Beijing China – Before China started cracking down on video games, Zhang “Ivan” had no shortage of new games to play.
These days, Zhang and his friends have a hard time finding games that pique their interest, After the authorities imposed a nine-month freeze on the issuance of licences Amid concerns over a growing addiction problem in the world’s most populous country.
Only 105 new games have been released in the Chinese market so far this year, compared to 755 in 2021 and more than 9,300 in 2017.
“Most of my friends like to play competitive first-person shooters,” Zhang, a college student in Beijing, told Al Jazeera. “But we can’t find the games we all want to play right now. There are fewer and fewer games to choose from, and I’m really sad.”
Zhang’s frustration is reflected in declining sales across the industry.
Video game revenue in the first half of 2022 fell for the first time since data became available in 2008, down 1.8 percent to 147.8 billion yuan ($21.9 billion), according to industry data released by the China Audiovisual and Digital Publishing Association and the China Audiovisual Publishing Association. China Game Industry Research Institute.
China’s economic slowdown has exacerbated the industry’s woes amid a “coronavirus zero” outbreak, with many young people finding they have less and less money to buy non-essential items such as video games.
The world’s second-largest economy barely avoided a contraction last quarter, growing just 0.4% as authorities continued to impose draconian lockdown measures to control the spread of COVID-19.
Youth unemployment hit an all-time high of 19.3 percent in June.
For Jon, a 29-year-old Shanghai resident who regularly plays mobile games such as Honor of Kings, the precarious economic situation means he is cutting back on his hobby.
“I’m spending less on games now than I used to, even though I’m earning more now than in previous years,” Jon, who asked to be named by his English name, told Al Jazeera.
“That’s because I’m worried that I’ll have to save more during these uncertain times because I could be locked down or facing unemployment.”
Free-to-download games haven’t escaped the recession either. Popular mobile games like Fate/Grand Order and Azur Lane make money by relying on players to make in-game purchases to gain an edge over their peers.
“The economy and the job market are really bad,” Wang Liang, a 22-year-old Beijing university student who likes first-person shooters, told Al Jazeera.
“So most gamers like me will inevitably have less disposable income available for gaming.”
The industry’s current difficulties come after 2021 is even tougher. Amid a sweeping regulatory crackdown on the industry, Beijing has introduced time limits and real-name verification rules for minors’ online gaming to prevent anonymous in-game purchases.
While the end of a nine-month freeze on new games in April offered a glimmer of hope for the industry, the number of releases has been a trickle compared to previous years.
The two largest domestic companies, Tencent Holdings and NetEase, together account for about 60 percent of the market, while foreign publishers have yet to get a game approved.
“Though dozens of games have been approved, these resourceful players who know the Chinese game market and player tastes very well have failed to launch new games,” said Nir Kshetri, a professor of economics at the University of North Carolina at Greensboro who has studied China Someone in the gaming industry told Al Jazeera.
a once prosperous industry
The industry’s decline marked a sharp reversal for a once booming industry.
In 2017, China became the global gaming capital with popular smartphone games such as Honor of Kings and Fantasy Westward Journey, capturing nearly a quarter of the $101.1 billion global market, according to research by venture capital firm Atomico.
Despite regulatory and economic challenges, China’s gaming market will have overall sales revenue of 296.5 billion yuan ($46.6 billion) in 2021, up 6.4 percent from the previous year, according to official government data.
According to research by Niko Partners, China’s esports industry was worth an estimated $403.1 million in the same year, making it the largest market on the planet.
Some in the industry believe that this solid foundation is a reason for optimism about the future.
A co-founder and chief operating officer of a game studio owned by Tencent, who asked not to be named, said the need for tighter regulation and the relaxation of the licensing freeze was a hopeful reason.
“There are still many ways to stimulate the market,” the co-founder told Al Jazeera, citing in-app purchases and advertising, greater productivity and emerging technologies such as VR and virtual worlds as potential solutions.
He downplayed the negative impact of the economy on the industry’s outlook.
“A reduction in disposable income means people are spending more cautiously on games. But that doesn’t necessarily mean they’re spending less on games,” he said.
“Gamers’ requirements will become higher and higher, so low-quality games cannot make money as easily as before. Only high-quality games can attract gamers to continue to pay. Therefore, game companies need to follow the trend, focus on improving game quality, and create more high-quality content , explore more realization possibilities.”
Others believe it will take a long time for the industry to recover.
In the first six months of the licensing freeze, more than 14,000 gaming-related companies closed, according to a January report by the South China Morning Post. Many other companies in adjacent industries, such as merchandise, advertising and publishing, have also been hit hard during this period.
“Chinese developers may face significant challenges in monetizing games until the ecosystem is rebuilt again,” Kshetri said.
Meanwhile, frustrated gamers like Zhang can only wait for the government to loosen its grip on the industry.
He also hopes that the current turmoil will bring about the necessary shake-up in the industry, ultimately leading to better games.
“The most important thing in competitive multiplayer games is the game environment, which I think is more important than the game content,” he said. “So if game makers can give players a better environment, that definitely makes them happy again.”