China’s Game Publishing Feels the Pinch as User Growth Slows

Recently, game research agency CNG and ThinkingData jointly released the 2021 Chinese Game Companies' Publishing Strategy Research Report. The report examines the changes that have occurred in the publishing market and predicts important trends for the future.

The report shows that the growth rate of Chinese gamers in the first half of 2021 was only 1.38%, a new low in recent years. The reasons are manifold: first, the bonus brought by the popularity of smartphones and the improvement of network facilities have peaked; second, several external channels themselves are caught in the bottleneck of user growth; third, the difficulty of maintaining players within the game industry has increased due to factors such as the increased difficulty of innovation and the reduction of new games. This has led to an increase in the value of existing players and a notable trend of targeted operations.

The Number of Chinese Gamers from 2015 to 2021The Number of Chinese Gamers from 2015 to 2021

In terms of sales expense, publicly listed game companies are expected to spend more than 98 billion CNY (15.4 billion USD) on expenses in 2021, showing a significant upward trend. The increase in sales expenses of many companies even exceeded the growth of their own revenue, leading to a decrease in net profit margin. On the other hand, 40% of small and medium-sized companies have scaled back their marketing expenses due to the rising cost of user acquisition.

As for uptime, the trend of long-term operation of games is becoming more and more obvious. The average life cycle of games in the first three quarters of 2021 has reached three and a half years, with games that have been online for more than three years accounting for more than 50% of the cash flow of the mobile game sector. In order to maintain the long-term vitality of games, game companies have also made efforts in various aspects: in the R&D phase, they have increased investment to produce game content that allows most users to find long-lasting fun; on the part of operations, they have improved user stickiness by continuously providing users with new game content and operation activities; at the sales end, they have expanded new user groups and maintained user vitality through various marketing strategies.

Average Uptime of Top 100 Mobile Games (In Terms of Cash Flow) Over the Years Average Uptime of Top 100 Mobile Games (In Terms of Cash Flow) Over the Years

In terms of publishing strategy, domestic mainstream games have adopted diversified publishing methods: game development and publishing are jointly participated by multiple parties such as developers, publishers, application markets, advertising platforms, social media, and other resources so that the breadth and depth of user acquisition are significantly improved. In overseas markets, about 60% of the revenue of China's independently developed mobile games comes from the three major regions of the US, Japan, and Korea. As the competition intensifies, more Chinese game companies seek to breakthrough in wider markets such as Europe and South America. The publishing strategies also need to be further upgraded to cater to the characteristics of different markets.

Overseas Revenue Distribution of China's Independently Developed Mobile Games in the First Half of 2021Overseas Revenue Distribution of China's Independently Developed Mobile Games in the First Half of 2021

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