Gamers visit Sony’s PlayStation booth at the annual China Joy Games Conference in Shanghai on July 30, 2021.
Arjun Kharbal | CNBC
The ban was finally lifted in 2014.
While these consoles were available on the so-called “gray market” – places that sell imported hardware at a high price – the ban made computer and mobile games more popular.
Now things are changing. China’s tech giants, along with a new breed of game developers, are looking to capitalize on 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 – almost as much as 30% revenue. But in China, it’s only 1%, so there’s a potentially big opportunity for a console game developer within China.
Daniel Ahmed |
Senior Analyst, Nico Partners
Sony, Microsoft, and Nintendo have launched next-generation game consoles in China.
“For the global market, the console is huge — about 30% of revenue. But in China, it’s only 1%, so there is a huge potential opportunity for a console game developer within China,” said Frank Mingbo Lee, founder of Studio Surgical Scalpels said, A game studio powered by Tencent, for CNBC.
Studio Surgical Scalpels is making an outer space-based “first person shooter” game called “Boundary” for Sony’s PC, PlayStation 4 and PlayStation 5.
China’s gaming hardware and software market size was $1.84 billion in 2020 and is expected to reach $2.46 billion in 2025, according to market intelligence firm Nikko Partners. But this was overshadowed by revenue from mobile and PC games. Mobile gaming revenue alone was $29.2 billion in 2020.
Globally, the gaming hardware market is expected to generate $49.2 billion in revenue, accounting for 28% of the worldwide gaming market, according to market research firm Newzoo.
This is where the opportunity lies.
“Although consoles were banned between 2000 and 2014, we are seeing a rise in console demand in China, and there is a larger market for consoles outside the country,” Daniel Ahmed, chief analyst at Niko Partners, told CNBC.
Lee, a game industry expert, said the “Boundary” was designed from “day one” for the global market, confirming the Chinese developer’s ambitions.
“Boundary” is just one of several high-profile toys to come out of China. Another upcoming game is “Black Legend: Wukong” developed by the Chinese studio Game Science.
The world’s largest gaming company, Tencent, along with Chinese rival NetEase, is eyeing the gaming hardware market.
On Thursday, NetEase launched a high-profile game called “Naraka: Bladepoint” – a 60-person Battle Royale like the popular title “Fortnite”. Hangzhou, which is based in China, is developing the game for consoles but has not revealed its release date yet.
In 2019, NetEase opened a game group in Montreal, Canada, to help with international expansion and another studio in Japan dedicated to game production last year.
In an interview with CNBC this month, Hu Zhipeng, Vice President of NetEase, called the console market “very attractive”.
“Our Sakura studio in Japan and Montreal is dedicated to developing games on consoles, with a third of the overseas market share being captured by console games,” Hu said.
Tencent’s growth in games over the years has been largely driven by acquisitions or investment in game studios. It has largely focused on mobile but is now shifting to companies that make games for PC and console.
according to Nico Partners report Posted in May.
Even 2020And The report noted that most of Tencent’s domestic investment went into mobile gaming, while PC and console investments were made overseas.
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 large teams to ensure they can create AAA-quality titles at scale that provide a competitive advantage, meet the demands of evolving gamers and reach the needs of evolving gamers,” said Ahmed of Nico Partners.
AAA is an informal term to refer to high quality and popular games.