Overview

The gaming industry in China has seen steady growth in 2024, with new developments in different market segments.

In the first half of 2024, China’s gaming industry saw steady growth in both user base and revenue, reaching a new high of 674 million users by the end of June. For the first half of the year, sales in China’s domestic gaming market totalled CNY147.26 billion, marking a year-on-year increase of 2.08%.

This growth can be attributed to the factors described below.

Mobile games, PC games and web games

In the first half of 2024, mobile games remained the largest segment, comprising 73.01% of total domestic game sales, with revenue reaching CNY107.51 billion – a slight year-on-year increase of 0.76%.

PC games also expanded, generating CNY33.76 billion, which accounted for 22.93% of total sales and reflected a 2.49% rise compared to the previous year.

In contrast, web games continued to decline, with revenues decreasing by 1.88% year-on-year to CNY2.34 billion, representing just 1.59% of the domestic market.

Mini games

Mini games were a particular highlight in the first half of 2024, experiencing a significant sales increase of 60.5% year-on-year, reaching CNY16.60 billion. Of this total, in-game purchases contributed CNY9.09 billion, while advertising generated CNY7.50 billion – an impressive year-on-year rise of 81.56% and 40.75%, respectively. This marks the third consecutive year of substantial revenue growth in the mini games sector.

Console games and e-sports gaming products

Benefiting from technological innovation and increasingly diversified player demands, China’s console gaming industry has shown robust growth. In the first half of 2024, it generated sales revenue of CNY799 million, up 6.6% year-on-year.

Additionally, leading e-sports games have maintained stable yet long-term operations together with new product releases, contributing to continuous annual sales growth. In the first half of 2024, the e-sports product market (excluding revenue originating from e-sports streaming, club operations, and event activities) generated CNY69.14 billion of revenue, marking a 7.24% rise year-on-year.

Overseas

In the first half of 2024, Chinese-developed games have also seen steady growth in overseas games market, generating USD8.55 billion in revenue – a year-on-year increase of 4.24%.

Overseas mobile game downloads saw robust recovery, positioning China as the world’s largest producer in the mobile games sector. The United States, Japan, and South Korea remained the primary overseas markets, accounting for 33%, 15.66%, and 8.82% of overseas revenue, respectively, totalling 57.48%. Japan’s market share experienced a slight decline, while Germany, the UK, and France collectively increased their share to 9.85%. Australia, Italy, and Canada also joined the top 10 markets.

Among the top 100 Chinese-developed mobile games by overseas revenue, strategy games dominate, representing 32.66% of the total, while RPGs dropped significantly to 10.48%. Simulation games increased from 5.28% last year to 9.97% this year, MOBA games rose from 3.83% to 9.07%, and idle games grew from 3.95% to 7.5%, all showing notable revenue growth.

There was also a significant breakthrough for Chinese AAA games internationally, with “Black Myth: Wukong” selling 20 million copies globally within a month after its release and generating revenue of over USD9.61 billion.

Recent Trends in Gaming Legislation

As the online gaming industry rapidly expands, rising concerns over youth protection, data security, content regulation, and overall market oversight have prompted the introduction of new legislative measures. The recent Measures for Online Game Management (Draft for Comment) (the “Draft Measures”) and the Regulations on the Protection of Minors Online (the “Regulations”) demonstrate a more rigorous and refined approach to regulating the gaming industry within Mainland China.

Measures for Online Game Management (Draft for Comment)

On 22 December 2023, the National Press and Publication Administration (NPPA) ) issued the Draft Measures, inviting public feedback until 22 January 2024. Although the NPPA has yet to finalise these Draft Measures, they are anticipated to represent a significant regulatory milestone. The Draft Measures aim to consolidate existing, fragmented regulations and introduce clearer guidelines and enhanced oversight of the online gaming industry.

Before 2018, the gaming industry was mainly regulated by two separate government systems: the publishing of online games was under the supervision of NPPA, while the Ministry of Culture (now the Ministry of Culture and Tourism) oversaw game operations. Following the reforms by the State Council in 2018, the NPPA assumed full regulatory control over the gaming industry. This shift led to the repeal of earlier regulations, which included, inter alia, the Interim Measures for the Administration of Online Games and the Circular of the Ministry of Culture on Regulating the Operation of Online Games and Strengthening the Interim and Ex Post Supervision, leaving a gap in formal regulatory frameworks.

