China’s games industry shrinks for the first time in years

techcrunch.com:

Over the past decade, China’s games industry has seen explosive growth, overtaken the U.S. in market size and given rise to global publishing giants like Tencent and NetEase. The boom is in part driven by a population that was quickly coming online and gaining purchasing power. But the heyday has come to an end as the market nears saturation and consumers tighten their wallets during economic headwinds.

China’s video games sector posted a decline in sales for the first time since at least 2008, according to past reports from the country’s top gaming industry association. The market grossed 265.9 billion yuan ($39 billion) from video gaming sales in 2022, a 10.33% drop year-over-year, according to a new report released by the association on Tuesday. The overall user size shrank to 664 million, 0.33% fewer than the year before.

China’s game sales from 2008-2018, published by the country’s top games industry association. Link to report.

China’s game sales from 20014-2022, published by the country’s top games industry association. Link to report.

The declines aggravated pressure on an industry that was already struggling. In recent years, China has launched a slew of crackdowns on video games, clamping down on content that is ideologically objectional and limiting playtime among underage users. Amid the industry shakeup, regulators stopped issuing new game permits for months; the process has resumed butnow takes longer and costs companies more to be compliant.

To carve out new growth opportunities, developers from scrappy studios to behemoths like Tencent are going abroad. Chinese games have been exported for years, but in recent times, they started to make a dent in the West. Toward the end of 2020, China-made titles accounted