Market Insight

China Joy 2020: Mobile games play a central role and cloud gaming draws industry attention

August 03, 2020

Chenyu Cui Chenyu Cui Senior Research Analyst, Games

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Despite the COVID-19 pandemic, China Joy 2020 still took place this summer from July 31 to Aug 3, attracting both industry visitors and gamers. Although some foreign companies such as Sony, Microsoft and EA are absent from the exhibition, major Chinese publishers attended the show and showcased their flagship titles.

Mobile is the highlight while PC gaming lacks new titles

A large portion of this year’s booth space was dedicated to mobile games. Even traditional PC games publishers such as Tencent and NetEase preferred to showcase their flagship mobile titles to draw gamers’ attention. Mobile games revenue has replaced that of PC games to boost these publishers’ games businesses, and their games pipelines center on the mobile platform. SART began to issue ISBNs to PC games at a stable pace in 2020, but licensed foreign PC games still face challenges to obtain approval, and publishers remain cautious to invest in in-house developed PC games. This explains why PC games had more of a niche presence during this year's China Joy exhibition.

The only hit PC title during the exhibition was World of Tanks from Wargaming via 360 Game, a subsidiary of Qihoo 360. Since 2012, the game was published by Kongzhong in China, but it failed to achieve expected popularity and content has not been updated since 2018. Although 360 Game initially stated it would collaborate with Kongzhong for World of Tanks in China, all the legacy gamers' data will be seamlessly transferred to a 360 Game account following open beta testing. 360 Game will also be responsible for marketing activities and esports events. The company actually has little publishing experience in hardcore PC client games, but the new head is from Chinese PC games behemoth Perfect World, and the re-structured team contains former employees of Perfect World’s esports business. As a result, 360 Game is likely to leverage World of Tanks to break into the PC games market and focus on its esports strategy.

Esports is becoming a stepping-stone for non-gaming companies to enter the industry

Previously, game developers and publishers represented the majority of the attendees at China Joy, but now non-gaming companies such as video streaming platforms and telcos have leveraged the opportunity to enter the games market. This is thanks to the expanding mobile games industry as well as significant growth sparked by the COVID-19 pandemic. From this year’s China Joy show, we can see that nearly all companies are offering on-site esports events: even T-mall, an e-commerce platform, is holding esports events to attract visitors.

Esports events with competitive tournaments and face-to-face encounters can easily capture gamers’ attention and, in return, these non-gaming companies could help the esports industry to extend its value chain and ecosystem. Besides legacy esports video streaming platforms, namely Douyu and Huya, short video companies such as Kuaishou and Douyin (Tik Tok) also put high value on games content. With monthly active users (MAUs) of 300 million viewing games content, Kuaishou is likely to enter games industry directly via esports streaming in 2020. Telcos are also eyeing the games industry opportunity. China Mobile’s Migu presented esports events for World Rally Championship 8 (WRC 8) to prove its cloud offering. Indeed, thanks to government support of esports events - in contrast to strict censorship on games content - esports will become the stepping-stone to enter the industry and gain profit.

A passionate turnout for cloud gaming

Each year, China Joy has an industry hot topic: from VR and gaming phones, to mobile esports, and this year it was cloud gaming. The new technology is already triggering industry partnerships. For example, China Mobile teamed up with Shengqu Game to offer a cloud gaming service for its legacy games. Cloud service providers such as Tencent Cloud and Alibaba center on the platform as a service (PaaS) model for developers and publishers; telcos such as China Mobile and China Telecom are leveraging cloud gaming platforms to expand their 5G coverage; and traditional developers and publishers are optimizing cloud solutions for their existing portfolios.

No company wants to be left behind during this wave, but most are afraid to pioneer the technology as monetization models and the gaming experience are unclear at this stage. Companies are drawing on lessons learned from the VR development experience, and plan a small number of games to aggregate market feedback, but hesitate to divert a greater share of resources to incubate the market. As a result, big companies are optimizing infrastructure and waiting for the market boom, while mid-tier and small companies are unable to drive market growth alone. This explains the recent steady but slight growth of this emerging market.

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