Although the NPPA has issued several normative documents regarding online gaming, a comprehensive regulatory framework had not been established until the release of the Draft Measures. The Draft Measures, consisting of eight chapters and sixty-four articles, offer a structured approach to managing the industry. A key requirement of the Draft Measures is that both game publishers and operators are required to obtain a “network publication service licence”, which marks a significant change in the regulatory framework. Additionally, the measures establish stricter operational standards, including time and spending limits, a ban on mandatory competitive play, regulation of random draw mechanics, and an extended retention period for user transaction records.

The protection of minors is another crucial aspect of the Draft Measures, with stricter controls on in-game purchases, and prohibitions on live-streaming rewards for underage players. The Draft Measures also introduce more stringent virtual currency regulations, requiring that entities involved in issuing and trading virtual currencies must operate separately. Moreover, all transactions must be processed through real-name authenticated digital Renminbi wallets to enhance transparency and security within online game economies. These measures mark a clear shift towards greater regulatory clarity and stricter enforcement in the gaming industry, providing a clearer vision for future compliance and governance.

Regulations on the Protection of Minors Online

The Regulations came into effect on 1 October 2024, marking a pivotal step in regulating online activities involving minors in China. The Regulations aim to address growing concerns about minors’ exposure to inappropriate content, excessive gaming, and privacy risks. The Regulations introduce a range of protective measures, including mandatory restrictions on gaming hours for minors, enhanced content filtering systems, and stronger data privacy safeguards.

The Regulations impose specific obligations on online game service providers to prevent addiction and limit the time and money minors can spend on games. Additionally, the regulations require the establishment of minor real-name authentication systems for online games and the implementation of age-appropriate content control. The Regulations also address the protection of minors’ personal information, and require the use of technology to prevent online bullying, monitor harmful behaviour, and identify inappropriate content with mechanisms for prompt warning and intervention.

These provisions represent a much stricter and more comprehensive approach to managing online environments for minors, reflecting the Chinese government’s growing focus on safeguarding minors in the digital age. The Regulations mark a shift towards more comprehensive oversight of online environments frequented by minors, setting clearer standards for the gaming industry and online platforms.

Market Access and Publication Licence (Banhao)

Although the gaming industry in Mainland China has seen limited progress in terms of regulatory oversight and market access following the repeal of the Interim Measures for the Administration of Online Games in 2019, the release of the Measures for Online Game Management (Draft for Comment) in December 2023 has brought more clarity to the industry. Dynamic supervision is mainly reflected in the relevant licences required for game operators and publication licences and/or record filing required for games.

Licences for game operators

Game operators are required to obtain different licences and certificates depending on the content of their services, resulting in restrictions on the top-level ownership structure of game operators, including the permissibility of foreign investment. In order to offer online games in Mainland China, for example, most operators must first obtain a “value-added telecommunications business licence” (ICP licence, also known as the B25 Information Services Licence) and have a registered business scope that includes the operation of online games. Up until now, these licences have not been granted to applicants with more than 50% foreign ownership, effectively limiting foreign control in the sector.

Additionally, under the Draft Measures, game operators are required to obtain a “network publication service licence” specifically covering online game operations. This requirement originates from a regulatory interpretation in 2009 by the NPPA and National Copyright Administration, which classified online game operation services as a form of game publishing, making the network publication service licence mandatory for such activities. At that time, however, the Ministry of Culture was the authority in charge of game operations, and despite the regulations made by the NPPA, the Ministry of Culture did not require the game operator to obtain a publication licence. This led to uncertainty regarding whether game operators not involved in publishing are required to obtain a publication licence. The ambiguity deepened following regulatory changes in 2018 and the repeal of the Interim Measures for the Administration of Online Games in 2019. If the Draft Measures are passed in their current form, game operators currently involved exclusively in game operations would need to apply for the “network publication service licence”, while those operators currently engaged in both online game publishing and operations would also need to expand the permitted scope of business for their publication licence. Moreover, online publishing is one of the business sectors subject to a foreign investment ban under the Regulations on the Administration of Network Publishing Services and the Special Administrative Measures for Foreign Investment Access (the “Negative List”), therefore foreign-invested entities may face further constraints on entering online game operations once the Draft Measures take effect.

Game operators have also encountered great difficulties in Mainland China’s capital markets. According to public market information, there are few gaming operators who have successfully completed IPOs in the A-share market, which reflects the increased tightening of supervision in the gaming industry.

