China’s gaming crackdown has caused the market to fall for the first time

China’s gaming crackdown has caused the market to fall for the first time

China’s video game industry has declined for the first time since data became available, official statistics showed. The country’s massive video games sector, the world’s largest, saw its revenue fall in the first half of 2022 for the first time since data became public 14 years ago (via Reuters).

The sector’s combined revenue fell 1.8 percent to 147.7 billion yuan ($21.8 billion) in the six months ended June. That’s according to the state-backed industry group China Audio-Video and Digital Publishing Association, which released a report today. The decline comes amid heavy Chinese government pressure on the industry, with restrictive regulations and a slowdown in approving the release of new games.

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Related: China’s Game License Freeze Hits Chinese Developers Hard

The fall, the first since the data was released in 2008, shows Beijing’s policies have weighed on the sector, which had previously grown rapidly for several years. Companies such as NetEase and Tencent, one of the world’s largest game companies, have suffered, as have a large number of smaller studios and indies making games for the domestic market.

Beijing’s deterrent effects include introducing new rules that restrict minors from playing online games, limiting the amount of time they can play each day and reducing the number of gaming licenses allowed. As of today, many titles from Tencent and NetEase are still waiting to be approved for sale

The industry report also revealed that the number of gamers in China fell, falling to 665.69 million from the 666.57 million reported in December. China’s game companies’ domestic revenue fell 4.25 percent to 124.5 billion. With these strict regulations, China’s game companies are increasingly looking to overseas markets to grow their business, and revenue in this direction has increased, rising 6.16 percent to nearly $9 billion during the period.

Beijing’s crackdown on the games sector was part of a broader crackdown on the technology and property sectors, as the government seeks to curb their growth and influence the economy and people’s lives. But as China faces an economic slowdown due in part to pandemic-related lockdowns, the government may begin to shift its attitude toward increasing economic output.

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