China's video games market recovers in 2023, domestic sales surpass $42.6 billion

China's video games market returned to growth this year as domestic revenue rose 13% to 303 billion yuan ($42.6 billion), putting Beijing's 8-month crackdown two years ago in the rear-view mirror.

People walk below a billboard ad of fantasy game "Genshin Impact" from Shanghai-based developer Mihoyo in Hong Kong, China October 20, 2020. (Reuters)

China's video games market returned to growth this year as domestic revenue rose 13% to 303 billion yuan ($42.6 billion), putting Beijing's 8-month crackdown two years ago in the rear-view mirror.

Industry association CGIGC said at a conference in Guangzhou on Friday the industry's domestic revenue this year reached over 300 billion yuan for the first time. It also said the number of gamers in China grew 0.61% to a record 668 million, which is more than North America's entire population.

The return to growth is an important turnaround for the world's biggest gaming market after China's gaming revenue shrank for the first time last year following Beijing's 8-month crackdown on the industry over gaming addiction concerns.

Games developed in China continued to grow as Beijing emphasized the need for self-sufficiency in technology. Annual revenue from homegrown games grew to 256 billion yuan, up 15% over the previous year. Also read: This mind-reading AI tool turns thoughts into text! Better than Elon Musk's Neuralink?

Revenue from Chinese games in foreign markets, however, took a hit after countries like India increased scrutiny of them on national security grounds. China's overseas games revenue fell 5.65% to $16.3 billion in 2023.

Anime-style games from China such as miHoYo's "Genshin Impact" gained popularity and expanded revenue, while anime-style games on smartphones posted a 31% growth to 31 billion yuan this year as compared with last year.

The recovery of China's gaming industry is reflected in Chinese gaming giant Tencent's return to growth this year after posting its first-ever revenue decline last year.

Tencent's rival NetEase also experienced a strong year as its shares rose more than 40% this year with help from gaming hits like "Egg Party".