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Is China the underdog of the gaming world?

May 22, 2018 7:00:00 AM

For as long as video games have been around, the US and Japan have been the behemoths of the industry, blasting out the world’s most popular games from some of the best-known studios. The likes of Nintendo, Square Enix, Electronic Arts, and Activision Blizzard have all experienced monumental success over a sustained period of time and continue to dominate much of the headlines in the gaming world. Over time, these institutions have catalysed the North American and Japanese markets as the single greatest indicator of a studio or title's success, taking the spotlight away from the most commercially attractive opportunity in the industry right now: China.

As home to the largest number of video game players in the world (around half a billion of them), the Chinese game industry generated over $26 billion in 2017, a quarter of the $109 billion global game market. This has been in large part to the explosion of the mobile gaming scene. Consider that the wildly popular shooter, PlayerUnknown's Battlegrounds, is currently averaging more than 10 million daily active users -- and that these figures don't even account for the Chinese market yet.

Interestingly, the growth in China's gaming industry can be largely traced back to a single enterprise: Tencent, a multinational investment firm based in Shenzen and valued at $580 billion. This year alone Tencent bought a 5% stake in Ubisoft, invested in Douyu the online game streaming service and Shanda Games the online game developers, and the deals have been coming thick and fast. Their strategic investment in western game studios has allowed them to tap into the lucrative North American market, whilst also providing a mutually beneficial gateway for studios into the Chinese market.

 

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Tencent has had an uncanny insight into gaming trends that will translate equally to both western and eastern audiences. In 2011, they bought a majority stake in Riot Games ahead of the success of League of Legends and the MOBA craze. In 2012 they invested in Epic Games (acquiring a nearly 40% stake for $330 million) that has allowed them to ride the monumental success of Fortnite, which earned $50 million in under two months of its release on mobile. Consider the fact that Tencent also have an existing stake in Bluehole, the studio behind PlayerUnknown's Battlegrounds, and you can see their dominance of the incredible success of the battle royale phenomenon.

There’s no sign of it slowing down either; over the past 5 years Tencent has bought stakes in over 227 startupsThe company understands that gaming is the future of the entertainment industry and that massive multiplayer online gaming is where the trends are headed and what gamers are yearning for. Not only that, but as the company has its own social media platforms to publicise and integrate into its games, and has an enormous network of engaged gamers that no other country can compete with, well it might well leave the competition in the US and Japan behind.

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