Video games in China#Online gaming

Broadly, the growth of the video game market in China is tied to expansion of its technology and digital economy from the 1990s to present day, which by 2016 represented over 30% of its gross domestic product.

File:Tongyang - downtown - internet cafe - CIMG9869.JPG

At the time that the video game industry was being established in North America in the 1970s, China was in the midst of major political and economic reform following the death of Mao Zedong in 1976. The country was technologically behind much of the rest of the world in terms of its media. Part of the reform was modernization of its media systems, helping to boost economic prosperity for citizens.{{cite journal | title = Japanese Console Games Popularization in China: Governance, Copycats, and Gamers | first1 = Sara X. T. | last1 = Liao | date = 2015 | doi = 10.1177/1555412015583574 | journal = Games and Culture | volume = 11 | issue = 3 | pages = 275–297 | s2cid = 147283833 | url = http://www.com.cuhk.edu.hk/images/content_people/publication/sara-journal-2016-japanese.pdf | access-date = September 20, 2019 }} As such, China saw little of arcade games or the first generation of home consoles, like the Atari 2600 and locally made Pong consoles.{{Cite web |url=https://www.theworldofchinese.com/2024/07/little-tyrant-revisited-a-brief-history-of-chinese-video-game-consoles/ |title=Little Tyrants: A Brief History of Chinese Video Game Consoles}}

By the 1980s, China's economy had significantly improved. After the video game crash of 1983 which devastated the North American video game market, Japan became a dominant factor in the global market leading off the third generation of consoles such as Nintendo's Famicom. The first widely-available video games in 1980s China were arcade games.{{Cite book |last1=Guo |first1=Li |title=Games & Play in Chinese & Sinophone Cultures |last2=Eyman |first2=Douglas |last3=Sun |first3=Hongmei |date=2024 |publisher=University of Washington Press |isbn=9780295752402 |editor-last=Guo |editor-first=Li |location=Seattle, WA |pages= |chapter=Introduction |editor-last2=Eyman |editor-first2=Douglas |editor-last3=Sun |editor-first3=Hongmei}}{{Rp|page=13}} The number of arcades in China increased significantly during fall 1985.{{Rp|page=14}}

Consoles were introduced to China in the late 1980s and were primarily imported from Japan.{{Rp|page=14}} However, importing these into China was costly, with a 130% tariff on hardware and games along with value-added taxes. Console systems were in high demand, but because of the high costs of importing, only few foreign companies did so. This created the video game clone grey market in China – manufacturing of reverse-engineered consoles and games at much lower costs than imported system, even if this required dubious or illegal copyright infringement. Outright copyright theft ("piracy") was also rampant in China due to the country's poor intellectual property controls. The sales of cloned console hardware and games outpaced that of legitimate imports, and further drove many foreign companies away since they could not compete with this area, such that by the 1990s, most video game systems in China were manufactured there. Xiaobawang Company created the first Chinese-produced console; it came with a keyboard and was intended both for gaming and educational purposes.{{Rp|page=14}} By the end of 1993, over 60% of secondary school students in Beijing owned a gaming console.{{Rp|page=14}} China also had a small market of legal consoles. Sega released the Master System in the late 1980s as the first officially distributed console in China ever, and in the 1990s it continued to distribute newer systems. The most popular was Mega Drive, which like Famicom was cloned by local manufacturers. Sega was one of the most famous arcade producers alongside Namco in the region. Nintendo entered in 1994 with the Game Boy and Super Nintendo through a Hong Kong distributor. There was also a market for smaller producers like UMC with Gamate and Super A'Can.{{cite | url=https://archive.org/details/game-software-93-02/%E7%94%B5%E5%AD%90%E6%B8%B8%E6%88%8F%E8%BD%AF%E4%BB%B696%E4%B8%8B%E5%8D%8A%E5%B9%B4%E5%90%88%E8%AE%A2%E6%9C%AC/page/n170/mode/1up?view=theater | magazine=Game Software |title=中国软件行业协会电子游戏机分会秘书长 | issue=09/1996 |page=2}}{{cite web | url=https://user.guancha.cn/main/content?id=153053 | title=25年后，任天堂仍然想打通"中国"这一关_风闻 }}{{cite journal | title= Gamate | journal = Game Software | issue = 1/1995 | pages= 39 }}{{cite journal |title= Super A'Can | journal = Game Software | issue = 12/1995 |pages= 46}}{{cite web |title=走进中国家用游戏机博物馆「极客堂」 |url=https://www.ign.com.cn/jiketang/33161/opinion/zou-jin-zhong-guo-jia-yong-you-xi-ji-bo-wu-guan-ji-ke-tang}}

As home ownership of computers in urban China increased after 1995, the Chinese PC games market grew significantly.{{Rp|page=14}}

Console games continued to grow in popularity through the 1990s, which created a broader concern in the media of video game addiction, with terms like "digital heroin" being used to describe video games. Even before the 1990s, there had been a broader stance in China that video games created negative effects on those that played them, which only grew during this decade. The impact on youth was particularly of concern, as video games were known to detract students from schoolwork, leaving them unprepared to enter China's college system. This situation was partially created by China's one-child policy, with sibling-less children having few others to interact with and little to do outside of school. The anti-addiction facet also discouraged foreign companies from trying to break into the Chinese market.

The concerns about video game addiction and negative influence on the youth came to a head in June 2000. The State Council passed a bill crafted by seven ministries specifically aimed at video games. The bill established certain provisions on video game content and regulations on operations of Internet cafés and arcades. The most significant facet of this bill was a ban on the production, import, and sale of consoles and arcade machines.{{cite news | url = https://www.reuters.com/article/us-china-gamesconsoles/china-suspends-ban-on-video-game-consoles-after-more-than-a-decade-idUSBREA0606C20140107 | title = China suspends ban on video game consoles after more than a decade| last1 = Carsten| first1 =Paul | date = January 6, 2014 | access-date = March 22, 2021 | publisher = Reuters }} This ban was not absolute, as it allowed for some consoles to be released in China, notably Sega Pico in 2002, Sony's PlayStation 2 in 2004 and several of Nintendo's consoles rebranded under the iQue partnership. However, with the restriction on game imports and their content, these consoles did not catch on in China.{{cite journal|url=http://www.highbeam.com/doc/1G1-91099802.html|archive-url=https://web.archive.org/web/20140921201103/http://www.highbeam.com/doc/1G1-91099802.html|url-status=dead|archive-date=September 21, 2014|date=March 25, 2002|title=Sega Toys markets Pico computer toy in China.|journal=Japan Toy and Game Software Journal|access-date=September 1, 2014}} The ban did not include games available on personal computers (PC), and as a result, the PC video game market in China flourished over the next fifteen years.{{cite web | url = https://www.pcgamer.com/its-time-to-pay-attention-to-china-inside-the-worlds-largest-pc-games-industry/ | title = Censorship, Steam, and the explosive rise of PC gaming in China | first1 = Steven | last1 = Messner | date = May 23, 2019 | access-date = May 23, 2019 | work = PC Gamer }} Internet cafés flourished, growing from 40,000 in 2000 to over 110,000 by 2002, and have remained numerous since.

The ban on arcade machines was dropped in 2009, but while arcade were permitted to operate, they had to take several safeguards to prevent excessive use by youth.{{cite web | url = https://www.engadget.com/2013/01/30/china-console-ban/ | title = China's complicated history with video games: when a ban isn't really a ban | first1 = Richard | last1 = Lai | date = January 30, 2013 | access-date = May 23, 2019 | work = Engadget }} However, since such arcades offered a low-cost way to play games without a PC, they still became a thriving industry comparable to PC gaming at internet cafés. As a result, Chinese gamers frequently visit the arcades to play action games, particularly fighting games, and occasionally unlicensed arcade ports of popular PC or mobile games such as Angry Birds or Plants vs. Zombies.{{cite web |last1=Jou |first1=Eric |title=The Wonderful and Seedy World of Chinese Arcades |url=http://kotaku.com/5894415/the-wonderful-and-seedy-world-of-chinese-arcades/gallery/1 |publisher=Kotaku |access-date=9 April 2012 |date=March 19, 2012 |url-status=dead |archive-url=https://web.archive.org/web/20120322011403/http://kotaku.com/5894415/the-wonderful-and-seedy-world-of-chinese-arcades/gallery/1 |archive-date=March 22, 2012 }}

File:Uncharted Waters Online booth at ChinaJoy 20060728.jpg]]

Legitimate acquisition of games and the hardware to play them was still relatively expensive in China, which continued to fuel the video game clone market in China. A large number of PC gamers in China acquired software through illegal downloads and pirated software websites to avoid the cost. Developers of legitimate games in China recognized that, to compete with this black market, they had to develop games that had a free or low upfront cost model but offered a way to monetize their games over time. Many Chinese-developed games became online games offering numerous microtransactions to recoup costs; such games could be offered at Internet cafés, which became a popular option for Chinese players that could not afford computer hardware, even as the price of computing equipment dropped over the next decade. This created a boom of massively multiplayer online games (MMOs) in the Chinese market and which helped to establish market dominance of companies like Tencent, Perfect World, and NetEase. PC cafés proliferated in urban centers as China's population continued to grow. Western free-to-play and subscription-based games like Dota 2 and World of Warcraft, poised to take advantage of this model, also became successful. It also prompted Chinese developers to develop numerous clones of popular Western games that they would offer at low cost, an issue that still persists presently.{{clarify timeframe|date=July 2022}}

Online gaming became of serious concern to the government around 2007, re-raising the issues of gaming addiction that had prompted the 2000 console ban. A government report claimed that 6% of teenage internet users, amounting to 3.5 million young people, were playing online games more than 40 hours a week. In July 2007, the government required that online game publishers and operates incorporate anti-addiction software on their games, specifically by monitoring how long underaged persons played. If a minor played for more than three hours straight, the game was to wipe half of any in-game currency that had earned that session, and lose all credits if played for more than five hours.{{cite web | url = https://www.engadget.com/2007/04/10/china-imposes-anti-addiction-limits-on-kids-gaming/ | title= China imposes anti-addiction limits on kids' gaming | first1 = Kyle | last1 = Orland | date = April 10, 2007 | access-date = September 20, 2019 | work = Engadget }} Additionally, these systems were required to have the player to log in using their national identification. However, at the time of implementation, not all publishers incorporated the required controls, and for those that did, players would find ways around the limitations, such as using family member IDs, or otherwise would simply play past the time requirements as there was nothing else to do beyond the video game.{{cite web | url = https://www.npr.org/templates/story/story.php?storyId=13897858 | title = Gamers Find Gaps in China's Anti-Addiction Efforts | first1= Louisa | last1 = Lim | date = August 28, 2007 | access-date = September 20, 2019 | publisher = NPR }}{{cite journal | title = Government Regulation of Online Game Addiction | first1 = Jing Da | last1 = Zhan | first2 = Hock Chuan | last2 = Chan | journal = Communications of the Association for Information Systems | volume = 30 | issue = 13 | pages = 187–198 | date = April 2012 | doi = 10.17705/1CAIS.03013 | url = https://aisel.aisnet.org/cgi/viewcontent.cgi?article=3655&context=cais | access-date = September 20, 2019 | doi-access = free }}

{{Image frame |caption=Number of players (top) and video game industry revenue in China (bottom) from 2008 to 2017, showcasing the expansive growth of the industry in this period{{cite web | url = http://www.cgigc.com.cn/member/upload/pms/201708/03180814msz5.pdf | title = China Gaming Industry Report | date = January 6, 2017 | access-date = September 24, 2019 | publisher = China Audiovisual and Digital Publishing Association Game Publishing Committee | language = zh }}|content=

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By 2007, the size of the Chinese video game market was estimated to be about {{USD|1.7 billion}} with around 42 million players, having grown 60% from the previous year mostly driven by online gaming.{{cite web | url = https://venturebeat.com/2008/05/02/chinese-online-game-market-forecast-to-more-than-triple-in-five-years/ | title = Chinese online game market forecast to more than triple in five years | first1= Dean | last1= Takahashi | date = May 2, 2008 | access-date = September 20, 2019 | work = Venture Beat }}{{cite web | url=http://www.gamedaily.com/articles/news/chinese-games-market-to-exceed-3-billion-in-2010-says-pearl-research/?biz=1 | title=Chinese Games Market to Exceed $3 Billion in 2010, says Pearl Research | work=GameDaily | date=March 19, 2008 | access-date=August 14, 2016 | author=James Brightman | archive-url=https://web.archive.org/web/20080320050706/http://www.gamedaily.com/articles/news/chinese-games-market-to-exceed-3-billion-in-2010-says-pearl-research/?biz=1 | archive-date=March 20, 2008}} At this stage, China's impact on the larger global market, valued at {{USD|41.9 billion}}, was not considered significant, as much of it was still driven by the grey market for clones and pirated games.{{cite web | url = https://arstechnica.com/gaming/2008/06/gaming-expected-to-be-a-68-billion-business-by-2012/ | title = Gaming expected to be a $68 billion business by 2012 | first1= Frank | last1 =Caron | date = June 18, 2019 | access-date = September 20, 2019 | work = Ars Technica }} However, the rapid growth led to forecasts that China would be a major contributor to the global market within five-years time.

