The esports and gaming sector witnessed historic milestones this summer. The first Esports World Cup, currently underway in Saudi Arabia, is the largest esports event in history. Meanwhile, the International Olympic Committee announced that the first Olympic Esports Games will be held in 2025, also in Saudi Arabia.
As other countries ramp up their gaming industries, China has firmly established itself as the world’s largest games market and the epicenter for global esports.
Over two decades, the value of China’s domestic gaming sector has skyrocketed 229-fold. In 2023, Chinese developers contributed 47% of global revenue from mobile games, which account for half of the global USD 166 billion games market. The country’s gamer base has reached 668 million, meaning one in every two Chinese is a gamer. Fueled by China’s expansion of 5G and other digital infrastructure, many Chinese tech giants have established leading positions in the global games market.
Beijing has long recognized the gaming industry’s significance for technological innovation, and it increasingly seeks to cultivate gaming as a driver of innovation in culture, tourism and entertainment.
A Cultural Export and Source of Soft Power
China has actively promoted the global dissemination of its games as a cultural export, with several games enjoying major success abroad. China has established a policy framework to promote traditional Chinese culture through innovative digital mediums, including high-quality games. In 2019, Beijing unveiled gaming industry development guidelines that aim to leverage games as an international medium for conveying compelling Chinese stories. This kickstarted China’s “go global” strategy for gaming, in which developers are encouraged to infuse traditional cultural elements and stories into their products. Cross-ministerial policies from 2021 and 2022 further supported the high-quality development and international expansion of Chinese games.
This export drive has led to culture becoming an integral element of gaming industry standards. Last year, the National Press and Publication Administration launched the High-Quality Publishing Project for Online Games, which aims to cultivate products that resonate with Chinese culture and values. Developers are encouraged to incorporate cultural elements into content and develop new games with a distinct national identity. Emphasis is placed on driving cultural innovation through technological development, using new-generation technology to create groundbreaking games with global market potential and cultural intellectual property.
The Sportification of Competitive Gaming and Esports as an Important Digital Industry
China’s booming games market owes much of its expansion to the surging popularity of esports. In 2023, China ranked first among nine key countries in global esports development.
Esports receive favorable policy support at the central and regional levels. China’s General Administration of Sports first recognized esports as an official sport in 2003. In 2016, the State Council published guidance calling for the development of “distinctive sports” like esports for the fitness and leisure industry. China also incorporated the creative digital sector, including esports, into its national strategic plan for emerging industries.
This institutional backing has propelled professionalization. Esports operations and players are now recognized as licensed occupations, and educational institutions offer many esports-related degrees. The inclusion of esports in the 2023 Asian Games further heightened their popularity as China took the top spot in the category.
Policymakers also view esports as an important driver of innovation and consumption. China’s 14th Five-Year Plan for the Development of the Cultural Industry highlighted esports as part of the entertainment industry and called for the use of 5G, artificial intelligence (AI), virtual reality (VR), augmented reality (AR) and other technologies to enhance digital cultural products and foster new immersive experiences. A recent State Council directive listed support for esports development as a means of boosting digital consumption. Local governments in Chengdu, Shanghai, Guangzhou, Shenzhen and other cities have issued plans to expand esports industrial chains with related industries, such as “esports + e-commerce” and “esports + KOLs (key opinion leaders).” Meanwhile, cities like Hangzhou and Chengdu have established esports hotels and “esports towns” for international tournaments to boost tourism consumption.
Implications for Foreign Businesses
Brand promotion. Esports are a crucial platform for sports exchange and brand promotion in the digital culture era. For instance, an English football club has partnered with Chinese esports leagues and brands to enhance their visibility in China, amassing millions of followers on Weibo. Esports also present sponsorship opportunities for brand promotion and customer engagement. For example, a Swiss company’s gaming gear line has found substantial success in the Chinese market by sponsoring esports teams and streamers.
Emerging markets. Saudi Arabia, one of China’s burgeoning trade partners, invested USD 38 billion in video games as part of its Saudi Vision 2030 program to diversify its economy. Riyadh’s commitment to esports and games development and China’s leading role in the sector create partnership and investment opportunities. Ongoing partnerships include the USD 8.5 billion MoU between the Saudi Esports Federation and Chinese tournament operator giant VSPO signed last December, as well as the recent strategic cooperation agreement between China Media Group, Esports World Cup Foundation and VSPO.
Technology application. The gaming sector provides fertile ground for applying cutting-edge technologies like AI, VR, AR and mixed reality (MR). Innovations like cloud gaming feature in Chinese initiatives to promote foreign investment, and the country’s industrial strategy places increasing emphasis on future technologies. Gaming also serves as a gateway to China for foreign tech products, exemplified by a U.S. multinational’s recent partnership to sell affordable VR headsets in the Chinese market.
Challenges for foreign businesses. China’s content review processes pose challenges for domestic and foreign developers alike, demanding careful consideration of cultural sensitivities and stringent regulatory requirements for launching new games. Fierce domestic competition necessitates rapid innovation and adaptation to meet the demands of Chinese consumers. Nevertheless, for businesses that can navigate the market and policy landscape successfully, opportunities for tech development and commercialization of gaming-related products abound.
