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China Online Games Reach $13.1 Billion

Parkour Everyday is a mobile title from Tencent that is bringing in $2.4 million daily.
Parkour Everyday is a mobile title from Tencent that is bringing in $2.4 million daily.

MAY 1, 2014 • China’s Ministry of Culture released its annual report noting that the domestic China online games industry generated 81.9 billion yuan ($13.1 billion) in revenue during 2013, an increase of 36.3% over 2012. Giant Interactive Group Inc., Kingsoft, Netease, Perfect World Ent. Inc., SNDA, Sohu, and Tencent Holdings Ltd. accounted for 54.4 billion yuan ($8.7 billion) of the total. Client and web content generated 69.1 billion yuan ($11 billion), while mobile games brought in 12.8 billion yuan ($2.1 billion). The ministry concluded that there were 500 million mobile phone users in China during 2013, with an annual growth rate of 19.1%. Chinese consumers playing mobile single-player content was at 170 million users, and those playing mobile online multiplayer games were at 120 million users.

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Impact: The latest numbers were consistent with guidance that the Ministry of Culture has been putting out for several months.  As DFC has been noting client- and web-based online games are still king of the hill in China. Mobile growth of course is a hot topic and mobile game revenue is expected to grow significantly in 2014.  However, the mobile space is overcrowded and the PC space remains significantly larger. That doesn’t mean there will be substantial individual mobile hits. The Ministry of Culture singles out Parkour Everyday (天天酷跑), a WeChat title that is generating 15 million yuan ($2.4 million) daily. Despite the significant growth in smartphone owners, and the enormous resources being thrown at the platform by Chinese game companies, we believe that market will support a larger number of hit games on the PC for the foreseeable future. Where mobile offers a distinct opportunity is for Western mobile studios looking for new markets for their content. It is a much easier proposition to localize and distribute casual mobile content in China than AAA Western games. We also will have to wait and see what percentage of the revenue pie the introduction of the Xbox One in China will be able to claim. Frankly, DFC expects that the majority of the consumers in China who want an Xbox One have likely already obtained one from the grey market or from online sources, but a lot depends on pricing and game content when the console officially goes on sale in September.

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