Chinese game developers envision a $ 49 billion console market share – .

0
23
Chinese game developers envision a $ 49 billion console market share – .


Gamers visit Sony’s PlayStation booth during the annual China Joy Games Conference in Shanghai on July 30, 2021.
Arjun Kharpal | CNBC
GUANGZHOU, China – For 14 years, game consoles like Sony, Microsoft and Nintendo have been banned in China.
The ban was finally lifted in 2014.

While these consoles were available on the so-called “gray market” – places that would sell imported devices at a high price – the ban led to the rise in popularity of PC and mobile games.

Chinese developers, like giants Tencent and NetEase, have struggled to create blockbuster titles for these platforms for more than a decade of ban.

Now things are changing. Chinese tech giants, alongside a new generation of game developers, are looking to harness the growth of video game consoles in China and target overseas gamers who have grown up with these devices.

For the global market, the console is huge – around 30% revenue. But in China it’s only 1% so there is a huge potential opportunity for the console game developer in China.

Facebook Facebook logo Sign up for Facebook to connect with Daniel Ahmad

analyste senior, Niko Partners

Sony, Microsoft, and Nintendo have all launched their next-generation gaming consoles in China.

“For the global market, the console is huge – around 30% revenue. But in China it’s only 1% and so there is a huge potential opportunity for the console game developer in China, ”Frank Mingbo Li, founder of Studio Surgical Scalpels, a game studio backed by Tencent, told CNBC.

Studio Surgical Scalpels creates a space-based first-person shooter called “Boundary” for PC and Sony’s PlayStation 4 and PlayStation 5.

The Chinese game console hardware and software market reached $ 1.84 billion in 2020 and is expected to reach $ 2.46 billion in 2025, according to market intelligence firm Niko Partners. But that is overshadowed by the revenue from mobile and PC games. Mobile gaming revenue alone was $ 29.2 billion in 2020.

Globally, the console market is expected to generate revenues of $ 49.2 billion, or 28% of the global games market, according to market research firm Newzoo.

This is where the opportunity lies.

“Despite the console ban between 2000 and 2014, we are seeing strong demand for consoles in China, and there is an even bigger market for consoles outside the country,” Daniel Ahmad, senior analyst at Niko, told CNBC Partners.

Li, who is a game industry veteran, said “Boundary” was designed from “very first day” for the global market, underscoring the Chinese developer’s ambitions.

“Boundary” is just one of the many leading console games from China. Another upcoming game is “Black Myth: Wu Kong” which is being developed by Chinese studio Game Science.

Gaming Giants Eye Console Market

The world’s largest games company Tencent, along with rival Chinese company NetEase, are also considering the console market.

NetEase on Thursday released a high-profile game called “Naraka: Bladepoint” – a 60-person battle royale style game like the popular title “Fortnite”. The Hangzhou, China-based company is also developing the game for consoles, but has yet to reveal a release date.

In 2019, NetEase opened a games team in Montreal, Canada to help with international expansion and another studio in Japan dedicated to console game production last year.

In an interview with CNBC this month, Hu Zhipeng, vice president of NetEase, called the console market “quite attractive.”

“Our Sakura studio in Japan and Montreal is dedicated to the development of console games, as a third of the overseas market share is occupied by console games,” said Hu.

Tencent’s growth in games over the years has been driven largely by acquisitions or investments in game studios. This has focused heavily on mobile, but is now shifting to companies that make games for PC and console.

“Almost half of the 51 investments in 2021 concern companies experienced in the development of games for PC and consoles. Many of them are national, ”according to a report by Niko Partners published in May.

Up to 2020, Most of Tencent’s domestic investment has been in mobile games, while investment in PCs and consoles has been overseas, the report notes.

And Tencent-owned developer TiMi Studio has opened offices in Montreal and Seattle to focus on PC and console games.

“Chinese studios are looking to match their overseas peers in game development by standardizing tools, creating advanced production processes, and investing in great teams to ensure they can create AAA-quality titles at great scale that provide a competitive advantage, respond to changing player demands and reach a large audience both in terms of geographies and platforms, ”said Ahmad of Niko Partners.

AAA is an unofficial term for popular, high-quality games.

LEAVE A REPLY

Please enter your comment!
Please enter your name here