Online gaming readily led way to the rise of social network games in China around 2007–2008, given that players were accustomed to free-to-play nature of online gaming. The Chinese game Happy Farm (2008) was included in Wired{{'s}} list of "The 15 Most Influential Games of the Decade" at #14, for its major influence on global social network games, particularly for having "inspired a dozen Facebook clones", the largest being Zynga's FarmVille.{{cite magazine|last1=Kohler|first1=Chris|title=14. Happy Farm (2008)|url=https://www.wired.com/gamelife/2009/12/the-15-most-influential-games-of-the-decade/2/|series=The 15 Most Influential Games of the Decade|magazine=Wired|access-date=10 September 2011|date=December 24, 2009|page=2}} A number of other games have since used similar game mechanics, such as Sunshine Farm, Happy Farmer, Happy Fishpond, Happy Pig Farm,{{cite web|url=http://www.techgearx.com/china%E2%80%99s-growing-addiction-online-farming-games/ |archive-url=https://web.archive.org/web/20091102084242/http://www.techgearx.com/china%E2%80%99s-growing-addiction-online-farming-games/ |url-status=usurped |archive-date=November 2, 2009 |title=China's growing addiction: online farming games |publisher=TechgearX |date=2009-10-29 |access-date=2010-05-06}}{{cite news|author=Elliott Ng |url=https://venturebeat.com/2009/10/29/china-qq-farm-happy-farm-games/ |title=China's growing addiction: online farming games |work=VentureBeat |date=2009-10-29 |access-date=2010-05-06}} Farm Town, Country Story, Barn Buddy, Sunshine Ranch, and Happy Harvest, as well as parodies such as Jungle Extreme and Farm Villain.{{cite magazine|last1=Kohler|first1=Chris|title=Farm Wars: How Facebook Games Harvest Big Bucks|url=https://www.wired.com/gamelife/2010/05/farm-wars/|magazine=Wired|access-date=12 September 2011|date=May 19, 2010}}{{cite web|title=Facebook》到開心農場歡呼收割 |url=http://life.chinatimes.com/2009Cti/Channel/Life/life-article/0,5047,100304+112009090100272,00.html |work=China Times |access-date=12 September 2011 |date=2009-09-01 |url-status=dead |archive-url=https://web.archive.org/web/20120324084517/http://life.chinatimes.com/2009Cti/Channel/Life/life-article/0,5047,100304+112009090100272,00.html |archive-date=March 24, 2012 }}

This further prepared the China market for mobile games around 2012, where there are about one billion mobile phone subscriptions, according to a United Nations report,{{cite web | url = https://www.bbc.com/news/technology-19925506 | title = UN: Six billion mobile phone subscriptions in the world | date = December 12, 2012 | access-date = September 20, 2019 | publisher = BBC }} and after Apple secured deals to distribute their iPhones within China.{{cite web | url = https://www.ft.com/content/6b702ad8-62bb-11e3-bba5-00144feabdc0 | title = Apple strikes deal with China Mobile | first1= Tim | last1= Bradshaw | first2=Sarah | last2= Mishkin | date = December 22, 2013 | access-date = September 20, 2019 | work = Financial Times }} Mobile devices in China are less expensive than computer or console hardware, and also provide Internet functionality; for many, they are the only form of Internet connectivity they have, making them popular gaming devices.{{cite web | url = https://www.fool.com/investing/2019/04/17/chinas-online-gaming-industry-a-mobile-first-world.aspx | title = China's Online Gaming Industry: A Mobile-First World | date = April 17, 2019 | access-date = September 25, 2019 | work = The Motley Fool }} Mobile games in China grew rapidly over the next several years, growing from about 10% of the Chinese video game market in 2012 to 41% in 2016.{{cite report | url = https://newzoo.com/insights/articles/global-games-market-reaches-99-6-billion-2016-mobile-generating-37/ | title = The Global Games Market Reaches $99.6 Billion in 2016, Mobile Generating 37% | date = April 2016 | access-date = January 20, 2019 | publisher = Newzoo | archive-date = April 7, 2022 | archive-url = https://web.archive.org/web/20220407234834/https://newzoo.com/insights/articles/global-games-market-reaches-99-6-billion-2016-mobile-generating-37/ | url-status = dead }} This expanded to more than 50% by 2018.{{cite web | url = https://venturebeat.com/2019/05/07/niko-partners-chinas-game-market-to-hit-41-5-billion-and-767-million-players-by-2023/ | title = Niko Partners: China's game market to hit $41.5 billion and 767 million players by 2023 | first1= Dean | last1= Takahashi | date = May 7, 2019 | access-date = September 20, 2019 | work = Venture Beat }} Furthering the growth of the social and mobile game markets was the fact that the anti-addiction measures applied to online games did not apply to these types of titles; it was not until 2017 where renewed concerns about mobile titles like Honor of Kings led Tencent to implement a similar anti-addiction system for its portfolio.{{cite web | url = https://ca.reuters.com/article/technologyNews/idCAKCN1AV0D2-OCATC | archive-url = https://web.archive.org/web/20170815150654/https://ca.reuters.com/article/technologyNews/idCAKCN1AV0D2-OCATC | url-status = dead | archive-date = August 15, 2017 | title = On the cards: Revenue surge for China's Tencent from popular fantasy game | first1 = Sijia | last1 = Jiang | date = August 14, 2017 | access-date = September 20, 2019 | publisher = Reuters }}

Social and mobile gaming significantly grew the Chinese video game market beyond earlier estimates. By 2013, the Chinese market for video games saw nearly a ten-fold growth since 2007, valued at {{USD|13.5 billion}} of the global {{USD|83 billion}},{{cite web | url = https://www.bloomberg.com/news/articles/2019-01-23/peak-video-game-top-analyst-sees-industry-slumping-in-2019 | title = Peak Video Game? Top Analyst Sees Industry Slumping in 2019 | first1= Yuki | last1 = Naramura | date = January 23, 2019 | access-date = January 29, 2019 | work = Bloomberg }} with over 490 million players, counting only those on personal computers; since consoles were still banned, these numbers do not take console players into account.

In 2014, China partially eased the restrictions on video game hardware by allowing game consoles to be manufactured in the Shanghai Free-Trade Zone (FTZ) and sold in the rest of China subject to cultural inspections. In July 2015, the ban on video game consoles within the country was completely lifted. According to a statement from the country's Ministry of Culture, companies like Sony, Nintendo, and Microsoft – among others – were now allowed to manufacture and sell video game consoles anywhere in the country.{{citation| url = https://money.cnn.com/2015/07/27/technology/china-video-game-ban-lifted/index.html| title = China eliminates all restrictions on gaming consoles | first1 = Sophia | last1 = Yan | date = 27 Jul 2015 | work = money.cnn.com }}

Microsoft and Sony quickly took advantage of the lifting of the ban, announcing sales of the Xbox One and PlayStation 4 platforms within the FTZ shortly after the 2014 announcement. Microsoft established a partnership with BesTV New Media Co, a subsidiary of the Shanghai Media Group, to sell Xbox One units in China,{{cite web | url = https://www.reuters.com/article/xbox-china-idUSL2N0NL2LE20140430 | title = Microsoft's Xbox One console to go on sale in China in September | first1 = Malathi | last1 = Nayak | date = April 29, 2014 | access-date = September 14, 2019 | publisher = Reuters }} with units first shipping by September 2014.{{Cite web|url=http://news.xbox.com/2014/04/xbox-one-china|title=BesTV and Microsoft to bring Xbox One to China in September|publisher=Xbox Marketing, Microsoft|date=April 29, 2014|access-date=May 13, 2014}} Sony worked with Shanghai Oriental Pearl Media in May 2014 to establish manufacturing in the FTZ,{{cite web | url = https://www.bbc.com/news/business-27572539 | title = Sony sets up PlayStation plant in China | date = May 27, 2014 | access-date = September 14, 2019 | work = BBC }} with the PlayStation 4 and PlayStation Vita shipping into China by March 2015.{{Cite web |url=http://nikopartners.com/sony-playstation-china-console-game-market/ |title=Sony PlayStation in China – Two Years In |date=May 17, 2017 |publisher=Niko Partners |access-date=August 22, 2018}} CEO of Sony Computer Entertainment Andrew House explained in September 2013 that the company intended to use the PlayStation Vita TV as a low-cost alternative for consumers in an attempt to penetrate the Chinese video game market.{{cite news |first=David |last=Scammell |date=September 12, 2013 |title=Sony not planning to release PlayStation Vita TV in US or Europe 'at this point' |url=https://www.videogamer.com/news/sony_not_planning_to_release_playstation_vita_tv_in_us_or_europe_at_this_point.html |archive-url=https://web.archive.org/web/20131002055446/https://www.videogamer.com/news/sony_not_planning_to_release_playstation_vita_tv_in_us_or_europe_at_this_point.html |access-date=2023-03-30|archive-date=2013-10-02 }} Both Microsoft and Sony have identified China as a key market for their next generation of consoles, the Xbox Series X and PlayStation 5 respectively.

Nintendo did not initially seek to bring the Wii U into China; Nintendo of America president Reggie Fils-Aimé stated that China was of interest to the company after the ban was lifted, but considered that there were similar difficulties with establishing sales there as they had recently had with Brazil.{{cite web | url = http://blogs.seattletimes.com/brierdudley/2014/06/11/e3-nintendo-boss-on-wii-u-beating-xbox-and-playstation/ | title = E3: Nintendo boss on Wii U beating Xbox and PlayStation | first1 = Brier | last1= Dudley | date = June 11, 2014 | access-date = September 14, 2019 | work = The Seattle Times }} Later, Nintendo had teamed up with Tencent by April 2019 to help sell and distribute the Nintendo Switch as well as aid its games through the Chinese government approval process led by National Radio and Television Administration.{{cite web | url = https://www.reuters.com/article/us-tencent-nintendo-china/tencent-wins-key-approval-to-sell-nintendos-switch-in-china-idUSKCN1RU0YK | title= Tencent wins key approval to sell Nintendo's Switch in China | first1 = Pei | last1= Li | first2= Sam | last2 = Nussey | date = April 18, 2019 | access-date= April 18, 2019 | publisher = Reuters }}{{cite web | url = https://www.engadget.com/2019/08/02/nintendo-switch-china-launch-plans/ | title= Tencent is at the center of Nintendo's Switch launch in China | first1= Steve | last1 = Dent | date = August 2, 2019 | access-date = August 2, 2019 | work = Engadget }} The Nintendo Switch went on sale in China on December 10, 2019, though unlike the international version; this unit included several concessions to region-lock it to China.{{cite web | url = https://www.gamedeveloper.com/business/nintendo-and-tencent-have-set-a-launch-date-for-the-switch-in-china | title = Nintendo and Tencent have set a launch date for the Switch in China | first1 = Chris | last1 = Kerr | date = December 4, 2019 | access-date = December 4, 2019 | work = Gamasutra }} Even with the ban lifted, console sales were slow, as consoles require dedicated space in home and did not have additional functionality, like personal computers, and further slowed by continued popularity of Internet cafés. The hardware grey market also persisted, drawing away legitimate sales of consoles.{{cite report | url = https://www.uscc.gov/sites/default/files/Research/China%27s%20Digital%20Game%20Sector.pdf | title = China's Digital Game Sector | first1 = Matt | last1 =Snyder | date = May 17, 2018 | access-date = September 25, 2019 | publisher = United States-China Economic and Security Review Commission }} Of the {{USD|37.9 billion}} industry revenue in 2018,{{cite web | url = https://newzoo.com/insights/articles/global-games-market-reaches-137-9-billion-in-2018-mobile-games-take-half/ | title = Mobile Revenues Account for More Than 50% of the Global Games Market as It Reaches $137.9 Billion in 2018 | first1= Tom | last1 = Wijman | date = April 30, 2018 | access-date = September 20, 2019 | publisher = Newzoo }} only about {{USD|1 billion|long=no}} was attributed to console sales. It is expected that as interest in legitimate sales of consoles increases in the future, the grey market will wane.{{cite web | url = https://venturebeat.com/2019/06/28/niko-china-will-spend-1-5-billion-on-console-gaming-by-2023/ | title = Niko: China will spend $1.5 billion on console gaming by 2023 | first1= Jeff | last1 =Grubb | date = June 28, 2019 | access-date = September 20, 2019 |work = Venture Beat }} Despite official availability of the Switch, imported and grey-market sales of Switch consoles still dominated China; while Nintendo and Tencent reported that a million Switch consoles had been sold by January 2021, the total number of Switch consoles in use within the country was estimated to be at least twice as high due to imported, non-region-locked versions.{{cite web | url = https://www.gamesindustry.biz/articles/2021-01-14-chinese-switch-sales-expose-failure-to-counter-the-ever-present-import-market-opinion | title = Chinese Switch sales expose a failure to counter the import market | first= Daniel | last = Camilo | date = January 14, 2021 | access-date = January 15, 2021 | work = GamesIndustry.biz }}

File:崩坏星穹铁道 四川成都.jpg in Chengdu, Sichuan]]

In March 2018, after the structural re-organization of State Administration of Radio and Television (SART), over a period of several months, no new game licenses were given out. Further, MOC had made the process of getting these licenses more stringent. This period has significantly impacted Tencent, one of the largest publishers of video games for China. In August 2018, Tencent was forced to pull from sale their version of Monster Hunter World from China as they had not got their license for it and the government received complaints about its content. Tencent were also blocked from publishing personal computer versions of PlayerUnknown's Battlegrounds and Fortnite Battle Royale. The license freezes was reported to have significant effects on those game publishers and developers that rely on Chinese sales.{{cite web | url = https://www.bloomberg.com/news/articles/2018-08-15/china-is-said-to-freeze-game-approvals-amid-agency-shakeup | title = China Freezes Game Approvals Amid Agency Shakeup | date = August 14, 2018 | access-date = August 15, 2018 | work = Bloomberg }} In late August 2018, the Chinese Ministry of Education called on the Chinese government and SART to also address the growing issue of myopia in children which was attributed to long hours of gaming on small screens like with mobile devices. The Ministry of Education had asked SART to consider placing restrictions on the number of hours each young player can play a game. On news of this, Tencent shares lost 5% of their value, an estimated {{USD|20 billion}} on the stock market, the next day.{{cite web | url = https://www.bbc.co.uk/news/world-asia-china-45366468 | title = China targets video gaming to tackle myopia in children | date = August 31, 2018 | access-date = August 31, 2018 | work = BBC }}{{cite web | url = http://www.gamasutra.com/view/news/326151/Chinas_video_game_licensing_freeze_could_last_another_six_months.php | archive-url = https://web.archive.org/web/20180910204557/http://www.gamasutra.com/view/news/326151/Chinas_video_game_licensing_freeze_could_last_another_six_months.php | url-status = dead | archive-date = September 10, 2018 | title= China's video game licensing freeze could last another six months | first1 = Chris | last1 =Kerr | date = September 10, 2018 | access-date = September 10, 2018 | work = Gamasutra }} A further approval route was closed by Chinese authorities in October 2018; this "green channel" route, which had been in place by August 2018, allowed a game to have a period of one month on the market for purposes of consumer testing without having full government approval, but had been seen by game publishers as temporary relief from the current ban. Tencent had been planning on distributing and monetizing from Fortnite Battle Royale via this method before this route was closed.{{cite web | url = https://www.bloomberg.com/news/articles/2018-10-24/china-said-to-halt-special-approval-process-for-new-games | title = China Halts Special Approval Process for New Games | first1 = Yuji | last1 = Nakamura | first2= Lulu Yilun | last2= Chen | date = October 24, 2018 | access-date= October 24, 2018 | work =Bloomberg }}

