The China digital gaming market is fundamentally different from other digital gaming markets, particularly those of the western countries. Game censorship in China is extremely stringent, and regulatory bodies often ban the licenses of video games that are deemed inappropriate for the cultural development of young gamers. Despite such limitations, China has become one of the largest digital gaming markets in the world, and has grown exponentially in the past few years due to the popularity of mobile games and eSports in the country. According to Research on Global Markets, the China digital gaming market is expected to expand at a compound annual growth rate (CAGR) of 15.4% during 2018-2023, and reach a revenue of USD 83.79 Bn by 2023. Read More: https://bit.ly/2HW6rSd

1. Insert Cover Image using Slide Master View
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2. 2
Market scope and segmentation
Chinadigitalgamingmarket
Segments Types
By platforms
PC games
Mobile games
Console games
By revenue models
Freemium Pay to play Advertising
By genres
Arena fightingRole-playShooter
Others

3. 3
Key questions answered in this study
 The historical, current and forecasted market size data for the China digital gaming market as a whole, as
well as, the segments of the market – by platforms – PC games, Mobile games, and Console games, by
revenue models – Freemium model, Pay to Play model and Advertising model and by genres – Shooter,
Role Play Action, Arena (fighting) , others (sports, strategy, adventure, etc.)
 The process through digital games reach end users from the manufacturers
 The major drivers and challenges affecting the China digital gaming market and its segments
 Trends in the China digital gaming market
 Analysis of the spending behavior of Chinese gamers
 Competitive landscape and market shares of leading Chinese gaming companies
 Profiles of major players operating in the China digital gaming market
Research coverage How this research service will help you
 Understand the demand of digital games in China to determine the viability of the
business
 Formulate a product market strategy – based on the position in the value chain to
determine the optimal product/service placement
 Identify the gap areas and address them
 Develop strategies and products, based on the industry for each of the segments
 Define the competitive positioning by comparing the products with the key players
in the market
Chinadigitalgamingmarket

4. 4
Executive summary I
Overview
Trends
USD Bn
• eSports is becoming increasingly popular with Chinese gamers. Gamers are obsessively playing eSports games like League of Legends,
Honor of Kings (Arena of Valor) in the country. Also, the government in the country is supporting developments and investments in
esports. Driven by this trend, China, which currently generates approx. 16% of the global esports revenues is expected to become the
largest market for eSports in the projected years.
• Adaptations of several PC games into mobile games are taking place in the country trend as it is leading to increased engagement and
revenue. Some of the highest revenue generating mobile games in China were mobile versions of the PC games. In 2015, Fantasy
Westward Journey, a PC games by NetEase, was launched as a mobile game and achieved immense success.
• In China affordable yet high-performance mobile phones are readily available from local manufacturers like Xiomi, Oppo, Vivo, etc.,
which allows gamers to play games on mobile on the go. With the increasing availability of affordable smartphones, the growth
potentials for China’s mobile gaming market is being strengthened.
• Self-sufficiency is another driver for the growth of the China digital gaming market. Most of China’s games are made by domestic
publishers and has little international appeal. Almost 93% of all money spent by Chinese gamers go to games developed by China-
based companies like Tencent, NetEase (together they hold 68% of the overall market in China (2017)), Perfect World, Shanda, etc.
• The regulatory body and government in China are very stringent. The licensing policies in China require foreign firms to partner with a Chinese company
to operate in China, thereby, reducing the foreign firms share of revenue earned in China. External sites like Facebook for social PC games, Google for
Google Playstore where most mobile games are available, etc. are all banned in China. Since March 2018, State Administration of Radio and Television has
limited the approval of new game titles causing a drastic slowdown in industry growth.
• Widespread piracy in China often limits the viability of digital games. Therefore, most games marketed in China are of the freemium model where in-game
payment structure is followed. Thus, the prospect of revenue generation and profits from paid games is limited, and it challenges the growth of such
business models.
• The China digital gaming market would grow from USD XX Bn in 2018 to USD XX.XX Bn in 2023 at a compound annual growth rate (CAGR) of XX.X%. The
mobile gaming segment is the largest segment, having generated 60% of the market revenues in 2018, followed by PC games and console games. The
positive change in the consumption behaviour of the vast gaming population in China, fuelled by economic improvement and improved mobile network
connectivity, is continuously raising the demand for digital games across the country and making it the games industry capital of the world.
XX.XX
XX.XX
83.79
2015 2018 2023

