Niko Partners lowered its forecast for the revenue of the Chinese gaming market for 2021 — from $47.52 billion to $46.98 billion

For the first time in 20 years, Niko Partners analysts have revised the forecast for the Chinese gaming market downwards. According to the updated data, by the end of 2021, the turnover of the console, mobile and PC segments in China will amount to $46.98 billion – $540 million less than originally expected.

As the analysts explained, they had to adjust the forecast largely due to the increasing control of the Chinese authorities over video games. For example, in September, local teenagers were banned from playing more than three hours a week. Also, over the past four months, not a single new online game has been able to get permission to release in China (however, it is assumed that the licensing process will resume in the near future).

In addition, Niko Partners noted that the Chinese gaming market has not fully recovered from the effects of the COVID-19 pandemic. In particular, Internet cafes were massively closed in the country last year. Now they are reopening, but not fast enough.

What else did Niko Partners indicate in the updated forecast:

• in 2021, mobile will continue to account for the most revenue. Its revenue will reach $32.3 billion — an increase of 10.5% in annual terms. Earlier it was expected that the growth would be 11.9%;
• the revenue of the PC segment will be $13.6 billion — a drop of 2.1% compared to 2020. Previously, analysts had predicted a drop of 1.2%;
• but analysts have not changed the forecast for the console segment. As before, they forecast him an income of $2.19 billion by the end of the year (taking into account sales of both legal and gray products). Niko Partners explained this situation by the fact that the console accounts for a relatively small share of the Chinese gaming market, so the actions of the authorities have little effect on the segment;
• in 2020, the number of gamers in China exceeded 700 million people, but now Niko Partners believes that this number will decrease. Due to the time limit imposed on games for minors, some teenagers will stop playing.

As Daniel Ahmad concluded, in the near future, the Chinese gaming market will not feel much of the consequences of what is happening. But the recent actions of the authorities may affect the long-term growth of the market. For example, Chinese gaming companies may start paying more attention to the foreign market, since their revenue from games grows faster outside of China.