Chinese video game firms continue to look overseas for growth, shrugging off geopolitical tensions, survey finds

China’s video gaming studios are largely unconcerned by geopolitical tensions when it comes to generating revenue from overseas markets, according to a survey of 33 gaming companies in the country with an overseas presence.

Only three of the companies surveyed, or 9.1 per cent, said that “global political and economic turbulence” had a “relatively big” impact on their overseas operations, according to survey results released on Monday.

Meanwhile, a third said “excessive competition” had a large impact on overseas revenue, according to the survey, which was conducted by consultancy CNG and China’s video gaming industry association.

And 30.1 per cent of survey respondents listed “lack of local talent” and the “rising cost of acquiring online traffic flows” as big influences on overseas operations. Only 6.1 per cent regarded “lack of global operational experience” as a big concern.

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The survey results form part of a report that reviews the overseas operations of Chinese video gaming companies. With the domestic video games market under pressure from economic headwinds and tougher licensing requirements, gaming studios have looked overseas for new growth drivers.

The combined overseas revenue of Chinese video gaming companies dropped to US$16.36 billion in 2023, down 5.7 per cent year-on-year, marking the second consecutive year of declines, according to the Gaming Publishing Committee of the China Audio-Video and Digital Publishing Association, the semi-official industry body.

Revenue outside the home market dropped by 3.7 per cent year-on-year in 2022 to US$17.34 billion, following a three-year run of double-digit growth.

The US, Japan and South Korea are the three largest international markets for Chinese video game firms, accounting for more than half of their overseas revenue, according to the industry association. Other popular destinations include Germany, France, Indonesia, Canada and the United Kingdom, among others.

The soft overseas sales of Chinese video gaming studios contrast with a rosy global gaming market, which raked in a total of 1.17 trillion yuan (US$165 billion) last year, up 6 per cent from a year earlier.

Pony Ma Huateng, the low-profile chairman and chief executive of Tencent Holdings, the world’s largest video gaming business by revenue, told an annual staff gathering on Monday of his intention to continue expanding overseas, according to people familiar with the situation.

According to the survey, around half of respondents said they would try to “acquire global intellectual property resources” and “expand gaming product offerings” in 2024 as a way to boost exports.

Separately, two thirds of respondents said they would try to woo players through “working with other established brands and intellectual property resources” in 2024 while 63.6 per cent said they would promote games via key opinion leaders.