5. 5
Market definitions
PC games are the games that are played using a
Personal Computer. These include
• Web games which are played using an
internet browser
• Games which are either purchased through
online or offline retail channels as well as
downloaded from websites such as Steam,
WeGame.
PC Games
Mobile games are the games played on
smartphones (iPhones / Apps enabled phones, etc.)
and tablets (iPads, app enabled tablets, etc.).
Mobile Games
Console games are the games played on consoles
such as PlayStation, Xbox, Nintendo Wii as well as
traditional consoles.
Console Games
The digital gaming market comprises PC games, mobile games and console games. The revenue generated from the software and content portion , apart from the hardware portion, of these
segments have been taken into consideration.

6. Value chain of games
For mobile games, distribution channel (apps) are extremely fragmented and non-Chinese companies cannot publish games in Android market without local partner, though, in Apple
app-store local partner is not compulsory. Currently, tele-operators in China play a crucial role in the value chain as a lot of payments for mobile games take place through SMS
payments when mobile data connectivity is weak. But due to penetration of WiFis and growing mobile data subscriptions, the role of operators is expected to decline.
TraditionalEmerging
Note: B & M ( Brick & Mortar)
28
Publishers pay fees for acquiring
rights to publish games.
Conduct market research to find
suitable channels for distribution.
Market/advertise the game to the
distributors
Developers Publishers
The developers develop &
design the game software
The story is written &
characters are drawn.
Distributors distribute the game to
the retailers and act as a
distribution intermediary between
the developer, publisher, and
retailers.
Retail/sell games to the consumers
Gamers
Increased adoption
of Internet
Distributors/Retailer (online and Bric and
Mortar)
Streaming/ Digital Platform/ App store
App
Stores
Game Portals Streaming/social
media
Payment/ Operator/Carrier

7. 7
China - market overview
The China digital gaming market is projected to expand at a CAGR of XX.X% over 2018-2023 to reach USD 83.79 Bn. In 2018, the mobile gaming segment surpassed the PC gaming segment for
the first time with revenue of USD XX.XX Bn. The mobile gaming segment is expected to exhibit a staggering CAGR of XX.X% through the forecast period (2018–2023). Among the various gaming
genres, role-playing games held the largest market share, while the freemium model emerged as the dominant business model in 2018.
XX.XX
XX.XX
XX.XX
2015 2016 2017
XX.XX
XX.XX
XX.XX
XX.XX
XX.XX
83.79
2018E 2019F 2020F 2021F 2022F 2023F
CAGR (2015-2017): XX.X%
CAGR (2018-2023): XX.X%
• The China digital gaming market is fundamentally different from other digital gaming markets, particularly those in Western countries. Game censorship in China is extremely stringent, and
regulatory bodies often ban the licenses of the video games that are deemed inappropriate for the health (both mental and physical) and cultural development of young gamers
• Despite such limitations, China has become one of the largest digital gaming markets in the world. The government’s 14-year-old ban on consoles (2000–2015) has led to an increase in PC
gaming, while the mobile gaming segment is witnessing staggering growth due to the availability of local yet affordable high-performance phones that are suitable for gaming
• Domestic players dominate China’s digital gaming market, and international players have limited impact on the market. Chinese gamers spend primarily (~93% of total spending) on the
games developed by China-based companies, such as Tencent and NetEase, as gamers prefer local game characters
• Increased entertainment consumption by China’s colossal gaming population, fueled by economic development and improved mobile network connectivity, is driving the demand for digital
games across the country, making the country the world’s biggest gaming industry
Historical market revenue (USD Bn) Projected market revenue (USD Bn)
Key observations

