Vortex Gaming

3,029억 6,400만 위안(한화 약 55조 1,515억 원), 최근 중국 음수협게임공단이 발표한 2023년 중국 게임산업 총 매출이다. 게임 이용자 수는 2023년 기준으로 약 6억 6,800만 명을 기록했다.

With such a vast market, Korean game companies have been targeting the Chinese game market for a while. In fact, just a few years ago, it wasn't hard to hear news of companies hitting it big in China, and there were even memes about it. After 2016, when the Chinese market closed down to the point where the term 'Korean Wave Ban' was used, interest waned relatively, but since then, as licenses began to open up gradually, news of Korean games re-entering the market has been coming in one by one. However, the sudden announcement of regulations last December, followed by confusion and measures to remedy the situation at the beginning of this year, have made the situation more unpredictable than ever.

The most basic keyword to understanding the Chinese game market is the 'license' mentioned earlier. It is a permit to service games in China, and is issued by the National Press and Publication Administration under the State Administration of Radio and Television of China. It is divided into two types: 'domestic license' required for Chinese game companies to service in China, and 'foreign license' received by foreign game companies to service in China. In order for Korean games to be serviced in China, a foreign license is essential.

However, after March 2017, until 'Summoners War' received a foreign license on December 2, 2020, there was not a single case of a Korean game receiving a license. According to a survey by the Korea Creative Content Agency, the Chinese government issued licenses to a total of 1,570 games in 2019, of which 185 were foreign licenses, but no Korean games were included.

The situation was better than for Korean games, which had not been issued licenses for a while, but there were rumors in the Chinese game industry that licenses were not being issued well during that period. According to data from the National Press and Publication Administration of China, an average of 7,000 to 8,000 licenses were issued annually until 2017, but this trend decreased sharply to 2,064 in 2018 and 1,570 in 2019. Even from July 22, 2021 to April 11, 2022, no licenses were issued at all.

However, from that time on, there were signs that the door to the Chinese market was opening little by little. Starting with 'Guardian Tales' in February 2021, Korean games such as 'CounterSide' and 'Black Desert Mobile' received licenses in June, and things began to ease up little by little. After the resumption of license issuance, in December 2022, Smilegate's 'Lost Ark' and 'Epic Seven', Nexon's 'MapleStory M', Netmarble's 'Second Country' and 'A3: Still Alive', and NPIXEL's 'Gran Saga' received licenses. In March 2023, Nexon's 'Blue Archive', Devsisters' 'Cookie Run: Kingdom', Netmarble's 'The Seven Deadly Sins: Grand Cross', Gravity's 'Ragnarok Origin' in August, and NCSoft's Blade & Soul 2 and Wemade's 'MIR M' in December received licenses, and some have been released in the Chinese market.

In particular, in 2023, not only did licenses open up, but also sales channels began to open up in various directions, such as participation in offline events. At ChinaJoy 2023, 'MapleStory M' and 'Lost Ark' were exhibited through their Chinese publishers, Century Tiancheng and Tencent, and at 'Bilibili World', which was held a week earlier, Blue Archive participated through Shanghai Roaming Star, a subsidiary of Yostar. The holding of offline events for new games in China, which had been completely cut off since 2019, was underway.

Although 'licenses' are usually cited as an obstacle to entering the Chinese game market, the game industry has cited the Chinese authorities' censorship and regulatory policies as another variable even before licenses are issued. It is already a well-known case that skull images or skull mobs are replaced with other things in order to enter China.

In fact, according to the guidelines of the Press and Publication Administration, which issues licenses, all games released in China must not contain anything that violates the Chinese Constitution or threatens sovereignty, harms China's interests or security, or harms traditions and culture, or anything that promotes superstition, obscenity, drugs, violence, or anything that harms culture and traditions. Even if these guidelines are followed, license issuance is a separate issue, and even after complying with the guidelines, there is room for re-censorship depending on the policy direction of the authorities. This applies to both domestic and foreign games.

In fact, in 2017, the Chinese Ministry of Culture randomly selected Chinese games such as 'Azur Lane', 'Honkai Impact 3rd', and 'Onmyoji' and began re-examining them. And at the National People's Congress in 2018, the National Press, Publication, Radio and Television Administration was renamed the National Radio and Television Administration and placed under the Central Propaganda Department while implementing the '19th National Congress Spirit of the Communist Party', and organizational restructuring occurred. After that, re-censorship was conducted on existing games such as 'CrossFire' and 'Knives Out', as well as various platforms and game developers.

