The Game Industry in China – Part II

By: Celia Qiu

Investment Analyst – Communication Services, Software, Telecoms

Now let’s take a closer look at the largest component of online gaming: mobile games, which is the fastest growing segment. In the past few years, China has been leading the way in mobile games development, with mobile games representing ~70% of total online game market, significantly higher than 47% globally, thanks to the rapid transition from PC to mobile internet. (iResearch, Newzoo, 2020)

In our view, shorter game round/more casual nature captures fragmented user time spent during commute. In addition, the increasing prevalence of Free-to-Play (FTP) model, where download is usually free at App stores, but users can purchase heroes, skins and battle passes in game, also helps lower the entry barrier and helps tap to a broader user base, especially female gamers.

In China, mobile gamers now also embrace different mobile genres, with MOBA (multi-player online battle game), MMORPG (Massively Multiplayer Online Role Playing Game), FPS (first-player shooting), card, and casual games being some most popular genres.

Looking ahead, we expect mobile games to account for an increasingly larger part of China’s total online games market, mainly driven by average revenue per user (ARPU) growth.

Tencent and NetEase are the two dominant online game companies in China, with an estimated combined market share of more than 60% as of 2019 (Company data, iResearch). HoK (Honour of Kings), Tencent’s flagship MOBA title launched in 2016, has 100mn daily active users (DAUs) (Tencent, Jan-Oct. 2020) and is one of the most successful mobile games as of date.

NetEase is an online game veteran with strong game development, publication and operation capabilities. Fantasy Worldwide Journey (FWJ), NetEase’s flagship MMORPG games, is recognized as one of the most successful PC titles in terms of longevity, as it remains a top 4 PC title in China after 17 years in operation. (Superdata, 2020)

Across the globe, major mobile games develop/publish companies include Activision Blizzard, Electronic Arts, BANDAI NAMCO, Netmarble, etc. (App Annie, 2020)

Disclaimer

This video contains the opinions of Mirae Asset Global Investments (Hong Kong) Limited (“MAGIHK”) and is intended for your use only.

It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument and shall not constitute any form of regulated financial advice, legal, tax or other regulated service. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. MAGIHK makes no representation as to their accuracy or completeness and therefore do not accept any liability for a loss arising from the use of this video.

All Investments contain risks. Forecasts, past information and estimates have certain inherent limitations. Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these opinions are suitable for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

Past performance is not a guarantee or a reliable indicator of future results. Before making any investment decision, investors should read the applicable fund prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the applicable investment and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice if in doubt.

Hong Kong, including Asia ex Japan

Issuer: Mirae Asset Global Investments (Hong Kong) Limited (Licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance). This video has not been reviewed by the Securities and Futures Commission or the applicable regulator in the jurisdiction which this article is posted and no part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of MAGIHK.

The Game Industry in China – Part II

Related Insights

Related Insights