8. 8
China - market trends
eSports: It is a form of video gaming wherein players compete with each
other in an online or live environment for a large number of viewers. This
format is becoming increasingly popular among Chinese gamers, who are
obsessively playing eSports PC games such as League of Legends and
mobile games such as Honor of Kings (Arena of Valor). Furthermore, the
Chinese government is encouraging the development of investments in
eSports. Buoyed by this trend, China, which currently generates ~16% of
the global eSports revenue, is expected to become the largest market for
this gaming format in the forecast period
Virtual reality: In the past few years, Chinese consumers have
adopted mobile virtual reality devices. Moderately priced
devices such as Cardboard (Google), Gear (Samsung), and
Magic Glass (Baofeng) are becoming popular among Chinese
customers. This points to the possibility of virtual reality
games causing a significant disruption in the Chinese digital
gaming landscape. Digital game giant NetEase has expressed
interest in VR-related activities. It has participated in the
funding of NextVR, an emerging VR broadcasting technology
company, as well as launched its own VR game, Twilight
Pioneers
Cross-platform trend (PC to Mobile): A significant trend
defining the Chinese digital gaming market is the adaptation of
several PC games into mobile games. PC games such as
CrossFire and League of Legends were recently relaunched as
mobile games in China. Some of the highest revenue-
generating mobile games in China were originally PC games.
Chinese game publishers are increasingly following this trend,
which has ensured increased engagement and revenue. In
2015, Fantasy Westward Journey, a PC game by NetEase, was
successfully launched as a mobile game
Women gamers: The number of female gamers in China,
particularly mobile gamers, has increased considerably,
with women showing a higher interest in gaming than
before. The female gamer population increased ~7% YoY in
2017 and represented nearly 50% of the country’s total
gamer population. Game publishers in the country are also
focusing on developing gaming content that appeals to
women gamers

9. 9
PC Gaming – growth drivers and key challenges
Growth drivers Key challenges
XX%
XX.XX XX.XX
18.57
2015 2018 2023
CAGR (2018-2023): XX.X%
XX%XX%
PC gaming
Key facts:
Revenue from PC gaming continues to increase, albeit at a slower rate than mobile gaming revenue,
despite a general decline in the number of PC gamers. Microtransactions are the most popular form of
monetization in PC games. With titles such as CrossFire, League of Legends, and Overwatch, Tencent and
NetEase dominate the PC game landscape as well
Rising disposable income and growing demand from PC gamers
Digital distribution of PC games
Popularity of eSports
Dedicated internet cafes
Demand from hard-core PC game enthusiasts in China and the
transformation of casual gamers to core PC gamers, who often play on
advanced computers, are driving the PC games market. China’s
economic growth (6.9% in 2017) is expected to boost the disposable
income of gamers, leading to increased spending on premium and
licensed content, thereby driving revenue
Owing to the digital distribution of PC games and the immense
popularity of digital payment methods, it is now convenient for Chinese
gamers to purchase PC games. Streaming channels such as Douyu,
Huya, and Panda TV are also driving PC gaming revenue. Accessibility to
digital distribution channels (including Steam, WeGame, and Battle.net)
and easy availability of alternative payment methods (Alipay, WeChat,
etc.) are fueling the growth of PC games
eSports is a rage in China. This gaming format is expected to witness a
CAGR of over 25% in the forecast period. Widespread adoption of
eSports has been instrumental in the growth of PC games in China, as
this format requires superior equipment that does not falter during
competitive gaming
Dedicated internet cafes have contributed to an increase in China’s PC
gaming revenue. About 234 million people aged 14–24 years play PC
games in the country. New luxury internet cafes, which have dedicated
spots for professional teams to live-stream their games and for other
gamers to watch live matches, are attracting more PC gamers.
Therefore, despite growth in mobile gaming, PC gaming revenue
continues to increase owing to the presence of dedicated internet
cafes, which are frequented by gamers for eSports and live-streaming
of games such as League of Legends and CrossFire
Mobile gaming has gained sudden popularity in China owing to the
availability of affordable yet high-performance smartphones and
accessibility to super-fast internet. This has been instrumental in driving
the shift from PC/video games to mobile gaming. Many leading game
publishers in China, such as Tencent and NetEase, are adopting the
multiplatform strategy and launching their PC game titles on mobiles,
thereby reducing the PC gaming traffic
Popularity of mobile gaming
Piracy
The biggest challenge for PC games is piracy, which eats into the
revenue earned from single-player versions of PC games and paid
games
Market share (2015, 2018 & 2023)

