the viral mini game Tiao Yi Tiao (a mini game directly accessible from the Wechat app, with a scoreboard that permits players to view friends’ rankings) boasting 100 million players.

Upcoming trends for mobile gaming

The Asia Pacific region will remain the largest gaming market by revenue, with over 25 per cent growth expected in 2018.

Three key trends will shape the gaming market going forward.

China’s mobile gaming market will continue to grow, not only in terms of revenue but also in terms of sophistication and quality. This will continue to fuel the development of mobile Esports.Game exports are expected to rise as Chinese publishers adapt or develop games catering to global audiences.VR and AR will gain traction despite still being at an embryonic stage. Companies like NetEase have achieved success in AR development and will be experimenting more with this technology in the coming years.
Conclusion

The future is undoubtedly bright for the gaming industry. AR, VR and Esports are a few of the hot concepts of 2018 that are ready to drive gaming in the coming years.

Mobile gaming continues to gain a much larger audience than PC and console games, due to advancements in technology and affordable devices.

China will continue to play a leading role in this industry world-wide. The outlook for Chinese gaming exports is promising. For example, in spite of tough competition, Chinese companies plan to enter South Korea to build more Esports leagues.

Spire Research and Consulting was established in 2000 to address a gap in the research and consulting industry in global emerging markets. Unlike most agencies that focus on traditional consumer research, our founders saw a profound need for holistic research projects.

These projects integrate traditional customer research with knowledge of the broader business eco-system; for instance, competitors, channels, legal and regulatory factors. They support strategic decision-making for market growth and entry. Our studies provide indispensable tools for creating business plans, setting sales quotas, quantifying budgets and investment as well as making product launch decisions.

Spire exists to undertake such projects with distinction.

Unit 501-502, DLF City Court,
DLF Phase III, Sector 24, Gurugram – 122002, India

Telephone: (91) 124 421 6144
Fax: (91) 124 422 1934
E-mail: india.info@spireresearch.com

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