State of play: Inside China’s increasingly influential games industry

Stay Informed

Get Industry News In Your Inbox…

Sign Up Today

Pocket Gamer Connects Summit Shanghai takes place on July 30th, offering insightful sessions and networking opportunities with developers, publishers, investors and more. Head to the website for more details and to register.

Ahead of the show, we’ll also soon be publishing a full China games market report.

China is the world’s most lucrative games market. It’s also the most challenging to break into.

According to the China Audio-Video and Digital Publishing Association’s annual report, the country’s games industry generated ¥325.8 billion ($44.8bn) in 2024, a rise of 7.53% year-over-year. Newzoo, meanwhile, puts the figure at $48.7bn.

Market intelligence firm AppMagic estimates that China’s App Store alone generated $15.6 billion last year, which actually marked a 1% decline Y/Y. In the first six months of 2025, it accumulated approximately $8 billion, a small rise of 0.7% Y/Y. For context, that US App Store accumulated $8.4bn behind the United States during H1 2025.

China is home to some of the world’s largest publishers and most successful developers, operating on a scale that some Western companies would be envious of.

Tencent, behind hits such as Honor of Kings and PUBG Mobile, has invested in and acquired studios around the world. It owns a majority stake in Clash of Clans developer Supercell – one of the world’s most successful mobile studios – while it also has investments in Riot Games, Epic Games, Ubisoft, Krafton, Pocket Gems, Funcom, and many more.

NetEase is another major global games publisher, with hits including Fantasy Westward Journey, Eggy Party and Knives Out.

Other notable publishers include AFK Arena developer Lilith Games, Genshin Impact maker miHoYo, Whiteout Survival studio Century Games, Last War studio First Fun, and more. What’s the common theme of the companies named here? They’ve all released a billion-dollar hit. Some successful at home, others on a global scale.

And of course one of the biggest notable recent launches is Black Myth: Wukong from Game Science. The title was a statement global release for the credentials of China’s games industry in the triple-A space – if it needed it. NetEase’s hero shooter Marvel Rivals and Tencent’s Delta Force, two top 20 Steam games by concurrent users, further highlight China’s increasing influence across platforms.

It’s not just the capabilities to build their own games – top Chinese developers have also become go-to partners for Western publishers. Blizzard partnered with NetEase on Diablo Immortal, while Activision tapped Tencent’s Timi Studio for multi-billion dollar success Call of Duty: Mobile.

These partnerships offer an opportunity to crack the country’s market, while also tapping expertise for mobile in particular.

Using AppMagic data to analyse the top 30 grossing games worldwide so far in 2025, 14 were either developed by a Chinese company or a developer owned by one.

There is no country more influential on the global games business.

China’s rise

The rise of China’s games industry has been a rapid one. Mikael Leinonen, CEO and founder of MyGamez, tells PocketGamer.biz that the common denominator across nearly every industry in China, including games, is the lightning-fast pace of development and innovation, as well as companies’ agility in adaptation to new conditions and building solutions quickly.

“When we started MyGamez over a decade ago, game development in China still lagged behind what I had seen in the West,” explains Leinonen. 

“Fast-forward to today, and many of the world’s most impressive developers are based in China — and I believe we’ve only seen the tip of the iceberg so far.

“Chinese developers are incredibly driven. They have access to a large pool of top talent and strong financial backing, and they operate in a massive, hyper-competitive domestic market that pushes constant innovation in game design, live ops, and marketing. It’s this intense pressure that sharpens their edge. It’s an exciting space that continues to evolve at breakneck speed.”

Tom van Dam, an experienced executive who has worked at NetEase, ByteDance and is now VP of business development at Joymaker, says China’s market is not just different, but has a distinct ecosystem that has evolved along its own unique trajectory.

“While Western markets were largely built around the console in the living room or maybe the desktop in the office, China’s industry was built from the ground up mostly around the smartphone,” he states.

“This has led to a different consumer behavior, where gaming is often integrated into daily life in short bursts, like a social utility rather than a specific relax or entertainment moment. The integration of mini-games within super apps like WeChat is a good example of this. It has brought gaming to a massive audience that might not otherwise engage with traditional platforms.”

Hurdles

The road for this rapid growth of China’s games industry has not been a smooth one. The country has gone through multiple game licence freezes – meaning no new releases – as regulators tightened up the rules around acceptable content and ensured compliance.

There are also periodic new regulations on games with new rules hitting the market – such as age verification, playtime limits for young players, and, at least temporarily, a crackdown on the tech sector at large.

At times, international politics can also come into play – there was for years an unannounced ban on South Korean publishers launching games in China, while on the other side, India has banned a number of Chinese apps, and the US is looking to kick out a Chinese-owned TikTok, which has also impacted ByteDance’s games publishing operations.

It’s these hurdles that can in some ways explain some of the expansion plans – and retreat – of China’s big players over the years on the international stage. Regulation at home helped spark overseas investments, while international politics, a tough global market and more company-specific internal reasons can help explain the likes of NetEase appearing to scale back its overseas investments.

“The broader trend of Chinese publishers going global really took off after the regulatory turbulence that began in 2017,” says Leinonen. “During the periods when it became difficult — or nearly impossible — to secure domestic publishing licenses, many Chinese companies found it faster and easier to publish their games overseas first.

“What began as a necessity then turned into a strategic advantage for many companies. Early successes abroad, combined with intense competition in the domestic market, motivated many studios to focus on international growth. Today, several leading Chinese companies build games specifically with global audiences in mind from day one.”

Van Dam adds: “From my perspective, the recent global success is driven by two key factors. First, the enormous intensity of competition in the domestic Chinese market creates incredibly capable and commercially adept companies at scale. The China market is like bootcamp for how to be a winning global player.