Publication licence (Banhao) for games

After a lengthy suspension from July 2021, the NPPA has begun granting new publication licences since April 2022. The current publication licence approval process has demonstrated the following trends, which are poised to boost the prosperity of the gaming industry:

• In 2022, the NPPA granted publication licences to 512 domestic online games. This figure saw a significant increase in 2023, with 977 domestic online games granted licences, indicating a robust recovery and growth within the industry. From January to August 2024, a total of 850 domestic online games have already been granted publication licences, reflecting ongoing momentum.
• The average number of licences granted per month in 2023 was approximately 88, while in 2024, this average has risen to around 106. The monthly distribution of licences has shown steady growth, reflecting a stable regulatory environment that supports industry development.

Besides domestic online games, the granting of imported online games has also made significant progress in 2024, with the NPPA granting licences for imported online games in February, April, June, and August. At the time of writing, the NPPA has granted publication licences to a total of 75 imported online games in 2024, following the 98 granted in 2023 and the 44 in 2022. Multiple top domestic and international gaming companies have obtained the publication licences for their imported online games, such as Tencent, NetEase, Perfect World, Archosaur, Verycd, ZQGame, TopJoy, Migu, etc.

Moreover, according to the Draft Measures, online game publishers and online game operators must complete the publication or operation within one year of obtaining their publication licence. If they fail to do so, they must provide a written justification to the relevant provincial publishing authority. This regulation aims to curb the practice of licence stockpiling, ensuring that approved games are promptly developed and brought to market.

Record-filing for mini games

The regulation framework for mini games largely remains unchanged in the past year – ie, a publication licence is not required for mini games, but mini games must complete the mandatory registration. According to the Notice of the Ministry of Industry and Information Technology on Record-filing for Mobile Internet Applications (the “Notice”) of 8 August 2023, developers of apps providing internet information services are required to complete filing procedures. Shortly after the Notice, on 9 August, WeChat announced that starting from 1 September 2023, all WeChat mini games must be registered before launched. Mini games that have already been launched also need to be registered before 31 March 2024; failure to do so will result in removal.

Further, the Draft Measures stipulate that the regulation of domestic mini games that lack a storyline, feature simple gameplay, and do not include in-game purchases, will be defined separately by the national publishing authority in accordance with the Regulations on Publication Management and the Draft Measures. This suggests that, in addition to the Ministry of Industry and Information Technology’s existing requirements for mini games, the NPPA intends to incorporate mini online games into its regulatory framework.

AI

Since the beginning of 2024, AI technology in the gaming industry has continued its rapid developments, with leading companies and institutions increasing their research inputs. It is expected that the number of research papers related to AI and gaming will double in 2024.

The gaming industry has seen significant accomplishment in the theoretical, model, and application layers of AIGC (AI-generated content) in a short period of time. At the strategic level, AI’s application in research and development occupies the largest share, with nearly half of the leading gaming companies leveraging AI to enhance production efficiency, establish intelligent production pipelines, and create virtual content for digital characters and digital humans, all to empower users in generating interactive content.

According to the 2024 ScienceDirect survey, over 99% of respondents in the Chinese gaming industry reported that the companies or departments they work in had introduced AI technologies and tools through various channels. Regarding the application of AI at the R&D level, the vast majority of respondents indicated that AI technology had improved overall project efficiency, with about 80% indicating an efficiency gain of over 20% and around 10% estimating that AI could potentially increase efficiency by more than 50%.

Recently, game developers have also shifted their use of AI towards end users, such as introducing AI NPCs and utilising AI for game interaction and task design to provide players with a more diversified gaming experience. In a survey designed for gaming industry practitioners, it is observed that AI technology has mostly been applied to content production, with nearly 70% focused on “enhancing the freedom of NPCs and narratives” and “assisting in art, music, and code creation”. Additionally, about 60% of respondents used AI for “generating specialised creative tools to support PGC/UGC content production”. Significant applications of AI have also emerged in data analysis, particularly in analysing user behaviour and optimising advertising activities for user acquisition.

Furthermore, advances in AI have bolstered cloud computing capabilities, enabling real-time processing that supports cloud gaming. This, in turn, has positioned cloud gaming as a new growth avenue within the gaming industry.

Judicial Development

In 2024, the protection of IP rights in game-related judicial practices has been further enhanced in the following aspects.

Reaffirmation of the approach for gameplay protection

In recent years, there has been much debate over the classification of gameplay as either audiovisual works, “other intellectual achievements conforming to the characteristics of works”, or whether it should instead fall under protection provided by the Anti-Unfair Competition Law. In September 2024, the Guangzhou Intellectual Property Court explicitly concluded in the Gold Coin Monopoly v Dong you Tycoon case ((2022) Yue 73 Min Zhong 2950) that the unique expression of gameplay rules should be protected under the Anti-Unfair Competition Law framework, providing a valuable reference for handling similar cases in the future.

