Video games in China

Additionally, cultural differences in gaming preferences and competition from established Western and Japanese developers require Chinese companies to innovate continuously while navigating complex international landscapes.

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.

[4] 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.

[41] 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.

[59] 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.

[92] The 10 largest online game companies by revenue in 2017 are:[93] The9 (第九城市) is similar to Shanda Entertainment, it specifically maintains and produces MMORPG content for the Chinese gamer base.

[105] 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.

[107] Players quickly flocked to existing Western games that supported competitive Internet play such as Command & Conquer: Red Alert and Quake II.

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.

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.

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.

[129] 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.

[69] 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.

For example, Blizzard Entertainment's World of Warcraft, an extremely popular MMO in China, was run initially through The9[a] and later by NetEase, both companies making necessary changes to parts of the game to adhere to Chinese content regulations.

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.

[158] 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.

[159] 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.

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.

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.

[166] 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.

[170] 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.

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.

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.

[173] 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.

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.

[174] Similarly, the National Radio and Television Administration (NRTA) has banned certain historical palace dramas for allegedly promoting royal lifestyles contrary to traditional virtues.

[177] 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.