China's game regulations are not limited to content censorship. In 2016, the Cyberspace Administration of China announced the 'Regulations on the Protection of Minors on the Internet', which stipulated that all game developers must install protection devices to restrict minors' access to the Internet and regulate content norms and online game usage time, leading to moves to regulate game users' access. The content, which was being prepared for legislation through a People's Daily report in 2017, became a reality in August 2021 when regulations were announced that teenagers under the age of 18 would only be allowed to play games for one hour a day on weekends and holidays, and would only be allowed to use games after going through a real-name verification process.

In particular, before the regulations were proposed, the Chinese Economic Information Daily published an article strongly criticizing games as 'spiritual opium', causing Chinese game-related stocks to fall across the board. After the report, Tencent's stock fell by 10%, while Pearl Abyss and Wemade fell by 9% and 12.5%, respectively. The Economic Information Daily deleted the article a few hours after the report, but the reason was not revealed. The related regulations are still in effect, and even a 'Guideline for Building a Mobile Internet Minor Mode' that limits minors to using smartphones for only two hours a day has been proposed.

As regulations gradually intensified, the National Press and Publication Administration announced 'Measures for the Management of Online Games' on December 22, putting a stop to it. The main points of the measures include prohibiting forced battles between users (Article 17) and prohibiting giving benefits such as daily login, first charge, and continuous charge to induce users, and setting a charge limit and posting it in the service rules. Providing or condoning high-priced transactions is prohibited (Article 18), and when selling probability-based items, the probability must be set reasonably and a method must be provided to obtain items with the same performance as probability-based item rewards with in-game currency (Article 27), etc. In addition, it included contents such as 'spreading socialist core values' and 'inheriting excellent Chinese traditional culture'.

After the announcement of these measures, the Chinese game market continued to shrink drastically. According to Reuters, Tencent and NetEase stocks plummeted by 16% and 28%, respectively, and the market value of Chinese game companies was reduced by nearly $80 billion (approximately 104 trillion won). In response, the National Press and Publication Administration of China said, "We will listen carefully to the concerns raised by the parties" and explained that it would receive opinions from the industry and users until January 22. Along with this, according to sources from Reuters, Peng Xuxin of the Central Propaganda Department, who proposed the agenda, was reportedly dismissed from his position as head of the publishing department after the announcement of the regulations.

As such, the level of online game regulation in China has been increasing in recent years, but recently, it has begun to try to resolve the situation by reconsidering the regulations. The biggest reason for this is presumed to be the plunge in Chinese game industry stock prices and the shrinking market. In addition, this regulation is a measure that could shake the very foundation of the model that has been the basis for major Chinese game companies to expand overseas as the Chinese game market shrinks, so it seems that they have begun to reconsider it.

In fact, after the COVID-19 pandemic, ChinaJoy, which celebrated its 20th anniversary in 2023, was so lackluster that it was unworthy of being called China's largest game show due to the low participation of game companies. ChinaJoy, hosted by the Shanghai Municipal Government, has developed in both quantity and quality, with a vast scale that utilizes more than 10 exhibition halls, as well as the participation of Tencent, NetEase, and various overseas game companies that have partnerships with them. In particular, since 2017, SIE has announced the 'China Hero Project' to support Chinese console game developers, allowing console games being developed by Chinese game companies such as 'Lost Soul Aside' and 'Origin: Mutation' to be demonstrated on-site. These games could be seen at ChinaJoy 2023, but most of the booths, except for a few, were focused on on-site events for existing works, making the game show less dense.

Rather, Chinese game companies focused more on Gamescom, which was held a few weeks later, and then on TGS and G-STAR. Tencent announced the Assassin's Creed IP-based mobile game 'Assassin's Creed Jade' and the Command & Conquer IP-based new game 'Command & Conquer: Legions' through a conference. NetEase unveiled the subculture open-world RPG 'Project Mugen' for the first time, and 'Black Myth: Wukong', a highly anticipated Chinese console game being developed by Game Science, also participated in Gamescom, giving the first opportunity to demonstrate the game at a booth.

Moves to enter the Korean market have also become more pronounced. At this year's G-STAR, Chinese subculture game developers and publishers participated more actively than ever before. Kuro Games announced the Korean dubbing and simultaneous global release of its new open-world RPG 'Ming Chao: Wuthering Waves', and unveiled the latest version at G-STAR following Gamescom and TGS. In particular, key developers, including Director Solon, visited the site and actively targeted the market.

HaoPlay, the publisher of 'Neural Cloud' and 'Reverse: 1999', also released information about 'Girls' Frontline 2' and 'Project Meteo', which had not yet been released in China at the time, at G-STAR. Hypergryph, the developer of 'Arknights', unveiled its new game 'POP U COM' at G-STAR following TGS, and conducted the first offline demonstration of its new turn-based RPG 'Ex Astris' at G-STAR. Since then, Hypergryph has unveiled its own service brand 'Gryphline' and is actively targeting the overseas game market, including recruiting testers for the new Arknights IP game 'Arknights: Endfield'.

