Mobile Gaming Booms in China Amidst COVID-19

The Spring Festival, or Chinese New Year, has always been a highly anticipated season for China’s mobile game industry. However, this year’s activity in the sector during the holiday reached levels far beyond anyone’s expectations. 

The user data report released by QuestMobile pointed out that during the 2020 Spring Festival, the number of daily active users and the average daily usage time of mobile devices reached a record high. From Jan. 24 to Feb. 2, the cumulative daily usage time across QuestMobile’s entire network increased significantly from the initial 5.06 billion hours to 6.11 billion hours with the number of mobile game players increasing by 30% compared with normal days, and the average daily usage time per person soaring by 17.8%.

According to Sensor Tower, in January 2020, 30 mobile game publishers globally earned more than $1.56 billion in revenue for the month, accounting for 28.2% of the total income of the global mobile industry. Chinese powerhouses Tencent, NetEase, Lilith, FunPlus and Lingxi Games occupied the top five spots in the ranking. 

The COVID-19 epidemic has become a lingering nightmare of all Chinese over the past two months. People around the country responded to the challenge of staying indoors by playing games, singing songs in mobile karaoke apps and watching variety shows and movies.

The mobile game industry has arguably become the biggest beneficiary of the COVID-19 outbreak.

According to Qichacha, a platform delivering analytics on China-based public and private companies, more than 40% of app downloads in the past few weeks were games, followed by social networks, entertainment, education and other categories. Free games led the pack, accounting for 60% of downloads. 

Some Chinese experts have inferred that the overall average daily turnover of the mobile game market can reach several billion yuan. Honor of Kings, for instance, was estimated to have been downloaded 120,000 to 150,000 times a day during this year’s Spring Festival holiday. The single-day peak in revenue on Jan. 24 (New Year’s Eve) is said to have amounted to 2 billion yuan, compared with 1.3 billion yuan in the same period last year, almost a 50% rise year-on-year.

Paradoxically, as China’s mobile gaming market booms, within the past two years, from March 29, 2018, to the end of 2019, 15,987 Chinese game developers folded operations. Almost 200 game companies have closed down across the country since the beginning of 2020. 

Part of the reason is the decline in demand for PC games. Another big component of the problem is monopolization. Big Chinese game developers like Tencent and NetEase have set the bar too high for smaller companies who don’t have the resources to compete in marketing and develop games of comparable quality.

The biggest gainers from the surge in downloads caused by COVID-19 are larger companies, with several mid-sized competitors trailing behind. Interestingly, the epidemic prompted investors to pour resources into China’s gaming industry with smaller companies seeing more noticeable gains in capital markets. Between Chinese New Year eve and the middle of February, several game companies saw their share prices soar by roughly 15%, including FriendTimes, Kunlun, XD, Zengame, Sanqi Interactive Entertainment, Dianhun, and others. During the same period, Tencent’s stock increased only 5.8% and NetEase’s – 8.1% (Numbers provided as of Feb. 14).

Investors are clearly excited about the opportunity to profit on the soaring demand for mobile games induced by the coronavirus outbreak. Yet, while they are pouring funds into small gaming companies, it is the big players that are seeing real monetary gains through sales. 

One company that could potentially break through the status quo and challenge the existing duopoly of Tencent and NetEase is ByteDance. During the 2020 Spring Festival, several casual game titles released by ByteDance made it into the Chinese App Store’s Top 10 free list. The company is currently preparing for its foray into heavy game genres, including MOBA and SLG where it will directly take on its rivals.