With China's effective ban of new games continuing into October 2018, Chinese players have found other routes of getting new games, which include using Steam which uses overseas servers.{{cite web | url = https://www.eurogamer.net/articles/2018-10-24-steam-popularity-skyrockets-in-china-as-governments-freeze-on-new-game-approvals-continues | title = Steam popularity skyrockets in China as government's freeze on new game approvals continues | first1 = Matt | last1 = Wales | date = October 24, 2018 | access-date = October 24, 2018 | work = Eurogamer }} Further, existing titles released before the freeze that continue to offer new content have seen a resurgence in players and spending as a result. To comply with the planned new rules, Tencent announced that all mobile games it manages in China will require users to use their Chinese ID to play. This will be used by Tencent to track the time that minors play the game and implement time limitations on them, among other steps to meet new regulations.{{cite web | url = https://www.theverge.com/2018/11/5/18065048/tencent-chinese-user-id-age-video-games-playerunknown-battlegrounds-league-of-legends | title = Tencent will soon require Chinese users to present IDs to play its video games | first1 =Shannon | last1= Liao | date = November 5, 2018 | access-date = November 5, 2018 | work = The Verge }}

By December 2018, the Chinese government had formed the "Online Game Ethics Committee" falling under the National Radio and Television Administration, which will review all games to be published in China for appropriate content as well as issues related to childhood myopia.{{cite web | url = https://www.polygon.com/2018/12/8/18132246/china-video-game-ethics-panel-censorship-approval | title = China sets up a video game ethics panel in its new approval process | first1= Owen | last1 = Good | date = December 8, 2018 | access-date = December 8, 2018 | work = Polygon }} The committee, by the end of the year, had restarted the approval process and will be working through a backlog of submissions to review in an expedited manner to allow new games to be released.{{cite web | url = https://www.gamesindustry.biz/articles/2018-12-21-china-ends-freeze-on-game-approvals | title = China ends freeze on game approvals | first1 = James | last1 = Batchelor | date = December 21, 2018 | access-date= December 31, 2018 | work = GamesIndustry.biz }} Initial approvals to 80 back-logged titles was granted within days, but notably lacked games published by Tencent and Netease, the two largest publishers in China.{{cite web | url = https://www.wsj.com/articles/tencent-not-winning-yet-even-as-chinas-games-approvals-freeze-finishes-11546413207 | title = Tencent Not Yet Winning Even as China's Game-Approval Freeze Melts | first1 = Shan | last1 = Li | date = January 2, 2019 | access-date = February 1, 2019 | work = The Wall Street Journal }} After several more rounds, Tencent had two games approved near the end of January 2019, but did not include either Fortnite Battle Royale or PlayerUnknown's Battlegrounds, two major titles that were financial drivers in other countries.{{cite web | url = https://www.wsj.com/articles/tencent-wins-approval-for-two-titles-after-gaming-freeze-in-china-11548339222 | title= Tencent Wins Approval For Two Titles After Gaming Freeze in China | first1 = Shan | last1 = Li | date = January 24, 2019 | access-date = February 1, 2019 | work = The Wall Street Journal }}

A second freeze on approvals started in February 2019, as any further approvals on new games were suspending until the committee has been able to clear the backlog of the titles from the prior freeze. By this point, only about 350 games had been approved from the previous freeze.{{cite web | url = https://www.gamedeveloper.com/business/report-china-freezes-new-game-approvals-as-regulators-tackle-backlog | title = Report: China freezes new game approvals as regulators tackle backlog | first1 = Chris | last1= Kerr | date = February 20, 2019 | access-date = February 21, 2019 | work = Gamasutra }}

According to China's State Administration of Press and Publication, the freezes were put in place as the video game industry had grown too rapidly in China at a rate that passed the capabilities for regulation to keep up. The second freeze that started in February 2019 was to put in place to give regulators a change to tune the game approval process to meet the current market size. The freeze is expected to be lifted in April 2019, alongside a new set of regulations for game approvals. These new changes include limiting the number of games that can be approved each year to around 5,000 games, strictly banning video game clones and games with obscene content, and placing more anti-addiction controls on mobile titles aimed at younger players.{{cite web | url =https://www.gamesindustry.biz/articles/2019-04-19-china-introduces-new-game-approval-process-limiting-total-approvals-per-year | title= China introduces new game approval process, limiting total approvals per year | first1= Rebekah | last1 =Valentine | date = April 19, 2019 | access-date = April 19, 2019 | work = GamesIndustry.biz }}

The nearly year-long freeze has had rippling effects on the global video game industry. Whereas in 2017, around 9,600 new games were approved, only around 1,980 were approved within 2018.{{cite web | url = https://www.thestreet.com/markets/electronic-arts-take-two-stock-hit-by-china-freeze-14872713 | title = Electronic Arts, Take-Two Plunge as China Freezes Video Game Approvals Again | first1 =Scott | last1 = van Vorhis | date = February 20, 2019 | access-date = February 21, 2019 | work = TheStreet }} Tencent had been one of the top 10 companies in the world at the start of 2018, but by October, its stock had dropped in value by 40%, an estimated {{USD|230 billion}}, and knocked the company out of the top ten.{{cite news | url = https://www.cnn.com/2018/10/16/tech/tencent-china-games-valuation/index.html | title= How China's video game crackdown caused a $200 billion stock wipeout for Tencent | first1 = Jordan | last1= Valinsky | date = October 24, 2018 | access-date = February 1, 2019 | work = CNN }} Apple attributed revenue loss in the fourth quarter of 2018 to China's approval freeze, which had also affected mobile video game apps.{{cite web | url = https://www.theverge.com/2019/1/29/18202812/chinese-censorship-hurt-apples-bottom-line | title = Apple blames revenue loss on China censoring video games | first1= Shannon | last1= Lioa | date = January 29, 2019 | access-date = February 1, 2019 | work = The Verge }} The freeze was expected to impact total revenues of the video game industry in 2019, with one analysis projecting a decline in revenue from the previous year, the first time in only a decade.{{cite web | url = https://www.bloomberg.com/news/articles/2019-01-23/peak-video-game-top-analyst-sees-industry-slumping-in-2019 | title = Peak Video Game? Top Analyst Sees Industry Slumping in 2019 | first1= Yuki | last1 = Naramura | date = January 23, 2019 | access-date = January 29, 2019 | work = Bloomberg L.P. }}

The Chinese government continued to push on restrictions on gaming after the approvals freeze was lifted, asserting its efforts were to restrict the influence of gaming on youth. The government has place restrictions on the amount of time minors can play video games, first in 2019 to 90 minutes per day on weekdays and three hours on weekends, and then to only one hour per day on weekends by 2021. The government has required that all online games to implement strong authentication protocols developed by the government as to track players' time in a game as well. Additionally, the government banned minors under the age of 16 from registering for livestreaming services.{{cite web | url = https://www.gamesindustry.biz/articles/2021-09-27-china-bans-livestreaming-by-those-under-16 | title = China bans livestreaming by children under 16 | first = Brendan | last = Sinclair | date = September 27, 2021 | accessdate = September 27, 2021 | work = GamesIndustry.biz }}

Since March 2021, there had been new pressure on video games, kicked off by statements made by General Secretary of the Chinese Communist Party Xi Jinping during the annual Two Sessions meetings where he claimed that video games could have a bad influence on the minds of children who are psychologically immature.{{cite web | url = https://www.scmp.com/tech/big-tech/article/3125059/president-xi-jinping-puts-spotlight-video-game-addiction-he-raises?module=inline&pgtype=article | title = President Xi Jinping puts spotlight on video game addiction as he raises concerns about teenagers | first= Josh | last= Ye | date = March 12, 2021 | accessdate = January 4, 2022 | work = South China Morning Post }} The government had stopped approval of games starting in August 2021 in an apparent new lockdown related to game content. The continued pressure by the government on the Chinese game sector started to take an effect on the economic valuation of the largest companies. An article published by the state-owned newspaper Economic Information Daily published a report in August 2021 that initially stated that online video games were an "opium for the mind", that gaming addiction was on the rise, and that there should be stronger government regulations. While the article was pulled and later republished without the "opium" statement, its effects caused shares of Tencent to drop by 10% initially that day in trading, though had recovered some after the revised article was published. Similar drops were seen with NetEase and Bilibili.{{cite web | url = https://www.wsj.com/articles/tencent-plummets-as-china-takes-aim-at-online-videogames-11627962018 | title = Tencent Sinks After China Denounces Online Gaming | first = Chong Koh | last = Ping | date = August 3, 2021 | accessdate = August 3, 2021 | work = The Wall Street Journal }} Later in September 2021, when both Tencent and Netease were notified by the government of an upcoming hearing and reminding them than violations of their youth gaming restrictions would be seriously dealt with, both companies' stocks dropped by about 10% due to fears that the government may be clamping down more on gaming in the future, including another potential approvals freeze.{{cite web | url = https://www.cnbc.com/2021/09/09/tencent-stock-falls-after-chinese-regulators-summon-gaming-firms.html | title = Tencent, NetEase shares dive after Chinese regulators summon firms; report of game approval freezes | first = Arjun | last = Kharpal | date = September 9, 2021 | accessdate = September 16, 2021 | work = CNBC }} Over 200 Chinese game companies, including Tencent and NetEase, signed a statement that month pledging that they will work to regulate youth gaming under the government's new regulations, as well as to enforce new rules relating to games involved "effeminate" portrayal of men in games.{{cite web | url = https://www.reuters.com/world/china/chinese-gaming-firms-vow-self-regulation-amid-crackdown-teen-addiction-2021-09-24/ | title = Chinese gaming firms vow self-regulation amid crackdown on teen addiction | date = September 23, 2021 | accessdate = September 24, 2021 | publisher = Reuters }} As reported by the South China Morning Post, an internal memo sent by the state's gaming trade organization to game companies in September 2021 for purposes of training further clarified that that government saw video games not as "pure entertainment" but as a form of art and thus works that must uphold "a correct set of values" related to China's heritage and culture, and would be more restrictive in what games they would approve within the country. The memo described games that have "blurred moral boundaries", where the player has an option of being good or bad within the game, and suggested that such games may need instead to restrict players to a specific moral path. Further, the memo identified that games that gave a "revisionist" form of history, or appeared more Japanese than Chinese, would likely fail to be approved.{{cite web | url = https://www.scmp.com/tech/policy/article/3150622/new-game-approvals-dry-china-internal-memo-shows-developers-now-have | title = New video game approvals dry up in China as internal memo shows that developers now have many red lines to avoid | first = Josh | last= Ye | date = September 29, 2021 | accessdate = September 30, 2021 | work = South China Morning Post }}

According to the South China Morning Post, the approvals for new games persisted through the end of 2021, and due to the lack of approvals, more than 14,000 game-related companies were deregistered in China through 2021.{{cite web | url = https://www.scmp.com/tech/policy/article/3161717/china-gaming-crackdown-freeze-new-video-game-licences-extends-2022 | title = China gaming crackdown: freeze on new video game licences extends into 2022 as 14,000 gaming-related firms shut down | first = Josh | last = Ye | date = December 31, 2021 | accessdate = January 4, 2021 | work = South China Morning Post }} The approvals freeze was lifted by April 2022 when new approvals were announced.{{cite web | url = https://www.gamesindustry.biz/articles/2022-04-11-china-ends-nine-month-freeze-on-game-approvals | title = China ends nine-month freeze on game approvals | first = Brendan | last = Sinclair | date = April 11, 2022 | accessdate = April 11, 2022 | work = GamesIndustry.biz }} In December 2021, players within China reported that the international version of Steam had been blocked in China. However, it turned out to be a partial disruption of Steam's web version and as of 2024, the International version of Steam is still fully accessible in China barring some occasional connection issues {{cite web | url = https://www.gamedeveloper.com/business/holiday-special-did-steam-really-just-get-banned-in-china- | title = Holiday special: did Steam really just get banned in China? | first = Simon | last = Carless | date = December 27, 2022 | accessdate= December 27, 2022 | work = gamedeveloper }} The government also banned the live streaming of unapproved games in April 2022.{{cite web | url = https://www.reuters.com/world/china/chinas-broadcasting-regulator-ban-livestreaming-games-without-approval-2022-04-15/ | title = In latest gaming crackdown, China bans livestreaming of unauthorised titles | first1 = Sophie | last1 = Yu | first2 = Josh | last2= Ye | date = April 15, 2022 | accessdate = April 16, 2022 | work = Reuters }}

A report issued in November 2022 by research firm CNG and the China Game Industry Group Committee, both with strong associations with the Chinese regulatory bodies, stated that the steps taken to reduce youth video game addiction had been working, with more than 70% of the country's youth gaming less than three hours a week. The report suggested that the regulatory bodies should be able to back off on the tight restrictions they had placed on publishers like Tencent and NetEase over the prior few years.{{cite web | url = https://www.cnbc.com/2022/11/23/china-shows-signs-of-easing-its-intense-crackdown-on-the-gaming-sector.html | title = China is showing signs its intense crackdown on the video game sector is easing | first= Arjun | last = Kharpal | date = November 23, 2022 | accessdate = November 23, 2022 | work = CNBC }}

