Video games back in picture after China crackdown

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“Against the backdrop of a sluggish global gaming market, China’s gaming industry is gradually emerging from a trough and showing an upward trend,” said Zhang Yijun, a director at CGIGC. Facing the challenges of the second half of the year, we still need to boost industry confidence.”

China’s gamer population shrank for the first time last year amid a sweeping, months-long government crackdown on the industry over gaming addiction concerns. The crackdown wiped out significant revenue and market value for many domestic gaming giants including Tencent Holdings and NetEase.

However, gaming revenue has yet to return to a pre-crackdown level. Sales revenue fell from 150.493 billion yuan in the first half of 2021 to 144.263 billion this first half. Authorities stopped approving new games for nearly eight months between 2021 and 2022 as part of the crackdown, but have since loosened regulations.

Regulators approved the latest batch of game licenses this week, allowing 88 games to hit the market for the month of July.

Alicia Yap, an analyst at Citi Bank, said up to 90 games were approved each month, totaling 1,000-1,100 domestic games in the whole of 2023, or almost double 2022 figures.

“We remain confident about a steady domestic game approval process heading into the second half,” Yap said. However, state media Securities Daily said this week the actual rate of game launches remained sluggish, with only 23 out of the 88 games approved by January being launched or posting a confirmed launch date.