Over 28,000 video games businesses shut down in China in 2018 and 2019 as a result of the nine-month licensing freeze. However, more than 22,000 new game-related companies have been registered in China in 2020. That’s around 122 new companies every day. These are the companies that use the word “game” in their company or brand names, or company descriptions.
According to South China Morning Post, the first six months of 2020 saw the total number of game-related companies grow more than 9 percent to 260,000.
While the local licensing regulations are becoming stricter, gaming revenues continue to grow attracting new entrants to this market. The Chinese gaming market generated $10.34 billion in revenue in the first quarter, as found by the Game Publishing Committee of the China Audio-video and Digital Publishing Association.
However, Liao Xuhua, a gaming analyst at Beijing-based Analysys International, explains that the newly founded companies in China are those looking to benefit indirectly from the recent boom. These include UA companies and advertisers.
“According to our previous research, only about 5 to 10 per cent of these companies have active, actual gaming businesses,” the analyst said. “But we are also anticipating continual reshuffling [of the industry]. Although the market as a whole is growing, the industry will eventually eliminate a lot of the smaller players.”