The NPPA issued new proposed rules in December 2023 aimed to further reduce the amount of time citizens play games and reduce in-game spending. These rules would prevent games from having daily or first-time login rewards and limit how much virtual currency that players could keep within in-game wallets. These rules appeared to be directly aimed at MMOs and gacha games, both popular titles within China, and as a result, both Tencent and NetEase saw major stock losses at the announcement of these rules totalling $80 billion.{{cite web | url = https://www.reuters.com/world/china/china-issues-draft-rules-online-game-management-2023-12-22/ | title = China to curb gaming spend; Tencent, NetEase plunge | first = Josh | last = Ye | date = December 22, 2023 | accessdate = December 22, 2023 | work = Reuters }}{{cite web | url = https://www.videogameschronicle.com/news/tencent-and-netease-lose-80b-in-value-as-china-plans-to-limit-game-spending/ |title = Tencent and NetEase lose $80b in value as China plans to limit game spending | first = Tom | last = Ivan | date = December 22, 2023 | accessdate = December 22, 2023 | work = Video Games Chronicle }} The government quickly walked back on these recommendations, and reported let go of the official that had drawn them by January 2024.{{Cite news | url=https://www.reuters.com/world/china/china-removes-official-after-video-games-rules-spark-turmoil-sources-2024-01-02/ | title=Exclusive: China removes official after video games rules spark turmoil | first=Josh | last=Ye | website=www.reuters.com | agency=Reuters}}

As of 2024, China has begun approving more and more games as it seeks to revive the industry after a prolonged down period after a 2021 crackdown. The government has approved an average of 107 games per month in 2024. This came along with China's first AAA game Black Myth: Wukong. Some analysts expect Black Myth’s success to have a positive impact on the Chinese gaming industry as the government could now be more inclined to issue game licenses to encourage domestic studios to work on more AAA games considering Black Myth: Wukong's domestic and international success {{cite web | url = https://www.scmp.com/tech/policy/article/3280322/chinas-109-video-game-approvals-september-include-mysterious-tencent-title | title = Holiday special: China's 109 video game approvals for September include a mysterious Tencent title | first = Cao | last = Ann | date = September 27, 2024 | accessdate= September 27, 2024 | work = South China Morning Post }}

Online gaming in China represents one of the largest and fastest growing Internet business sectors in the world. As of 2022, China is the second largest market for online games after the United States.{{cite web |title=Top countries and markets by video game revenues |url=https://newzoo.com/resources/rankings/top-10-countries-by-game-revenues |url-status=live |archive-url=https://web.archive.org/web/20230326135814/https://newzoo.com/resources/rankings/top-10-countries-by-game-revenues |archive-date=2023-03-26 |access-date=6 October 2023 |website=Newzoo}} In 2023, the country has 668 million internet users playing online games and the industry was worth US$42 billion.{{Cite news |last1=Feng |first1=Coco |last2=Deng |first2=Iris |date=13 January 2024 |title=China's video gaming market ended 2023 battered and bruised, but can world-beating titles and innovation save the day? |url=https://www.scmp.com/tech/article/3248249/chinas-video-gaming-market-ended-2023-battered-and-bruised-can-world-beating-titles-and-innovation |access-date=11 July 2024 |work=South China Morning Post}} 53.8% of gamers are male, 46.2% are female.{{cite web |author=Steven Millward |date=30 April 2024 |title=The Future of Female Gaming in China [Top Market Trends] |url=https://sekkeidigitalgroup.com/the-future-of-female-gaming-in-china |access-date=11 July 2024 |work=Sekkei Digital Group}}

Online games in China fall into two primary categories: MMORPGs and MOCGs. The former have a predilection for persistent online worlds where hundreds to thousands of game players can interact simultaneously; the latter is a generic term for games played competitively online without the existence of a persistent online realm (games as simple as online Ma Jiang and online competitive card games would fall under this category). In 2011, there were over 100 million Chinese MMO gamers.

Official Chinese statistics regarding online gaming state that as of the close of 2006 revenue from China's online gaming industry reached RMB 8 billion or around {{USD|1.04 billion}}, with earnings reaching around RMB 33 billion or {{USD|4.3 billion}}. Additionally, while Japanese, American, and South Korean companies have traditionally dominated the market, Chinese developed software now holds a 65% market share on the mainland, with an additional 20 million in revenue generated by users outside of China.People's Daily Online. [http://english.people.com.cn/200704/13/eng20070413_366346.html "China's Online Game Industry on a Roll"]. 2007.

QQ Games is one such popular online client. Growth was driven in part by China's most popular online game, Netease's Fantasy Westward Journey, which now has 1.66 million peak concurrent users. Another contributor is Giant's Zhengtu Online, which has 1.52 million peak concurrent users.

Today, the video game market is dominated by the Tencent Games division of Tencent Holdings, which is estimated to contribute to 46% of the overall revenue in China, and nearly 10% of the global video game market as of 2017, making it the largest video game company in the world. NetEase, which contributes to around 15% of overall revenue in China, is the second largest video game company in China, as well as the seventh largest in the world as of 2017.{{Cite web|date=2017-03-23|title=Tencent leads the top 25 public game companies with $10.2 billion in revenues|url=https://venturebeat.com/2017/03/23/tencent-leads-the-top-25-public-game-companies-with-10-2-billion-in-revenues/|access-date=2021-08-21|website=VentureBeat|language=en-US}} Other major players include Perfect World, Shunrong, and Shanda.

These companies are noted for having made aggressive investments in foreign video game developers, particularly from South Korea and the United States, and for making strategic agreements with other entities to serve as the China-based operating arm for foreign interests to meet Chinese government regulations. Notably, Tencent's acquisitions have included: {{USD|400 million}} to acquire Riot Games in 2011 to gain right to the online game League of Legends and {{USD|8.6 billion}} for Supercell in 2016 for its mobile game Clash of Clans. Among major investments include approximately 5% of Activision in 2013,{{cite web | url= https://www.fool.com/investing/2018/02/13/tencent-owns-stakes-in-these-4-us-companies.aspx | title = Tencent Owns Stakes in These 4 U.S. Companies | first1= Leo | last1 = Sun | date = February 13, 2018 | access-date = September 25, 2019 |work = The Motley Fool }} a 40% interest in Epic Games in 2013,{{cite web |url=https://www.polygon.com/2013/3/21/4131702/tencents-epic-games-stock-acquisition |title=Tencent's $330M Epic Games investment absorbed 40 percent of developer [Updated] |last1=Crecente |first1=Brian |date=March 21, 2013 |website=Polygon |access-date=August 24, 2016 |archive-url=https://web.archive.org/web/20160820045446/http://www.polygon.com/2013/3/21/4131702/tencents-epic-games-stock-acquisition |archive-date=August 20, 2016 |url-status=live}} and a 5% interest in Ubisoft in 2018.{{cite web| url = https://www.polygon.com/2018/3/20/17144094/ubisoft-vivendi-sells-stake-tencent-deal | title = Ubisoft finally fends off Vivendi takeover bid through Tencent partnership | first1 = Samit | last1= Sarkar | date = 20 March 2018 | access-date = 23 April 2019 |work = Polygon }}

The 10 largest online game companies by revenue in 2017 are:{{cite web |last=Armstrong |first=Johanna |date=2018-04-12 |title=China's 2017 Game Industry Market Report |url=http://www.youxistory.com/2018/04/chinas-2017-game-industry-market-report.html |access-date=2018-03-12 |work=Youxi Story}}

1. Tencent: Tencent Games is the Interactive Entertainment Division (aka IED) of Tencent.
2. NetEase: a popular online portal in China, also branched out in the space of MMORPGs with the release of Westward Journey. The game, based on ancient westward travels on the Silk Road (a popular theme from Chinese developed MMORPGs), has gone through two iterations; it was re-released as Westward Journey II due to numerous problems with the initial release, and its game engine was used to develop Fantasy Westward Journey, which is currently the most popular MMORPG in China (based on PCU numbers).Gamasutra.[https://web.archive.org/web/20070408140437/http://www.gamasutra.com/php-bin/news_index.php?story=13369 "The China Angle"]. April 3, 2007
3. YY
4. 37 Interactive
5. Perfect World
6. Elex
7. IGG
8. Alpha Group
9. Century Huatong Group (owner of Shanda). Shanda produces and supports many popular MMORPGs. The company is significant because it introduced a new online payment system with the release of Legend of Mir 2 in 2001. Instead of charging users for the initial purchase of the game, Shanda gave the software away free-of-charge and decided to charge users for time spent playing in game. This payment system specifically counteracted piracy because the company could maintain easier control over the time users spent in the game, rather than attempt to limit the game's distribution.Gamasutra.[https://web.archive.org/web/20070324093913/http://www.gamasutra.com/php-bin/news_index.php?story=13170 "The China Angle"]. March 20, 2007. Shanda maintains a large number of MMORPGs in China developed by Western, Korean and native Chinese companies; the latter two regions produce Shanda's most popular games. The company also maintains numerous casual games as well, with platforms supporting chess and other non-persistent world games.[https://web.archive.org/web/20040723033418/http://www.snda.com/en/index.jsp Shanda Entertainment]
10. Kunlun Tech

The9 (第九城市) is similar to Shanda Entertainment, it specifically maintains and produces MMORPG content for the Chinese gamer base. The9 is notable because of its partnership with Blizzard Entertainment in bringing World of Warcraft (the most popular MMORPG outside of Asia) to China. World of Warcraft is the most popular western MMORPG in Asia, and one of the most popular in China in general. Recent statistics place its peak concurrent users at around 688,000, easily among the top MMORPGs in the country.{{cite web|author=Shang Koo|work=Gamasutra|url=http://gamasutra.com/php-bin/news_index.php?story=13369|archive-url=https://web.archive.org/web/20070408140437/http://www.gamasutra.com/php-bin/news_index.php?story=13369|url-status=dead|archive-date=April 8, 2007|title=The China Angle: Wii Piracy, World Of Warcraft Beaten?|date=April 3, 2007}} The9 also implemented a pay-for-time system for the game, which differs from the monthly subscription payment structure used by Blizzard in other territories. In April 2009, World of Warcraft owner Activision Blizzard announced it had selected The9 competitor NetEase to operate the game in China. The9's license expired on June 7, 2009.{{cite web | url=http://www.businessinsider.com/chinese-gamer-the9-feels-pain-from-loss-of-world-of-warcraft-2009-8 | title='World Of Warcraft' Loss Burns Chinese Gamer The9 | work=Business Insider | date=August 28, 2009 | access-date=August 14, 2016 | author=Rory Maher}}

In 2023, China's gaming industry continued to show strong competitiveness and resilience in the global market. Compared to 2017, the ranking and revenue structure in 2023 has changed significantly, with headline companies such as Tencent and NetEase still dominating, but emerging companies such as miHoYo, HYPERGRYPH and Game Science are rapidly emerging as industry highlights with high-quality titles such as Genshin Impact, Honkai: Star Rail and Black Myth: Wukong. In addition, game genres have become more diversified, from MOBAs and shooters to tactical role-playing and female-oriented card games, further segmenting market demand. These changes reflect the progress made by China's game industry in terms of technological innovation, content creation and global market adaptation, and also reveal the industry's development trends and opportunities in the new market environment.

In order to gauge the popularity of online games, both in China and internationally, three benchmarks are commonly implemented. The first is peak concurrent users (PCU), which is the maximum numbers of players online simultaneously at a given time. A high PCU number signifies that a game has a large base of constant user participation, which is essential for the survival of an online world. The second statistic used is the daily active player base; this number is essentially a count of the number of disparate users who sign on in a given 24-hour period. This statistic differs from PCU simply because of its longer time span but the daily user base is still a good quantifier of popularity and usage.

The third statistic is simply the total number of registered users for a specific game or service, this statistic is significantly more problematic because most, if not all, online games do not limit the user to a single account or user name. For example, some games claim millions of registered users; a disingenuous statistic given that the most popular MMORPGs in China usually garner only 800,000 to one million peak concurrent users.Gamasutra.[https://web.archive.org/web/20070408140437/http://www.gamasutra.com/php-bin/news_index.php?story=13369 "The China Angle"]. April 3, 2007. Thus, while registered user numbers can be quite impressive, they are not as accurate a gauge of popularity as the other aforementioned statistics.{{Citation needed|date=March 2008}}{{Original research inline|date=March 2008}}

In 2010, there were 25 investments made into Chinese online gaming companies. Of the 25 investments 20 of these deal disclosed financial details. As a group these 20 deals combined for a total of US$137 million in investment.The China Perspective.[http://www.thechinaperspective.com/articles/ecommerceonlinegameslure64ofinvestmentsinchina039sinternetmarket8182/index.html "E-Commerce, Online Games Lure 64% of Investments in China's Internet Market"]. February 15th, 2011.