10. 10
Company overview: NetEase
NetEase operates an interactive online community in China. It offers various
games in a range of genres through mobile devices and PCs, including role-
playing games, massively multiplayer online role-playing games (MMORPGs),
battle arena games, simulation games, collectible card games, first-person
shooter games, and sandbox games, to the Chinese market
• In November 2018, NetEase announced a collaboration with
Blizzard Entertainment to co-develop the next game in the
storied Diablofranchise, Diablo Immortal, a mobile massively
multiplayer action RPG for Android and iOS devices
• In June 2018, NetEase announced its acquisition of a minority
stake in Bungie, an independent employee-owned studio, to
support the incubation of new creative gameplay by delivering
brand new digital gaming experiences collaboratively
• In May 2018, NetEase celebrated its extensive portfolio of
existing and upcoming PC and mobile games at the NetEase
Fourth Annual “520 Game Enthusiasts’ Day” in Guangzhou,
where it unveiled over 20 new PC and mobile titles, including
MMO games, sandbox games, battle arena games, puzzle games,
simulation games, collectible card games, and sports games
• In January 2018, Mattel and NetEase announced their
collaboration to form Mattel163 to make mobile games and
other digital experiences based on Mattel’s iconic global brands.
The venture was meant to make games and apps around Barbie,
Hot Wheels, Fisher-Price, and Thomas & Friends next
Founded: 1997
Operational headquarters: Beijing,
China
Key people: Lei Ding (Founder, CEO, and
Director); Hui Xiaojun (Vice President of
Game Development)
Employees: 18,129
Net revenue: USD 7.9 Bn (2017)
Website: https://NetEase-na.com/
Incorporating new technologies from third parties as well as continuing
to develop NetEase’s own proprietary technology in order to produce
user-friendly internet and e-commerce applications, services, and
technologies
Focusing on building brand awareness through proactive public
relations and traditional and online advertising, including corporate
branding and announcements about services through outdoor,
print, and online advertisements
Leveraging internet media traffic to generate revenues from
online games, products offered on e-commerce platforms,
advertisements, and e-mail and other services
Focusing on high-profile events to increase traffic on NetEase’s websites
and other online and mobile platforms and enhance their appeal to
advertisers
Geographic presence
• Asia-Pacific
Major products
• Internet games
• Mobile games
• Gross Profit: USD 3.98 Bn
• Profit before Tax: USD 2.00 Bn
• Net Profit: USD 1.67 Bn
• Operating Profit: USD 1.87 Bn
• Online Games Revenues: USD 5.29 Bn
Company snapshot
Major initiatives/highlights
Growth strategy
Key numbers (2017)

11. Appendix
11
Research methodology
The study begins with identifying the right research question(s). The question depends on what we are going to achieve by conducting the research or what we want
to convey to the prospective customers through this research. Next we identify the logical steps to arrive at the answers to the question(s). These logical steps form
our research objectives. The research objectives provide us a guideline regarding what information we need to conduct analysis. We strongly believe that clear
objectives will lead to clear results about the given market
The next stage of the research is conducted utilizing the secondary sources of information, process called desk/secondary research. Netscribes Inc. has a considerable
volume of information in both quantitative and qualitative forms, across all major industries and its sectors. Also, we conduct in-depth study of the market,
understanding its key stakeholders, drivers, trends, challenges and opportunities globally covering major regions such as North America, Latin America, Europe, Asia
Pacific, and Middle East & Africa. The key sources consumed for these research include (but not limited to) the following:
 Financial reports published by the key market players
 Government and other official sources including the National Statistics
 National and International trade associations
 Paid databases
 Other reliable sources
The qualitative and quantitative findings from the above stages are brought together by specialists to perform a rigorous analysis. The regional market trends, drivers,
and opportunities obtained during the analysis is compared with regional economic indicators, sector growth rates, population index, etc. to ensure the data
consistency. After ensuring the consistency, these historical and present indicators help us to understand how the market will perform in future. Our proprietary
forecasting model factors in all these indicators to predict the future market accurately.
Primary research complements the secondary research, as and when required, as it helps us to gain insights from the industries directly by communicating with the
senior executives, key opinion leaders and independent consultants who are experts in their industries or specific industry sectors. Such interviews are conducted
across the value chain of the market in question. A survey questionnaire is usually prepared for conducting any primary interview or survey. The questionnaire is
developed with utmost care to fulfil the key research objectives and also to validate the assumptions about the market. This supplements the information otherwise
unaddressed via secondary research. The primary data collection is done by expert interviewers who have specific industry knowledge. Linguists are hired to conduct
interviews in the respondent’s native language. Some of the primary research methods applied at Netscribes include the following:
 In-depth Interviews
 Executive Interviews
 Expert Panels

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