“Second is a highly sophisticated approach to data and live operations. There is a willingness to launch and then iterate relentlessly based on real-time player data, treating a game’s release as the start, not the end, of the development process. The launch of a game is often simply referred to as the Open Beta Test, with no actual “1.0 launch milestone” planned beyond.”

For international publishers looking to break into China’s games market, there are unique hurdles and rules companies must follow. Companies must work with a local partner to launch in China, which often means handing over source code as well. It’s a process that can see time-to-market take nine to 12 months, though MyGamez says a few years ago, it could have taken as long as two years to gain approval and launch.

Opportunities

Leinonen says that despite these hurdles, with around 30% of global games revenue emanating from China, the market still represents one of the biggest growth opportunities available to successful overseas developers.

“I often encourage studios to treat publishing in China like developing a whole new game: it requires proper resourcing, comes with some risk, but if done well, the upside can be massive,” he states.

“Compared to the effort needed to create an entirely new hit game, bringing an existing successful title to China often requires far fewer resources — and comes with a higher probability of success.”

On the topic of regulatory uncertainty, Leinonen claims the environment has now stabilised, with the game approval process now faster and more transparent.

Key opportunities he sees in the space include the mobile casual and hypercasual genres, while the rapidly growing HTML5 nin-games market on WeChat and Douyin is “offering powerful distribution for instant play games”. He also cites Steam’s large Chinese playerbase as a key opportunity for developers, while influencer marketing and brand collaborations are emerging as a major trend.

Van Dam echoes the sentiment that there are significant and diverse opportunities in China, as well as opportunities for growth, particularly in reaching audiences outside of the major cities. For this, mini-games have proven an effective approach, he says.

“At the same time, the go-global/chuhai movement is entering a more mature phase,” says van Dam.

“The focus is expanding beyond the historically popular markets in Southeast Asia to a truly global ambition, being listed in the top-10 charts across the world. This is also my key focus at Joymaker, you could say it feels like a shared ‘The China Dream’ between all local companies.

“Finally, I believe we are seeing an important inflection point with the rise of premium, triple-A development. A title with the profile of Black Myth: Wukong represents more than just a single product. It signals a new level of ambition for the industry to create globally impactful games that are breaking old boundaries or cultural divides.”

Challenges

Of course, it’s never all roses for any country’s games hub. As well as the aforementioned hurdles for getting into China’s market – which notably blocked Roblox’s expansion in the country – the market faces other challenges too.

Leinonen says rising talent costs in major cities have significantly driven up production expenses, while at the same time user expectations for production quality, speed of content updates, and overall VIP treatment on every aspect keeps rising. 

“As a result, many companies are relocating to tier 2 and tier 3 cities in search of more cost-efficient operations,” he says.

That may come as a surprise, as Western analysts sometimes point to larger teams and lower costs as one of the reasons for China’s success, as well as some controversial work culture practices like 996.

“In the short-term, the post-Covid economic slowdown has made it more difficult for new studios to raise capital,” Leinonen continues. “However, signs of recovery are emerging, and market confidence is gradually returning.

“Another concern is the dominance of distribution platforms that also own the marketing channels. This creates an environment where platforms can exert considerable control over publisher margins, bordering on monopolistic behaviour. That said, growing competition among Android app stores and the rise of HTML5 mini-game platforms like WeChat and Douyin could help balance the playing field and push fees down.”

Van Dam says the industry’s greatest challenge is a direct result of its own success.

“Having achieved such a high level of expertise in the free-to-play mobile space, there has been less focus on developing the skill set for other models, such as premium, or narrative-driven console games,” he explains. “There is a technology and design gap that the industry is now actively working to close.

“Another key challenge is the transition from a model of iteration to one of innovation. Commercially, it has often been a very successful strategy to adapt existing, successful IPs. However, I think the long-term goal for the ecosystem must be the creation of its own original, globally recognised franchises.”

One senior employee at a major Chinese publisher tells PocketGamer.biz that the market for indies has become particularly challenging. They say that an ISBN, which all games require, can be quite expensive for an indie, with costs running into thousands of dollars. Meanwhile, there are only a limited number of license approvals each month – 158 games were greenlit in June 2025, according to Yicai (147 domestic and 11 foreign-made) – further limiting opportunities.

“China’s economy is dropping pretty badly, so I’m worried that we are going to see some of that hit our industry, especially those who still don’t go overseas with their games.”

The future

So what does the future hold for China’s games industry? It’s already highly influential globally and has the world’s most lucrative market at home. While for overseas publishers, despite the potentially lucrative opportunities, it’s a market that’s more challenging to enter than any other.

Van Dam and Leinonen are optimistic about its prospects.

“Looking ahead five years, I think the industry here will be fundamentally different,” says van Dam.

“The integration of AI in development will be a major driver of this change. This is not just for production efficiencies, but also for enabling new forms of interactive entertainment. I expect Chinese companies to be at the forefront of this, given the pace of AI development here and the lack of an opposing movement against AI like you see in some other markets.

“Furthermore, I think the distinction between ‘Chinese games’ and ‘Western games’ will become increasingly blurred as we see more global co-productions and integrated teams. The most significant shift, however, will likely be China’s journey as a major exporter of original IP. 

“We are seeing the beginning of this now, but in five years I expect to see multiple Chinese-developed universes that have expanded into global brands across all forms of media.”

Leinonen adds: “I believe China will be a global trendsetter in gaming, driving new innovations in design, monetisation, and player engagement. Any company aiming for global leadership will need to be in China — both to compete and to learn from its incredible pace and creativity.”