China has domestically produced a number of games, including Arena of Valor, Westward Journey, The Incorruptible Warrior, and Crazy Mouse. There are a large number of domestically made massively multiplayer online role-playing game MMORPGs in China, although many generally remain unheard of outside of the country.{{cite news | last1=Custer | first1=Charlie | title=Chinese Video Games in America | work=ChinaGeeks | date=24 January 2010 | url=http://chinageeks.org/2010/01/chinese-video-games-in-america/ | archive-url=https://web.archive.org/web/20160120063030/http://chinageeks.org/2010/01/chinese-video-games-in-america/ | archive-date=2016-01-20 | access-date=20 January 2016}}{{cite news |last=Hancock |first=Tom |date=2017-06-25 |title=China's Tencent scores with world's top-earning mobile game |work=Financial Times |url=https://www.ft.com/content/5387d6a8-57d3-11e7-9fed-c19e2700005f}}

China does have a small but growing indie game scene. The growth of China's indie game scene is considered to have been through hobbyist programmers starting around the 1990s and into the 2000s after the console ban where personal computer games became more popular. An early well-known indie developer, Coconut Island, was founded in the mid-2000s, and through its success, starting a number of game jams around the country starting in 2011, and eventually established the China Indie Game Alliance, one of the country's largest developer communities. Further interest in indie game development came with the popularity of mobile games in the country. The 2014 title Monument Valley developed by Ustwo in the United Kingdom is considered to have been an influential title as it was able to tell an emotional story through the game medium, and drew more interest in the indie game scene.{{cite magazine | url = https://egmnow.com/the-closing-walls-around-chinas-independent-game-development-scene/ | title = The Closing Walls Around China's Independent Game Developers | first1= Khee Hoon | last1 = Chan | date = January 17, 2020 | access-date = February 7, 2020 | magazine = Electronic Gaming Monthly }} Indie game development is challenged by the governmental approval process, requiring resources that many indie developers do not have.{{cite web | url = https://www.pcgamer.com/pc-gaming-in-china-everything-you-need-to-know-about-the-worlds-biggest-pc-games-industry/ | title = PC gaming in China: Everything you need to know about the world's biggest PC games industry | first1 = Steven | last1= Messner | date = September 12, 2019 | access-date = September 12, 2019 | work = PC Gamer }} As with mainstream commercial games, indie games must be approved and get a license to be sold, or otherwise may be offered freely, which does not require a license. This has led to a black market around obtaining licenses, using non-China-controlled platforms like Steam to distribute games, or other questionable means to get their game into players' hands. As Valve has been working with Perfect World to create a China-specific client for Steam, which would be limited to games approached by the Chinese government, several indie developers fear this may harm the indie scene within China.{{cite web | url = https://www.pcgamer.com/many-chinese-developers-are-worried-about-steams-upcoming-chinese-only-version/ | first1 = Steven | last1 = Messner | title = Many Chinese developers are worried about Steam's upcoming Chinese-only version | date = February 8, 2020 | access-date = February 12, 2020 | work = PC Gamer }}

Most of the major video game systems in the world since the 1990s have been manufactured in China; by 2019, 96% of all video game consoles were manufactured in China, generally taking advantage of the net lower-income labor available in the country. Some of the larger manufacturers based in China or with factories within China creating video game consoles include Foxconn, Hosiden, and Flex. Because of this, trade relations between China and other countries can have an impact on video game console pricing.{{Cite web | url = https://www.pcgamesn.com/game-console-trump-tariff | title = Microsoft, Sony, and Nintendo join PC makers in looking to move production out of China | first1 = Dustin | last1 =Bailey | date = June 5, 2019 | access-date = January 24, 2020 | work = PCGamesN }} Around 2019, as Sony, Microsoft, and Nintendo were preparing their next generation systems, a trade war between the United States and China was threatening to create a 25% import tariff on electronic goods shipped into the U.S. from China, which would have significantly affected the prices of these new consoles. There had already been an impact on personal computer components prior, leading to speculation on the impact on consoles. Sony, Microsoft and Nintendo jointly petitioned the U.S. government to not go through with this plan, in addition to other electronics vendors in the U.S. By January 2020, the U.S. government affirmed it had backed off this planned tariff.{{cite web | url = https://venturebeat.com/2020/01/24/u-s-china-trade-deal-clears-way-for-playstation-5-and-xbox-series-x/ | title = U.S.-China trade deal clears way for PlayStation 5 and Xbox Series X | first1= Jeff | last1= Grubb | date = January 24, 2020 | access-date = January 24, 2020 | work = Venture Beat }} Despite this, Sony, Microsoft and Nintendo have all expressed plans to divest some of the Chinese manufacturing to other countries in southeast Asia such as Vietnam.

Esports in China had been significant since 1996, as the country gained access to the Internet and PC gaming cafes began appearing across the county, also added by the popularity of QQ, a Chinese instant messaging client that helped with long-distance communications.{{cite journal | title = Game On: The Rise of the eSports Middle Kingdom | first1 = Haiqing | last1 = Yu | date = 2018 | journal = Media Industries| volume = 5 | issue = 1 | doi = 10.3998/mij.15031809.0005.106 | doi-access = free }} Players quickly flocked to existing Western games that supported competitive Internet play such as Command & Conquer: Red Alert and Quake II. However, it was the release of StarCraft in 1998 that established the formation of organized competitive esports in China, including the formation of the China StarCraft Association to arrange unofficial tournaments for 1999 and onward. That same year was also the first official esports tournament in China based on Quake II. By 2000, the China E-Sports Association, formed from StarCraft players, was established, and Chinese players and teams participated and won medals starting with the World Cyber Games 2001. By 2003, the Chinese government recognized the success that Chinese players had in these games, and despite the stigma that the government had towards the addicting qualities of video games, recognized esports as an official sport in 2003, encouraging youth to excel in this area and that participating in esports was "training the body for China".

China continued to expand its esports engagement alongside South Korea over the next several years, with its growth occurring alongside the growth of other online games in China. China became more involved with planning of the World Cyber Games along South Korea, who had founded the event in 2000. The growth was further fueled by China's large Internet companies investing in esports teams and players, establishing esport tournaments of their own, and acquiring Korea developers of popular esports games. These companies have also gained investment into foreign companies that have produced popular esports titles in China. Notably, Tencent initially acquired an investment into Riot Games in 2008, which produced League of Legends, and by 2015 had fully acquired the studio. Tencent has also invested into Activision Blizzard, which, through Blizzard Entertainment, distribute StarCraft, World of Warcraft, Hearthstone, and Heroes of the Storm. The Alibaba Group and other e-commerce Chinese businesses have also invested heavily into the esports arena within China as early as 2006, but have made more inroads by establishing the World Electronic Sports Games in 2016 as a replacement for the World Cyber Games. Alibaba's efforts have centered on making the cities of Hangzhou and Changzhou esports centers in China.

Due to both government encouragement and industry investment, the number of professional esports players in China grew from 50 in 2006 to over 1000 in 2016.{{cite web | url = https://www.scmp.com/news/china/society/article/2104805/chinas-e-sports-phenomenon-just-imagine-americas-entire-capital | title = The phenomenal rise of e-sports in China where gamers outnumber the US population | first1= Zen | last1 =Soo | date = August 2, 2017 | access-date = September 24, 2019 | work = South China Morning Post }} In early 2019, China's Ministry of Human Resources and Social Security included both "professional gamer" and "professional gaming operator" as an officially recognized job on its Occupation Skill Testing Authority list;{{cite web | url = https://variety.com/2019/gaming/news/osta-china-gaming-profession-1203126468/ | title = China to Recognize Gaming as Official Profession | first1 = Emily | last1= Gera | date = February 1, 2019 | access-date = September 24, 2019 | work = Variety }} by July 2019, around 100,000 people had registers themselves as "professional gamers" under this, and were making an average of three times the average salary in China. The Ministry had stated they believe that the professional esports sector in China can have over 2 million jobs in five years. This expansive growth has led several local governments to offer incentives for bringing esports to their cities.{{cite web | url = https://www.latimes.com/business/story/2019-07-19/beijing-pushing-esports-could-cause-culture-clashes | title = Chinese governments hand out cash, subsidies to encourage esports development | first1 = Shuli | last1= Ren | date = July 19, 2019 | work = Bloomberg L.P. | via = The Los Angeles Times }}

In esports, China has been the world leader in terms of tournament winnings, possessing some of the best talents in the world across multiple video games, as well as one of the largest pool of video gamers.{{cite news|title=China's eSports Industry Revenue Reached $7B Last Year|url=https://www.chinamoneynetwork.com/2017/04/25/chinas-esports-industry-revenue-reached-7b-last-year|work=China Money Network|date=25 April 2017}} As of 2017, half of the top 20 highest earning esports players in the world are Chinese.{{cite news|title=China Stands Ready to Lead eSports Globally - CKGSB Knowledge|url=http://knowledge.ckgsb.edu.cn/2017/09/18/technology/esports-in-china-lead-globally/|work=knowledge.ckgsb.edu.cn}}

In addition to talent, China is also one of the largest consumers of esports. The 2017 League of Legends World Championship, held in Beijing, drew an estimated 106 million viewers from online streaming services with 98% of them from China, a number on par with the television audience of the Super Bowl.{{cite news | url = https://www.washingtonpost.com/business/2018/08/27/massive-popularity-esports-charts/ | title = The massive popularity of esports, in charts | first1 = Christopher | last1 = Ingraham | date= August 27, 2018 | access-date = September 24, 2019 | newspaper = The Washington Post }} The event was seen as China establishing its place in the global esports marketplace, and demonstrated how China and South Korea's leadership in this area has helped to expand esports popularity to other countries.{{cite web | url = https://www.cnbc.com/2019/04/14/league-of-legends-gets-more-viewers-than-super-bowlwhats-coming-next.html | title = This esports giant draws in more viewers than the Super Bowl, and it's expected to get even bigger | first1= Annie | last1= Pei | date = April 14, 2019 | access-date = September 24, 2019 | publisher = CNBC }} China is estimated to have about 20% of the global revenue in esports, including sponsorships, merchandising and media rights, with an estimated {{USD|210 million}} of the global {{USD|1.1 billion}} by 2019, having surpassed Europe and trailing only behind North America.{{cite web | url = https://www.gamesindustry.biz/articles/2019-02-12-newzoo-global-esports-market-will-exceed-USD1-billion-in-2019 | title = Newzoo: Global esports market will exceed $1 billion in 2019 | first1= Rebekah | last1= Valentine | date = February 12, 2019 | access-date = September 24, 2019 | work = GamesIndustry.biz }}

Despite the popularity of esports in the country, it is still not exempt from the grasp of the government's censorship. This was most notable in the Blitzchung controversy in October 2019 where an American video game developer Blizzard Entertainment punished Ng Wai Chung (吳偉聰) (known as Blitzchung), a Hong Kongese esports player of the online video game Hearthstone, for voicing his support of the 2019–20 Hong Kong protests during an official streaming event. Despite the public's response, which included a boycott and a letter from United States Congress representatives, Blizzard did not remove the punishment but did slightly reduce it.

{{See also|Intellectual property in China}}

As described above, China has had a history of a gray market of illegal imports and video game clones, both in hardware and software, as well as copyright theft/piracy as a result of poor intellectual property laws and enforcement in the latter part of the 20th century.

Chinese developers have been known to copy video games from foreign developers which resulted in multiple clones of established video game franchises.{{cite news | url= https://www.cnbc.com/2018/01/23/ip-plagiarism-is-rampant-in-china-and-media-companies-profit-from-it.html | title = Plagiarism is rampant in China, and its media companies are raking in billions | first1 = Qian | last1 = Chen | date = January 23, 2018 | access-date = September 26, 2019 | publisher = CNBC }} Some developers take inspiration from existing games and incorporate the designs, gameplay and mechanics to their own IPs.{{Cite web | url=https://www.chartboost.com/blog/seeing-double-a-closer-look-at-copycatting-in-chinas-mobile-game-market/ |title = Seeing Double: A Closer Look at Copycatting in China's Mobile Game Market|date = December 2016}}{{Cite news | url=https://www.abacusnews.com/digital-life/chinas-blatant-breath-wild-knock-sparks-outrage/article/3016176 |title = China's blatant Breath of the Wild knock-off sparks outrage|newspaper = South China Morning Post|date = 27 June 2019}}{{Cite web | url=https://www.sixthtone.com/news/1003962/inside-game-for-peace%2C-chinas-new-state-approved-pubg-clone |title = Inside Game for Peace, China's New State-Approved PUBG Clone|date = 2019-05-09}} There have been multiple lawsuits filed by major video game companies such as the case filed by Riot Games against Moonton Technology for copying its characters featured in League of Legends. Riot itself has failed to have U.S. courts rule in their favor due to the copyright-taking happening outside of the United States,{{cite web | url = https://www.gamesindustry.biz/court-dismisses-riot-games-lawsuit-against-moonton-technology | title = Court dismisses Riot Games' lawsuit against Moonton Technology | first = James | last = Batchelor | date = November 10, 2022 | accessdate = November 25, 2022 | work = GamesIndustry.biz }} but through its partner Tencent, they have been successful in lawsuits filed in China.{{Cite web | url=https://dotesports.com/league-of-legends/news/source-riot-games-parent-tencent-wins-lawsuit-mobile-legends-31079 |title = Riot Games parent Tencent wins $2.5 million in lawsuit against Moonton CEO|date = 2018-07-18}} There have been reports where plagiarists are credited as the original creators. Analysts have attributed the rise in plagiarism to lack of knowledge of the original IPs due to non-releases of games in the Chinese Markets, delays or outright ban by the Chinese government.{{Cite web|url=https://www.cnbc.com/2018/01/23/ip-plagiarism-is-rampant-in-china-and-media-companies-profit-from-it.html|title=Plagiarism is rampant in China, and its media companies are raking in billions|website=CNBC|date=24 January 2018}}

More recently, with the tech industry boom in China, the government has implemented stricter copyright controls and processes, but it is still considered to be weaker than intellectual copyright protections in Western nations, which poses a threat for foreign companies seeking to sell into China.

Because of the high amount of software piracy in China, many foreign game companies have been reluctant to enter the country's market with single player or console games. Instead, they have focused on selling online titles such as massively multiplayer online games as income from these titles comes largely from subscription fees or in game item purchases rather than the purchase price of the title itself.

{{see also|Gold farming}}

As of December 2005, there were an estimated 100,000 Chinese employed as "farmers", video game players who work to acquire virtual currency or items in online games so they can be sold to other players for real currency.{{cite web |url= https://www.nytimes.com/2005/12/09/technology/09gaming.html?ex=1291784400&en=a723d0f8592dff2e&ei=5090&partner=rssuserland&emc=rss|title= Ogre to Slay? Outsource It to Chinese|author= Barboza, David|date= 2005-12-09|work= The New York Times}}

Video games are regulated through the government and the Chinese Communist Party as with most mass media in China, but further, as video games are seen as a cultural benefit, additional agencies are involved in promoting the growth of video games.

The Ministry of Industry and Information Technology (MIIT) was formed in 2008, superseding the Ministry of Information Industry, which was established in the late 1990s through the integration of the Ministry of Post and Telecommunications and the Ministry of Electronics Industry. The agency's primary goals include the regulation and promotion of Chinese telecommunications and software companies which include online gaming. MII is also responsible for a number of initiatives aimed at increasing the number and prominence of natively produced online games. One example of such involvement is the inclusion of online gaming in the 2006–2010 plan for software and information service development.

