Share this article

Chinese Domestic Video Game investments plummeted 80% Compared to Last Quarter

By Cecil Gao
Apr. 29, 2022 updated 04:58

Recently, China’s Academy of Information and Communications Technology has published the domestic internet investment report for the first quarter of 2022. In the report, CAICT has pointed out that China's domestic internet investment has shown a decline since the beginning of 2022. Among them, the reduction of the overall investment amount in  the gaming industry has fallen by 80% compared to the fourth quarter of last year. 

CAICT also pointed out that the decline in investment by large companies targeting the domestic market had a lot to do with the establishment of the Anti-Monopoly Bureau in China in November last year. Large Chinese game companies such as Tencent, BiliBili and NetEase, for example, still dominate the game investment market in the first quarter of 2022, but at a significantly slower pace compared to last year.

Take Tencent as an example; this year, Tencent changed its business model of investing in and acquiring game makers at home and instead made medium-sized investments overseas. Tencent’s increasing investment in the overseas gaming market is due to the great success seen by new Chinese game developers like miHoYo, Lilith Games and NUVERSE in recent years. In December last year, Tencent revealed its overseas game brand Level Infinite at TGA, which marked the next stage of Tencent's international games business. Investment and acquisition of overseas game companies have gradually become Tencent's primary goal. The hundreds of overseas studios Tencent has invested in and acquired include Turtle Rock, the developer of Back 4 Blood, Exit Plan, a Polish 3A developer, and Inflexion Studios, the developer of Nightingale, etc. Almost every one of them has excellent development capabilities.

Unlike Tencent, NetEase has long been readying itself to enter the overseas market. They established Nagoshi Studio last year under the name of Nagoshi Toshihiro, the producer of the Yakuza series, and acquired Grasshopper, the developer of Killer7. In the first quarter of this year, NetEase shifted its investment target to emerging game-related industries. In January, NetEase invested in several companies that work on metaverse games and acquired a technology company that focuses on the development of virtual reality ‘script-killing’ (a trendy Chinese offline Role-playing game).

In addition, BiliBili continues to increase its investment in the anime mobile game field, investing and acquiring game manufacturers including Dragon Punch Storm, MoBao Network and NekoDay.

Also, CHT, a Chinese car manufacturer, has proposed the acquisition of 49% of Shouxin Network for 360 million USD. In the field of blockchain games, Animoca Brands from Hong Kong, China, has completed a 400 million USD financing in the last six months.

Compared with last year, the enthusiasm of big manufacturers to invest in Chinese game companies has trended downwards, and domestic companies have also changed their strategy to overseas game companies. Investment bank Drake Star Partners said in its forecast of the games market in 2022 that the acquisition of European and American game studios by Asian companies will accelerate in 2022, while Internet companies represented by Tencent, NetEase and ByteDance will continue to consolidate.

 When the overseas market has become an important target for Chinese game companies, the way to go abroad is no longer limited to the game products themselves. Technology, capital, brand, and publishers will also become ways to expand overseas for Chinese game companies.