China's video game sector has reportedly experienced a fall in revenue for the first time since at least 2005, as per previous data from the nation's leading gaming industry association. Based on a recent report published by the organization on Tuesday, the market saw video game sales revenue of 265.9 billion yuan ($39 billion) in 2022, a 10.33% year-over-year decline. The number of users decreased to 664 million, which is 0.33% less than the previous year.

The declines increased strain on a sector that was already under duress. China has initiated a number of clampdowns on video games in recent years, banning young users' access and removing content that is deemed to be ideologically offensive. During the industry upheaval, officials halted the issuance of new game permits for several months. Apparently, the procedure has resumed, but it now takes more time and costs businesses more to be compliant.

Developers, from small startups to industry giants like Tencent, are relocating abroad to seize potential growth opportunities. Chinese video games have long been exported, but only recently have they begun to gain traction in the West.

As per market research firm Sensor Tower, China-produced games made up as much as 20% of mobile gaming sales in the United States by the end of 2020. Last July, Chinese companies accounted for 39 of the top 100 mobile games in terms of revenue worldwide.

The ratio may possibly be higher in reality given that Chinese game creators, including other online businesses, are increasingly attempting to hide their nationality in order to mitigate the negative effects of being associated with China. For example, as its ties with China soured, India recently blocked hundreds of Chinese applications, including the immensely popular PUBG Mobile.

Regardless, Chinese games had another successful year in 2022, with $17.3 billion in global sales, based on the industry report. Even while the number decreased 3.7% YoY, domestic sales saw a far worse reduction.

Source credit: https://techcrunch.com/2023/02/14/china-gaming-industry-shrinks-first-time/