Listed here are the ministry's stated objectives involving online gaming:{{Cite web|url=https://nuke.fas.org/guide/china/agency/mii.htm|title=Ministry of Information Industry - China Nuclear Forces|website=nuke.fas.org}}

• Study and formulate the state's information industry development strategies, general and specific policies, and overall plans, revitalize the electronics and information products manufacturing, telecommunications and software industries, promote the information economy and society.
• Draw up laws, rules and regulations on electronics and information products manufacturing, telecommunications and software industries, and publish administrative rules and regulations; and supervise the enforcement of laws and administrative rules.
• Work out technical policies, systems and criteria of the electronics and information products manufacturing, telecommunications and software industries, and technical systems and criteria of the radio and television transmission networks; certificate the entry of telecom networking equipment to networks and manage the entry of telecom terminal equipment to networks; direct the supervision and management of electronics and information products quality.
• Propel the research and development of electronics and information products manufacturing, telecommunications and software industries, organize research of major scientific and technological development projects, and digestion, absorption and creation of imported technologies, and promote the industrialization of scientific and technological research results; support the development of native industry.

The ministry is also responsible for a number of initiatives aimed at increasing the number and prominence of natively produced online games. One example of such involvement is the inclusion of online gaming in the 2006–2010 plan for software and information service development.

The General Administration of Press and Publication (GAPP) was responsible for monitoring and regulating publication of print based media, electronic media, and audio-visual products (including online games).chinaculture.org. [http://www.chinaculture.org/gb/en_artists/2003-09/24/content_26984.htm "General Administration of Press and Publishing of PRC"]. GAPP has also been instrumental in combating the growing problem of Internet addiction and game addiction in China by teaming up with eight other government outlets concerned with the growing effect of game play on China's youth. Towards this end, GAPP worked with other agencies, including the Central Civilization Office, Ministry of Education, Chinese Communist Youth League, Ministry of Information Industry, Ministry of Public Security, All China Women's Federation, and China's Care for the Next Generation Work Commission.{{cite web|work=China Tech News|url=http://www.chinatechnews.com/2007/04/11/5240-chinese-ministries-schedule-anti-addiction-game-system/|title=Chinese Ministries Schedule Anti-Addiction Game System|date=April 11, 2007}} GAPP also initiated the China National Online Game Publication Project in 2004. The intent of the project was to promote native game development through the use of government subsidies to game developers. The project had provided an estimated 300 million RMB to 16 Chinese game development companies by the end of its third year.TDC Trade.[http://www.tdctrade.com/alert/cba-e0501c-2.htm "Business Alert - China"]. January 2005. The State Administration of Radio, Film, and Television (SARFT) affected the world of Chinese online games in 2004 by instating a blanket ban on computer game related commercials in the state-run media. The only company to directly contradict this ban is Chinese game provider The9, which teamed with Coca-Cola to jointly promote the release of the popular Western MMORPG World of Warcraft in 2005. Besides this instance, the online game market has thrived without much media promotion.{{cite web|author=Shang Koo|work=Gamasutra|url=https://www.gamedeveloper.com/game-platforms/the-china-angle-rumors-and-regulations|title=The China Angle: Rumors And Regulations|date=April 17, 2007}} The SARFT and GAPP were merged to form the State Administration of Press, Publication, Radio, Film, and Television in 2013, which was later transformed to the National Radio and Television Administration in 2018.

The Beijing Reformatory for Juvenile Delinquents claimed in 2007 that a third of its detainees were influenced by violent online games or erotic websites when committing crimes such as robbery and rape.{{cite web |url= http://news.xinhuanet.com/english/2007-04/12/content_5968968.htm|archive-url= https://web.archive.org/web/20070416223857/http://news.xinhuanet.com/english/2007-04/12/content_5968968.htm|url-status= dead|archive-date= April 16, 2007|title= China launches campaign to crack down on Web porn|date= 2007-04-12|publisher= Xinhua}} In a high-profile case from October 2004, 41-year-old Qiu Chengwei was sentenced to death for murdering 26-year-old Zhu Caoyuan over a dispute regarding the sale of a virtual weapon the two had jointly won in the game Legend of Mir 3.{{cite web |url= http://www.chinadaily.com.cn/english/doc/2005-06/08/content_449494.htm|title= Death sentence for online gamer|author= Cao Li|date= 2005-06-08|publisher= China Daily}} Also, in September 2007, a Chinese man in Guangzhou died after playing Internet video games for three consecutive days in an Internet cafe.{{cite web |url=https://www.reuters.com/article/us-china-internet-death-idUST16999720070917|title= Man in China dies after three-day Internet session|date=2007-09-17 |publisher= Reuters}}

{{See also|List of banned video games#China{{!}}List of banned video games}}

As with almost all mass media in the country, video games in China are subject to the national policies of censorship. Content in video games is overseen by SART/NRTA; publishers are required to obtain a license for the game in China from SART before publishing, which may be denied if the game contains elements deemed inappropriate. The process to submit games for a license and put them on sale following that is overseen by MOC. The State General Administration of Press and Publication and anti-porn and illegal publication offices have also played a role in screening games.{{cite web |url= http://news.xinhuanet.com/english/2005-01/26/content_2511068.htm|archive-url= https://web.archive.org/web/20050129054706/http://news.xinhuanet.com/english/2005-01/26/content_2511068.htm|url-status= dead|archive-date= January 29, 2005|title= 50 illegal electronic games banned|date= 2006-01-26|publisher= Xinhua}}

Examples of banned games have included:

• Hearts of Iron (for "distorting history and damaging China's sovereignty and territorial integrity"){{cite web |url= http://www.chinadaily.com.cn/english/doc/2004-05/29/content_334845.htm|title= Swedish video game banned for harming China's sovereignty|date= 2004-05-29|publisher= Xinhua}}
• I.G.I.-2: Covert Strike (for "intentionally blackening China and the Chinese army's image"){{cite web |url= http://www.chinadaily.com.cn/english/doc/2004-03/19/content_316379.htm|title= Computer game cracked down on for discrediting China's image|date= 2004-03-19|publisher= Xinhua}}
• Command & Conquer: Generals (for "smearing the image of China and the Chinese army")
• Battlefield 4 (for "smearing the image of China and endangering national security"){{cite web |url= http://www.tomshardware.com/news/battlefield-china-banned-illegal-shooter,25542.html|title= Battlefield 4 Now Banned in China|date= 2013-12-27|publisher= Tom's Hardware}}

In addition to banning games completely, several games have had their content screened to remove certain imagery deemed offensive or unfavorable. Common examples include skeletons or skulls being either fleshed out or removed entirely. Cases of which can be seen in Chinese versions of popular video games such as Dota 2 and World of Warcraft.

With the formation of the Online Game Ethics Committee in December 2018, nine titles reportedly were classified as prohibited or to be withdrawn, but this has yet to be confirmed by reliable sources. These included Fortnite, PlayerUnknown's Battlegrounds, H1Z1, Paladins, and Ring of Elysium. Eleven other titles were told that they needed to make corrective action to be sold within China, including Overwatch, World of Warcraft, Diablo 3, and League of Legends.{{cite web | url = https://www.pcgamesn.com/fortnite/fortnite-china-ban | title= Fortnite, PUBG, and Paladins have reportedly been banned by the Chinese government | first1 = Ali | last1 = Jones | date = December 11, 2018 | access-date = December 11, 2018 | work = PCGamesN }}

Publishing a title without having government approval can lead to a company being fined from five to ten times the revenues they earned from the game.{{cite web | url = https://www.gamesindustry.biz/articles/2019-12-13-company-fined-nearly-USD100k-for-publishing-unapproved-game-in-china | title = Company fined nearly $100k for publishing unapproved game in China | first1= Rebekah | last1= Valentine | date= December 13, 2019 | access-date= December 13, 2019 | work = GamesIndustry.biz }}

In addition to content control, the Chinese government has pushed technology companies, including video game distributors like Tencent, into allowing the government to have partial ownership of the companies that can be used to affect the content produced; in exchange, such companies may gain a competitive edge over others in interactions dealing with the government.{{cite web | url = https://www.wsj.com/articles/beijing-pushes-for-a-direct-hand-in-chinas-big-tech-firms-1507758314 | title = Beijing Pushes for a Direct Hand in China's Big Tech Firms | first1 = Li | last1= Yuan | date = October 11, 2017 | access-date = September 26, 2019 | work = The Wall Street Journal }}

Along with guidelines to control and eliminate youth gaming issued in September 2021, the Chinese government has also issued a guidelines regarding the presentation of LGBT and "effimininacy" in video games are to be avoided.{{cite web | url = https://www.pcgamer.com/china-slows-new-game-approvals-calls-for-less-effeminate-men-in-videogames | title = China calls for less 'effeminate' men in videogames | first1 = Andy | last1= Chalk | date = September 16, 2021 | access-date = September 21, 2021 | work = PCGamer }}

China was one of the first countries to recognize the potential for addiction to the Internet, video games, and other digital media, and was the first country to formally classify Internet addiction a clinical disorder by recognizing Clinical Diagnostic Criteria for Internet Addiction in 2008.{{Cite web|url=http://www.gov.cn/jrzg/2008-11/08/content_1143277.htm|title=我国首个《网络成瘾临床诊断标准》通过专家论证|website=www.gov.cn|access-date=2018-03-02}}{{Cite news|url=https://www.washingtonpost.com/news/worldviews/wp/2017/08/14/a-teen-checked-into-an-internet-addiction-camp-in-china-he-was-dead-two-days-later/|title=A teen checked into an Internet-addiction camp in China. He was dead two days later.|last1=Wang|first1=Amy B.|date=2017-08-14|newspaper=Washington Post|access-date=2018-02-20|issn=0190-8286}} In 2015, the Chinese government also found that more than 500 million citizens over five years old, nearly half the population, suffered from some form of near-sightednessed, and while video games were not solely responsible for this, the government felt they needed to reduce the amount of time youth played video games.{{cite web | url = https://www.bbc.com/news/world-asia-china-45366468 | title= China targets video gaming to tackle myopia in children | date = August 31, 2018 | access-date = November 6, 2019 | work = BBC }}

China has sought to deal with addiction to video games by its youth by enacting regulations to be implemented by video game publishers aimed to limit consecutive play time particularly for children. As early as 2005 China's Ministry of Culture has enacted several public health efforts to address gaming and internet related disorders. One of the first systems required by the government was launched in 2005 to regulate adolescents' Internet use, including limiting daily gaming time to 3 hours and requiring users' identification in online video games.{{Cite web|url=https://www.ft.com/content/89ea206a-13f3-11da-af53-00000e2511c8|title=China moves to zap online game addiction|date=2005-08-23|website=Financial Times|access-date=2018-02-20}} In 2007, an "Online Game Anti-Addiction System" was implemented for minors, restricting their use to 3 hours or less per day. The ministry also proposed a "Comprehensive Prevention Program Plan for Minors’ Online Gaming Addiction" in 2013, to promulgate research, particularly on diagnostic methods and interventions.{{Cite journal|last1=King|first1=Daniel L.|last2=Delfabbro|first2=Paul H.|last3=Doh|first3=Young Yim|last4=Wu|first4=Anise M. S.|last5=Kuss|first5=Daria J.|last6=Pallesen|first6=Ståle|last7=Mentzoni|first7=Rune|last8=Carragher|first8=Natacha|last9=Sakuma|first9=Hiroshi|date=2018-02-01|title=Policy and Prevention Approaches for Disordered and Hazardous Gaming and Internet Use: an International Perspective|journal=Prevention Science|language=en|volume=19|issue=2|pages=233–249|doi=10.1007/s11121-017-0813-1|pmid=28677089|s2cid=28853252|issn=1573-6695|url=http://irep.ntu.ac.uk/id/eprint/31235/1/PubSub8799_490a_Kuss.pdf}} China's Ministry of Education in 2018 announced that new regulations would be introduced to further limit the amount of time spent by minors in online games.{{Cite news|url=https://www.bbc.com/news/technology-45432863|title=State data to limit China child gamers|date=2018-09-06|work=BBC News|access-date=2019-09-18|language=en-GB}}{{Cite web|url=https://nikopartners.com/a-new-notice-from-chinas-ministry-of-education-and-its-impact-on-games/|title=A new notice from China's Ministry of Education, and its impact on games|website=Niko|date=30 August 2018|publisher=Niko Partners|language=en-US|access-date=2019-09-18}} While these regulations were not immediately binding, most large Chinese publishers took steps to implement the required features. For example, Tencent restricted the amount of time that children could spend playing one of its online games, to one hour per day for children 12 and under, and two hours per day for children aged {{nowrap|13-18}}.{{Cite web|url=https://www.businessinsider.com/tencent-age-restrictions-identity-verification-china-video-games-2018-11|title=Video game addiction has sparked a culture war in China — and it's having huge repercussions for the world's biggest video game maker|last1=Webb|first1=Kevin|date=2018-11-07|website=Business Insider Australia|language=en|access-date=2019-09-18}} This is facilitated by tracking players via their state-issued identification numbers. This has put some pressure on Western companies that publish via partners in China on how to apply these new anti-addiction requirements into their games, as outside of China, tracking younger players frequently raises privacy concerns. Specialized versions of games, developed by the Chinese partner, have been made to meet these requirements without affecting the rest of the world; Riot Games let its China-based studio implement the requirements into League of Legends for specialized release in China.{{cite web | url = https://www.latimes.com/business/story/2019-07-21/american-game-developers-china-surveillance | title= How U.S. video game companies are building tools for China's surveillance state | first1 = James B. | last1 = Cutchin | date = July 21, 2019 | access-date = September 20, 2019 | work = The Los Angeles Times }}

