China's Gaming Industry Sees Decline in Revenue for Three Consecutive Months

Sophie Webster, Tech Times 23 June 2022, 02:06 pm

The Chinese gaming industry is currently struggling as its revenues dropped in May.

According to a report published by research firm Gamma Data, the industry is having difficulty bouncing back from the impact of a slowing economy and the newly rolled out regulations in China.

Chinese Gaming Industry Struggles

According to South China Morning Post, the gaming industry's revenue fell 6.74% in May. In April, the revenue was down 0.31%.

The decline was driven by a decline in mobile game revenue, which dropped to 10.85% for May, while in April, it dropped by 2.15%.

Aside from the famous game titles bringing less money compared to 2021, the newly launched mobile games did not perform as well as anticipated.

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The month of May counts as the third month with a year-on-year revenue decline, according to Gamma Data.

While in the first three months, the gaming industry saw revenues increase by 3.17%, the latest drop comes after the regulators approved 105 new gaming titles for sale in China after an eight-month hiatus.

In 2021, the video game licensing was halted after Beijing introduced new regulations that decreased the playing time for minors.

This has put thousands of small game studios out of business and has affected the growth of massive companies like NetEase and Tencent Holdings.

Both NetEase and Tencent Holdings did not have any gaming titles included on the last two approval lists released in April and May, according to CNN.

Even ByteDance, the studio that owns the popular social media app TikTok, was forced to shut down its game development studio that it just bought in 2019.

Consumer Demand Declines

Consumer demand has weakened as well, and it is something that gaming companies have to deal with, especially since China is facing a slow economy.

According to Owen Soh, the founder of Eastlab Consulting, which is based in Shanghai, people are no longer spending on games due to the slow growth in the technology sector and the lay-offs across a wide range of businesses.

China's retail sales, which is an indicator of how willing the people are to spend money on products, have declined for the past three months as the strict measures under the country's COVID-19 policy affected economic growth.

According to Reuters, the retail sales contracted 6.7% in May from the same month in 2021 after an even steeper fall of 11.11% in April.

To deal with the worsening conditions in China, some tech companies have branched out to other countries to increase their revenues. However, the mobile gaming market hasn't been good abroad too.

Chinese gaming companies brought in only $1.45 billion from overseas markets in May, which is 5.8% less compared to what the companies brought in back in April.

The declining demand for games and the decreasing revenue of the gaming industry are not only felt in China. Globally, mobile games downloaded in Apple's App Store and Google Play Store also fell.

Apple's App Store and Google's Play Store only brought in $6.8 billion in player spending in May. It is down 8% compared to the player spending in May 2021.