The judge in the second instance pointed out that specific aspects of gameplay design – such as the functionality and impact of various game elements, upgrade mechanics, and the systematic structure of the game – go beyond the protection afforded to a game’s audiovisual presentation under copyright law. These elements instead define the operational mechanism of the gameplay itself, providing competitive advantages and value for game operators.

The court emphasised that “skin-changing” games, which closely imitate these gameplay features, exploit the intellectual contributions and financial investments made by original developers, thereby seizing business opportunities that rightfully belong to those developers. Such unauthorised use was deemed a violation of the principles of good faith and fair commercial practices, constituting unfair competition.

Frequent and innovative application of pre-litigation injunctions demonstrating increasingly flexible and efficient remedies

Since 2024, there have been numerous cases applying pre-litigation injunctions, significantly aiding gaming companies in promptly addressing and halting infringement. In March 2024, the Shanghai Pudong Court issued the first-ever pre-litigation injunction in China concerning infringement on undisclosed character designs in video games ((2024) Hu 0115 Xing Bao No 2). This case marked a judicial milestone by establishing that undisclosed character designs in games can be categorised as business information and thus fall within the protectable scope of trade secrets. The court conducted a comprehensive analysis of the harm caused by the leakage of information during online game testing, reflecting the judicial practice’s adherence to the principle of “rapid protection” in response to the features of the gaming industry.

Repeatedly record high compensation awards

In September 2024, the Pokémon Company announced that the first instance trial of the Pokémon infringement case against “Pocket Monster: Remake” had recently concluded. The Shenzhen Intermediate People’s Court determined that the accused infringing game violated Pokémon Company’s copyright and constituted unfair competition. The court ruled that the four defendants compensate a loss amounting to CNY107 million, setting a new high for compensation in China’s gaming industry.

Virtual Items

Regulation

The Draft Measures stipulate that in terms of the distribution of online game virtual items, operators shall not provide or condone high-priced transactions of virtual items, and shall disclose the issuance or changes of virtual items. It is prohibited to reversely exchange online game virtual items into currency, and those providing random draw services must provide alternatives for users to obtain virtual items and value-added services available in random draw at the same time. In terms of provision of virtual item trading services, the regulation stipulates that such transaction must be conducted under proper supervision through digital Renminbi wallets with real-name authentication and all transaction records between players must be kept. Virtual item trading services are restricted to approved games only, prohibiting their provision in unapproved games.

At present, the Draft Measures have not officially come into effect. The aforementioned regulations on virtual items mainly focus on preventing the financialisation of virtual items and curbing the potential risks of money laundering, gambling, and other criminal activities through virtual item transactions. It is worth noting that for random draws of virtual items, the mandatory requirements on providing users with direct purchase channels as an alternative may reduce users’ participation in random draw games and undermine the profitability model of such services.

Live-streaming sales

Since 2024, mainstream platforms in China have been gradually promoting sales of virtual items by live streaming. In May 2024, the Douyin channel alone saw 37 game companies live streaming sales of virtual items. For instance, the top two games, Naraka: Bladepoint and VALORANT, both achieved a gross merchandise value (GMV) of between CNY10 million and CNY25 million that month. Naraka held a total of 15 live streaming sale activities in the first half of 2024, with a total GMV exceeding CNY100 million, with the average sales per live stream exceeding CNY10 million.

This approach has proven advantageous, generating high viewership and enhancing both the profitability and publicity for the games involved. As this model is still evolving, industry experts anticipate that leading game companies and live-streaming platforms will continue to refine their strategies, aligning the approach with each game’s specific dynamics and audience.

Judicial developments

Since 2024, the Chinese judiciary has increasingly addressed cases involving virtual items in gaming, advancing legal standards for this unconventional property type. Chinese courts have gradually recognised virtual items, such as in-game props, as a form of online virtual property. This designation has implications for player rights, particularly when games are discontinued.

When it comes to virtual item transactions, Chinese courts tend to respect the user agreements and similar provisions that game companies prescribed in advance, seeking to balance the restriction of third-party transactions and the protection of trust interests of the parties involved in the transaction. In the case of (2023) Yue 0192 Min Chu No 3977, where a gaming platform banned the account of a player due to abnormal transaction activities, the Guangzhou Internet Court determined that the user agreement released by the platform was valid and that the “ownership” of game props as virtual items belongs to the game company or its co-operating parties. The court pointed out that users only have usage rights over virtual items, and thus did not support the player’s claim for damages.