A new law enacted in November 2019 limits children under 18 to less than 90 minutes of playing video games on weekdays and three hours on weekends, with no video game playing allowed between 10 p.m. to 8 a.m. These are set by requiring game publishers to enforce these limits based on user logins. Additionally, the law limits how much any player can spend on microtransactions, ranging from about $28 to $57 per month depending on the age of the player.{{cite web | url = https://www.nytimes.com/2019/11/06/business/china-video-game-ban-young.html | title = 90 Minutes a Day, Until 10 p.m.: China Sets Rules for Young Gamers | first1 = Javier C. | last1 = Hernández | first2= Albee | last2= Zhang | date = November 6, 2019 | access-date = November 6, 2019 | work = The New York Times }} In September 2020, the government implemented its own name-based authentication system to be made available to all companies to uphold these laws.{{cite web | url = https://www.scmp.com/abacus/games/article/3095509/chinas-real-name-verification-system-games-launch-nationwide-september | title = China's real name verification system for games to launch nationwide by September | first = Masha | last = Borak | date = August 3, 2020 | access-date = August 3, 2020 | work = South China Morning Post }} Chinese regulators further reduced the amount of time minors are allowed to play online games in August 2021 to one hour each day on Friday, Saturday, and Sunday, as well as on public holidays, from 8 to 9 pm. The measures also capped how much minors could spend on such games, with those between 8 and 16 limited to 200 yuan per month, and those between 16 and 18 to 400 yuan per month. Implementation measures were not described as part of this regulation.{{cite news | url = https://www.wsj.com/articles/china-sets-new-rules-for-youth-no-more-videogames-during-the-school-week-11630325781 | title = China Limits Videogames to Three Hours a Week for Young People | first = Keith | last = Zhai | date = August 30, 2021 | accessdate = August 30, 2021 | work = The Wall Street Journal }}{{cite news |last1=Ricker |first1=Thomas |title=Kids in China now restricted to just 3 hours of online gaming per week |url=https://www.theverge.com/2021/8/30/22648107/china-curbs-gaming-addiction-3-hours-each-week-spiritual-opium |access-date=August 30, 2021 |work=The Verge |date=August 30, 2021}} In September 2021, GAPP launched a website that allowed for any Chinese citizen to report on games that appeared to be in violation of these anti-addiction measures, classified between those that failed to perform proper identity checks, those that failed limit minors' hours, and those that failed to limit minors' spending within the game.{{cite web | url = https://www.scmp.com/tech/big-tech/article/3149042/beijing-sets-website-public-report-gaming-company-irregularities-anti | title = Beijing sets up website for public to report gaming company 'irregularities' as anti-addiction drive ramps up | first = Josh | last = Ye | date = September 17, 2021 | accessdate = September 22, 2021 | work = South China Morning Post }}

Most of the large publishers in China routinely collect data on players and how they play their game. One primary reason is that this is information that may be mandated by the government due to its mass surveillance programs and for implementing systems such as for the anti-addiction measures. Secondly, many of these large companies not only provide video games but a range of media across the spectrum including online video, music, and books, and these companies couple that data to have better reach of targeted advertising as to increase revenues. There are fears, but no reported cases, of these large companies sharing data with the government from foreign users. These fears have had impacts for companies that are fully or partially controlled by Chinese companies. For example, Epic Games in 2018 released its own digital storefront, the Epic Games Store which came under some criticism by players in the West, partially due to fear that Epic would share their data with Tencent and subsequently to the Chinese government, and have called the Store spyware.{{cite web | url = https://www.usgamer.net/articles/the-epic-games-store-is-spyware-how-a-toxic-accusation-was-started-by-anti-chinese-sentiment | title = "The Epic Games Store is Spyware:" How a Toxic Accusation Was Started by Anti-Chinese Sentiment | first1= Matt | last1 = Kim | date= April 4, 2019 | access-date = April 4, 2019 | work = USGamer }}{{cite web | url = https://www.polygon.com/2019/4/5/18295833/epic-games-store-controversy-explained | title = The fury over the Epic Games Store, explained | first1 = Charlie | last1 =Hall | date = April 5, 2019 | access-date = April 5, 2019 | work = Polygon }}

With the rising success of online games from 2007 onwards, some foreign companies sought to invest full or partial ownership of Chinese companies to help capture a portion of the growing market. The Chinese government, concerned that these foreign companies would have influence on how the Chinese companies manage their video games, passed a law that banned any foreign company from investing or having any type of ownership in a Chinese company, with the General Administration of Press and Publication serving as the watchdog for such violations.{{cite web | url = https://www.reuters.com/article/us-china-onlinegames/china-bans-foreign-investment-in-online-games-industry-idUSTRE59B1GE20091012 | title = China bans foreign investment in online games industry | date = October 12, 2009 | access-date = September 23, 2019 | publisher = Reuters }} This still allows for foreign companies to bring games into China, but only through operating agreements and partnerships with wholly owned Chinese companies. For example, Blizzard Entertainment's World of Warcraft, an extremely popular MMO in China, was run initially through The9{{efn|The9's contract with Blizzard was believed to be terminated between a combination of pressure from GAPP about Blizzard's partial ownership, as well as Electronic Arts' investment into The9 after Blizzard was acquired by Activision, a direct competitor to Electronic Arts.{{cite web | url = https://www.engadget.com/2014/01/17/wow-archivist-wow-in-china-an-uncensored-history/ | title = WoW Archivist: WoW in China, an uncensored history | first1= Scott | last1= Andrews | date = January 17, 2014 | access-date = September 23, 2019 | work =Engadget}}}} and later by NetEase, both companies making necessary changes to parts of the game to adhere to Chinese content regulations.

China introduced a pilot version of its first content rating system in December 2020, the "Online Game Age-Appropriateness Warning" system. It uses three color-based classifications, green for "8+" (games appropriate for ages 8 and up), blue for "12+", and yellow for "16+". Games with online components are required to display these labels on packaging, their website, registration pages, and other relevant materials, The rating system was developed by the Audio-Video and Digital Publishing Association alongside Tencent and NetEase and 52 other organizations.{{cite web | url = https://www.gamesindustry.biz/articles/2020-12-18-china-introduces-new-age-rating-system | title = China introduces new age rating system | first= Marie | last = Dealessandri | date = December 18, 2020 | access-date = December 18, 2020 | work = GamesIndustry.biz }}

Chinese gaming companies have emerged as dominant players in the global gaming industry, driven largely by their strategic focus on mobile gaming. This approach has enabled them to expand rapidly into international markets, leveraging the ubiquity of smartphones and improved mobile internet infrastructure. Among these companies, Tencent and NetEase have led the charge by prioritizing mobile-first game development, utilizing technological innovation, and tailoring content to local markets. Their global success is a direct result of adaptive strategies that have allowed them to capture significant market share across continents.

Mobile gaming has become the largest segment of the global video game industry, with China playing a pivotal role in shaping its evolution. As of 2024, China accounts for more than 31% of global mobile gaming revenue, generating approximately $40 billion annually. Tencent’s Honor of Kings, one of the highest-grossing mobile games worldwide, is a prime example of this dominance. By the end of 2023, the game had surpassed 100 million daily active users globally, reinforcing its reputation as a flagship mobile title. Similarly, NetEase’s LifeAfter gained immense popularity with its survival-themed gameplay, resonating with players worldwide.{{Cite web |title=Fast Plays, Big Pays: Unpacking China's Mobile Gaming Dominance |url=https://www.globalgamesforum.com/features/fast-plays-big-pays-unpacking-chinas-mobile-gaming-dominance |access-date=2024-12-16 |website=www.globalgamesforum.com |language=en}}

A key factor in Chinese companies’ mobile gaming success has been their global launch strategies, centered on meticulously tailored regional campaigns and localized game development. Tencent’s expansion of Honor of Kings into regions such as Latin America, the Middle East, and Europe exemplifies this approach. By June 2024, the game had been launched in over 160 countries, supporting 14 languages to enhance the gaming experience for players worldwide.{{Cite web |last=Feed |first=TechNode |date=2023-02-17 |title=NetEase brings ChatGPT-like tech to new mobile game · TechNode |url=https://technode.com/2023/02/17/netease-announces-use-of-chatgpt-like-tech-in-new-mobile-game/ |access-date=2024-12-16 |website=TechNode |language=en-US}} This global expansion contributed to Honor of Kings generating approximately $1.48 billion in revenue in 2023, maintaining its position as the highest-grossing mobile game of the year.

Similarly, NetEase’s Knives Out has achieved remarkable success, particularly in Japan. By November 2022, the game had surpassed $2 billion in lifetime revenue, with 90% of this income originating from the Japanese market.{{Cite web |last=Obedkov |first=Evgeny |date=2023-06-07 |title=PUBG Mobile tops $10 billion in revenue, second only to another Tencent's hit Honor of Kings |url=https://gameworldobserver.com/2023/06/07/pubg-mobile-revenue-10-billion-tencent-krafton |access-date=2024-12-16 |website=Game World Observer |language=en-US}} This success is attributed to NetEase’s collaborations with popular local brands such as One Piece and Evangelion, as well as aggressive advertising campaigns and exclusive perks tailored for Japanese players. In February 2018 alone, Knives Out generated $24 million globally, with Japan accounting for 80% of sales outside China.{{Cite web |last=Harris |first=Iain |date=2018-03-08 |title=NetEase's PUBG-like Knives Out reaps $24 million in February thanks to unexpected success in Japan |url=https://www.pocketgamer.biz/knives-out-reaps-24-million-in-february/ |access-date=2024-12-16 |website=www.pocketgamer.biz |language=en}}

Monetization models have been pivotal in driving revenue for Chinese mobile games, with developers adeptly implementing free-to-play (F2P) frameworks enhanced by in-app purchases (IAPs) such as cosmetic upgrades, weapon skins, and premium battle passes. This strategy has proven highly effective, as evidenced by Tencent’s PUBG Mobile, developed in collaboration with Krafton. By June 2023, PUBG Mobile had surpassed $10 billion in global player spending, making it one of the highest-grossing mobile games worldwide. A significant portion of this revenue—approximately 60.3%—originated from China, followed by the United States at 10.7% and Japan at 3.7%.

The game’s monetization success is largely attributed to its implementation of the Royale Pass, a tiered reward system that incentivizes player engagement and spending. Following the introduction of the Royale Pass, PUBG Mobile experienced a 365% increase in global spending during the first week compared to the preceding three weeks.{{Cite web |date=2018-06-27 |title=PUBG Mobile revenue increased by 365% due to seasonal passes |url=https://wnhub.io/news/finance/item-14477 |access-date=2024-12-16 |website=WN Hub}}

Chinese developers have also effectively employed hybrid monetization strategies, combining IAPs with in-app advertising (IAA) to maximize revenue. In China, approximately 60% of mobile game revenues are derived from in-app advertisements, indicating a balanced approach between player spending and ad-based income.{{Cite web |last1=cycles |first1=This text provides general information Statista assumes no liability for the information given being complete or correct Due to varying update |last2=Text |first2=Statistics Can Display More up-to-Date Data Than Referenced in the |title=Topic: Mobile games in China |url=https://www.statista.com/topics/11784/mobile-games-in-china/ |access-date=2024-12-16 |website=Statista |language=en}} This dual strategy allows developers to cater to both paying users and non-spenders, thereby broadening the monetization base. Furthermore, the integration of culturally relevant content and localized events has bolstered monetization efforts. By tailoring in-game offerings to align with regional preferences and cultural themes, developers have enhanced player engagement and willingness to spend on virtual goods. This culturally sensitive approach has been instrumental in the global success of Chinese mobile games, enabling them to resonate with diverse audiences and sustain high revenue levels.

Technological innovation has been a cornerstone of Chinese companies’ mobile gaming expansion, with Tencent and NetEase leading the charge through advanced cloud gaming platforms and artificial intelligence (AI) integration. Tencent’s cloud gaming service, START, launched in collaboration with NVIDIA, enables users to stream AAA games on underpowered devices, thereby eliminating the need for expensive hardware and expanding access to high-quality gaming experiences. This partnership leverages NVIDIA’s GPU technology to deliver a seamless gaming experience comparable to playing on a local gaming rig.{{Cite web |title=Tencent Games Partners with NVIDIA to Launch START Cloud Gaming Service |url=https://nvidianews.nvidia.com/news/tencent-games-partners-with-nvidia-to-launch-start-cloud-gaming-service |access-date=2024-12-16 |website=NVIDIA Newsroom |language=en-us}}

Similarly, NetEase has integrated AI-powered features into its mobile games to enhance player engagement and retention. For instance, in the development of Cygnus Enterprises, NetEase’s Team Miaozi utilized AI to create dynamic non-player characters (NPCs) that interact with players in a more lifelike manner, thereby enriching the gaming experience.{{Cite web |title=How NetEase transformed RPG gameplay with an AI companion |url=https://inworld.ai/case-study/how-netease-transformed-rpg-gameplay-with-an-ai-companion |access-date=2024-12-16 |website=inworld.ai |language=en-us}} Furthermore, NetEase announced plans to incorporate ChatGPT-like technology into its upcoming mobile game, Justice Online Mobile, allowing players to engage in complex, AI-generated dialogues with NPCs, which can influence in-game events and character relationships.{{Cite web |last=Feed |first=TechNode |date=2023-02-17 |title=NetEase brings ChatGPT-like tech to new mobile game · TechNode |url=https://technode.com/2023/02/17/netease-announces-use-of-chatgpt-like-tech-in-new-mobile-game/ |access-date=2024-12-16 |website=TechNode |language=en-US}}

These technological advancements have not only enhanced gameplay but also contributed to significant financial growth. In the second quarter of 2024, NetEase reported revenues of $3.5 billion, a 6% increase from the previous year, with mobile games accounting for 76.4% of total revenue.{{Cite web |last=Systems |first=Eulerpool Research |title=NetEase and the Transformation of the Gaming Industry: A Look at the Future {{!}} Eulerpool News |url=https://eulerpool.com/en/news/all/netease-and-the-transformation-of-the-gaming-industry-a-look-into-the-future |access-date=2024-12-16 |website=Eulerpool Research Systems |language=en-US}} By leveraging cloud gaming and AI technologies, Chinese gaming companies have been able to deliver personalized and immersive experiences, thereby fostering greater player loyalty and expanding their global footprint.

Emerging markets have proven particularly lucrative for Chinese mobile game developers, with regions like Southeast Asia, Africa, and Latin America experiencing explosive growth in mobile gaming due to increased smartphone penetration and more affordable internet access. In 2023, Southeast Asia’s gaming market generated over $4.4 billion in revenues, with mobile gaming accounting for approximately 70% of this figure.{{Cite web |date=2019-11-12 |title=Games Market Trends and Publishers to Watch in Southeast Asia: The World's Fastest-Growing Mobile Games Market |url=https://newzoo.com/resources/blog/games-market-trends-and-publishers-to-watch-in-southeast-asia-the-worlds-fastest-growing-mobile-games-market |access-date=2024-12-16 |website=Newzoo |language=en}} Recognizing these trends, Tencent strategically launched Arena Breakout in these regions, targeting Latin American and Southeast Asian players with localized in-game events and culturally relevant content. This approach included translating the game into multiple languages, adjusting gameplay mechanics to suit local preferences, and collaborating with regional influencers for marketing campaigns. Such tailored strategies have significantly boosted Tencent’s market share in these rapidly developing regions, aligning with the company’s broader objective to expand its global gaming footprint.{{Cite web |date=2022-08-17 |title=Tencent looks overseas for new video gamers as home market cools |url=https://www.scmp.com/tech/big-tech/article/3189108/tencent-looks-overseas-video-gaming-growth-home-market-cools-under |access-date=2024-12-16 |website=South China Morning Post |language=en}}

Cross-platform integration has significantly bolstered the mobile gaming ecosystem cultivated by Chinese companies, particularly Tencent and NetEase. Tencent’s implementation of cross-play functionality allows players to transition seamlessly between mobile, PC, and console platforms, thereby enhancing user retention and expanding the potential player base. This strategy aligns with Tencent’s broader objective to create and support more cross-platform and AAA games capable of competing in the high-end market.{{Cite web |last=jen |date=2021-05-18 |title=Tencent's Silent Pursuit of Global Gaming Domination |url=https://nikopartners.com/tencents-silent-pursuit-of-global-gaming-domination/ |access-date=2024-12-16 |website=Niko Partners |language=en-US}}

In the realm of esports, Tencent and NetEase have made substantial investments to develop robust infrastructures linked to their mobile games. The PUBG Mobile Global Championship (PMGC) exemplifies this effort, with the 2023 tournament attracting a peak viewership of 980,110 concurrent viewers during the grand finals, marking it as the fifth-highest PUBG Mobile event in the history of the esport.{{Cite web |date=2023-12-11 |title=PUBG Mobile Global Championship 2023 draws almost 1m viewers |url=https://esportsinsider.com/2023/12/pubg-mobile-global-championship-23-viewership |access-date=2024-12-16 |language=en-GB}} This level of engagement underscores the growing prominence of mobile gaming within the global esports arena. By integrating cross-platform capabilities and investing in esports, Chinese gaming companies have not only enhanced the gaming experience but also expanded their reach across diverse gaming communities, solidifying their positions in the global market.

The Chinese video game industry faces significant challenges within its domestic market. One of the most pressing issues is the increasingly stringent regulatory environment. The issuance of game licenses, known as "版号" (banhao), has declined sharply over the years. In 2022, only 468 domestic games were granted licenses, compared to 9368 in 2017, reflecting a steep reduction in the number of new games allowed into the market.{{Cite journal |last1=Yang |first1=Chun |last2=Chan |first2=David Yuen-Tung |date=July 2021 |title=Market Expansion of Domestic Gaming Firms in Shenzhen, China: Dilemma of Globalisation and Regionalisation |url=https://onlinelibrary.wiley.com/doi/10.1111/tesg.12459 |journal=Tijdschrift voor Economische en Sociale Geografie |language=en |volume=112 |issue=3 |pages=256–273 |doi=10.1111/tesg.12459 |issn=0040-747X}} This limited availability of licenses has raised the barrier to entry for smaller developers, creating a highly competitive environment dominated by larger companies such as Tencent and NetEase.

Additionally, the Chinese government has implemented strict regulations to protect minors from excessive gaming. In 2021, new policies restricted minors to only three hours of online gaming per week, specifically from 8 PM to 9 PM on Fridays, Saturdays, and Sundays.{{Cite journal |last1=Jiang |first1=Qiaolei |last2=Fung |first2=Anthony Y.H. |date=2017-11-07 |title=Games With a Continuum: Globalization, Regionalization, and the Nation-State in the Development of China's Online Game Industry |url=https://doi.org/10.1177/1555412017737636 |journal=Games and Culture |volume=14 |issue=7–8 |pages=801–824 |doi=10.1177/1555412017737636 |issn=1555-4120}} These measures were introduced as part of efforts to combat gaming addiction, but they have significantly affected revenue streams for companies reliant on younger players. For instance, Tencent reported declines in its domestic gaming revenue in 2022, with year-over-year decreases of 1% in the first quarter and 7% in the third quarter.

The domestic gaming market has also experienced stagnation in user growth. By mid-2022, China’s gaming user base had reached 666 million, representing a slight decline of 0.13% year-over-year. This saturation, coupled with increasing development costs and rising competition, has made it increasingly difficult for companies to maintain profitability.

As Chinese gaming companies expand abroad, localization has emerged as a critical challenge. Successful localization involves more than translating text into local languages; it requires adapting games to fit cultural preferences, aesthetic expectations, and regional gaming habits. For example, a storyline or gameplay mechanic that resonates with Chinese players might not appeal to audiences in Europe or the United States.

According to industry professionals, cultural differences often hinder the success of Chinese games in foreign markets. For instance, games that rely heavily on narrative elements may struggle if their storylines fail to connect with local audiences due to poor translation or cultural misalignment.{{Cite journal |last1=Wu |first1=Jie |last2=Chen |first2=Xiaoyun |date=October 2014 |title=Home country institutional environments and foreign expansion of emerging market firms |url=https://doi.org/10.1016/j.ibusrev.2014.01.004 |journal=International Business Review |volume=23 |issue=5 |pages=862–872 |doi=10.1016/j.ibusrev.2014.01.004 |issn=0969-5931}} Localization issues are compounded by the need to integrate local payment systems or comply with regional regulations, further increasing the complexity of overseas operations.

The cost of acquiring users in mature gaming markets, such as the United States, Japan, and South Korea, has risen significantly. In these markets, player preferences are highly specific, and competition is fierce. Companies must invest heavily in advertising and promotional campaigns to stand out, often leading to narrow profit margins. For example, the cost per user acquisition in these regions has grown to such an extent that smaller firms struggle to compete with industry giants like Tencent and NetEase.{{Cite journal |last=熠如 |first=赵 |date=2023 |title="中国游戏跑步出海" |url=https://www.zgsjcn.com/shipin/4554.html |journal=中国商界}}

In contrast, emerging markets such as Southeast Asia and Latin America present opportunities but come with challenges of their own. While these markets offer lower acquisition costs and growing user bases, players in these regions generally have lower spending power, making it difficult for companies to generate significant revenue. Additionally, the relatively underdeveloped infrastructure in these areas can complicate distribution and payment processes.

Despite the rapid international expansion of Chinese gaming firms, revenue from overseas markets has faced setbacks. Reports indicate that the overseas revenue of Chinese-developed games declined for four consecutive quarters in 2022. This decline can be attributed to several factors, including increased competition, the global economic slowdown, and reduced consumer spending on entertainment following the COVID-19 pandemic. Even established titles, such as State of Survival by FunPlus and Honor of Kings by Tencent, experienced revenue declines during this period.

Geopolitical tensions have also created obstacles for Chinese gaming companies. Restrictions on Chinese technology companies in certain markets, particularly the United States, have made it harder for Chinese games to gain traction. Concerns over data privacy and security have led some governments to impose bans or restrictions on apps developed by Chinese firms. For instance, Tencent and NetEase have faced scrutiny in various countries, which has slowed their efforts to expand into these markets.

Moreover, the Chinese government’s tight control over the gaming industry extends beyond the domestic market. Companies are required to obtain approval for international partnerships and investments, adding another layer of complexity to their global operations. This regulatory oversight can delay projects and reduce the agility needed to compete in fast-moving international markets.

In response to these challenges, Chinese gaming companies have increasingly sought to integrate cultural elements into their games to appeal to international audiences. For example, miHoYo’s Genshin Impact, which incorporates Chinese cultural themes through its music, characters, and storylines, has achieved global success, winning multiple awards such as the TGA Best Mobile Game. Similarly, companies like 37 Interactive Entertainment have infused traditional Chinese cultural elements, such as Peking Opera and the maritime Silk Road, into their games to differentiate themselves in the global market.

This strategy of leveraging cultural exports has not only helped Chinese games gain recognition abroad but has also positioned them as a medium for soft power, allowing international audiences to engage with Chinese culture through interactive experiences.

Video games have evolved from simple entertainment to significant cultural and diplomatic tools, embodying the concept of "soft power," a term introduced by Joseph Nye in the late 20th century. Soft power refers to the ability of a nation to influence others through cultural appeal and persuasion rather than coercion, contrasting with "hard power," which involves economic or military force. Video games, as a widely consumed form of storytelling and cultural representation, have become an effective medium for soft power, allowing countries to share narratives and cultural identities on both national and global scales. Recognizing their economic and cultural significance, governments have increasingly supported video game development as tools for public diplomacy.{{Cite journal |last1=Donald |first1=Iain |last2=Webber |first2=Nick |last3=Wright |first3=Esther |date=2023-06-01 |title=Video games, historical representation and soft power |url=https://intellectdiscover.com/content/journals/10.1386/jgvw_00075_1 |journal=Journal of Gaming & Virtual Worlds |language=en |volume=15 |issue=China and the World: Navigating Video Game Localization and Copyright Challenges |pages=105–127 |doi=10.1386/jgvw_00075_1 |issn=1757-191X}}

In China, this approach aligns with efforts under Xi Jinping's leadership to communicate "China's stories" through various media, including video games, to foster national pride. This strategy enables China to present its values, narratives, and cultural landmarks globally. However, video games often undergo cultural scrutiny to ensure they align with national narratives. For example, "Marching Towards the Republic" (2003) was edited to match China's official historical perspective. Similarly, the National Radio and Television Administration (NRTA) has banned certain historical palace dramas for allegedly promoting royal lifestyles contrary to traditional virtues.

China aims to maintain cultural integrity while seeking global recognition for its heritage. Controversies arise over historical portrayals, such as criticisms from Chinese audiences regarding perceived inaccuracies in the Korean drama "Jumong." Additionally, reactions to games like "The Prefect's Decision III," viewed as glamorizing Japanese invaders, highlight tensions in historical representation. China's relationship with territories depicted in "Hearts of Iron" led to its ban, underscoring concerns about historical narratives in video games. Chinese players have expressed dissatisfaction with the scarcity of historically based strategy games reflecting their history.

"Black Myth: Wukong," an action role-playing game inspired by the classic Chinese novel "Journey to the West," exemplifies China's success in advancing video games.{{Cite web |last1=Xiang |first1=Jun |last2=Yuan |first2=Shaoyu |date=2024-10-16 |title=Black Myth: Wukong – how China's gaming revolution is fueling its tech power |url=https://theconversation.com/black-myth-wukong-how-chinas-gaming-revolution-is-fueling-its-tech-power-239998 |access-date=2024-12-16 |website=The Conversation |language=en-US}} The game integrates traditional Chinese mythology with modern gaming mechanics, featuring Sun Wukong, the Monkey King, in a richly detailed world. It aims to entertain while educating players about Chinese culture through elements like Buddhist iconography and traditional architecture.{{Cite press release |last=Education |first=WuKong |title=The Global Ascent of "Wukong": A Cultural and Language Learning Phenomenon |url=https://www.prnewswire.com/news-releases/the-global-ascent-of-wukong-a-cultural-and-language-learning-phenomenon-302229276.html |access-date=2024-12-16 |website=www.prnewswire.com |language=en}} This promotes non-Western narratives globally and challenges Western cultural dominance.{{cn|date=February 2025}} Games like "Genshin Impact" and "Honor of Kings" demonstrate video games' potential as vessels of soft power by introducing global audiences to Chinese culture and history.{{Cite book |last1=Chen |first1=Rong |last2=Guo |first2=Yichen |last3=Yu |first3=Mengli |chapter=Investigating the Impact of Chinese Cultural Elements on Player Loyalty in Video Games: A Cross-National Exploratory Study |series=Advances in Social Science, Education and Humanities Research |date=2023-12-30 |volume=807 |title=Proceedings of the 2023 3rd International Conference on Social Development and Media Communication (SDMC 2023) |chapter-url=https://www.atlantis-press.com/proceedings/sdmc-23/125996237 |language=en |publisher=Atlantis Press |pages=282–289 |doi=10.2991/978-2-38476-178-4_34 |isbn=978-2-38476-178-4}} Tencent's investments in series like "League of Legends" and "Arena of Valor" have established significant eSports communities worldwide. "Honor of Kings" has also gained international success, sparking interest in Chinese mythology. Research by Rong Chen, Yichen Guo, and Mengli Yu at Nankai University highlights the impact of Chinese cultural elements on player loyalty in video games.

• Gold farming in China
• Software industry in China
• China Software Industry Association
• Video gaming in Indonesia
• History of Eastern role-playing video games
• Digital divide in China
• Telecommunications industry in China

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• {{cite web |url=http://www.atimes.com/atimes/China_Business/IE19Cb02.html |archive-url=https://web.archive.org/web/20070523101728/http://www.atimes.com/atimes/China_Business/IE19Cb02.html |url-status=dead |archive-date=2007-05-23 |title=China scores in online games battle |author=Olivia Chung |access-date=2007-05-19 |work=Asia Times Online}}

{{History of video games}}

{{Economy of China}}

{{Telecommunications in the People's Republic of China}}

{{Asia topic |Video games in}}

Category:Science and technology in the People's Republic of China

Category:Chinese culture