These moves did not happen overnight. Already in 2021, as Chinese regulations intensified, Chinese game companies restructured their brands around overseas branches and actively entered the global market. 'Level Infinite', which Tencent launched to operate overseas game services, is a prime example. Meanwhile, Chinese game companies, especially subculture game developers, were stimulated by the success of 'Genshin Impact', which was released in 2020, and began to actively enter the global market. With domestic releases becoming difficult due to the government's regulations and prolonged suspension of license issuance, overseas markets became a breakthrough.

On the other hand, this has led to a situation where companies that used to develop or publish mainly for the Chinese domestic market have become more contracted. In fact, I heard news that a small and medium-sized Chinese game company that exchanged business cards at ChinaJoy 2019 went out of business after struggling to find a partner to go overseas in a situation where Chinese licenses were blocked. A Chinese publisher official who visited Korea also said that publishers were having a harder time than developers after the suspension of license issuance. In that situation, the Chinese game market even recorded negative growth. In 2022, after the regulations were applied in 2021, the total revenue of the Chinese game market was approximately 265.884 billion yuan (approximately 48 trillion won), a 10% decrease compared to 296.5 billion won in 2021.

In order to overcome this situation, publishers and platforms are also actively entering overseas markets. After China's overseas travel became relatively free in 2023, Bilibili participated in PlayX4 B2B, and Yostar revealed in an interview with Inven that they came to Korea to discover more diverse games.

As such, while the internal situation is unstable due to the government's regulations and various other situations, if you look at the main models of Chinese game companies that are growing while increasing the proportion of the global market, most of them are free-to-play live service games based on probability-based items rather than console packages. In this situation, as regulations that could completely change the BM and various game structures were announced, the controversy grew, so it is not unreasonable for the authorities to approach the situation carefully and try to resolve it. In particular, according to a Xinhua News Agency report last December, overseas sales of Chinese games reached $16.4 billion (approximately 21.5609 trillion won) in 2023, achieving annual sales of over 100 billion yuan (approximately 18.5 trillion won) for the fourth consecutive year, so the authorities cannot easily ignore the situation.

At one time, there was a saying in the Korean game industry that if a Korean game could just get a license and be released in China, it could achieve great success. In fact, there were cases of 'Dungeon & Fighter', 'CrossFire', etc. that entered the Chinese market and achieved great success, and many companies, encouraged by that success, knocked on the door of the Chinese market.

Korean PC MMORPGs, which have been strong in Chinese games, are still performing well this time. 'Lost Ark' has been ranked in the top 10 of the WeGame popularity rankings since its initial release, and has regained the top spot in the WeGame popular games ranking with the announcement of the upcoming January 10 Weather Artist update, showing clear indicators with each major update.

On the other hand, mobile games have not achieved the 'jackpot' results they expected in the Chinese market, which they faced again after the door was closed once. According to a Sensor Tower survey, Smilegate's 'Epic Seven' and Nexon's 'Blue Archive' earned $4.3 million (approximately 5.8 billion won) and $2.9 million (approximately 3.9 billion won), respectively, as of September. MapleStory M recorded 4th place in the App Store after its release in China and recorded approximately $55 million (approximately 74.2 billion won) in revenue in just 35 days of service, achieving results in the revenue sector. Black Desert Mobile, which Pearl Abyss launched in the Chinese market earlier, recorded 1st place in the App Store immediately after its release, but fell out of the top 100 within 4 months.

The reasons for the poor performance in the Chinese mobile game market include the difficulty of reading trends due to the fragmented and independent ecosystem unique to the Chinese mobile market, and optimization issues. Since Google is blocked in the Chinese market, there are many alternative Android app markets. There are various major platforms, including TapTap, Bilibili, Tencent My App, Huawei App Market, and Oppo Software Store. In addition to app markets, communities, SNS, and streaming sites where users are active are also divided into various branches, including QQ, Weibo, Bilibili, Douyu TV, and Tencent Video. In addition, since various types of smartphones that are difficult to find in Korea are used on the market, it is not easy to respond to optimization.

In addition, in the meantime when overseas game companies were blocked from entering China, the so-called 'future vision', which is based on information from users who have played overseas in advance, has also begun to be widely applied. In fact, 'Blue Archive' was somewhat sluggish at the beginning of its release, but with the 227th Hot Spring Operation Log! update, which added Nodoka (hot spring), which is considered an essential card for some total war battles after the half-anniversary event in the main story Part 3 Eden Treaty Chapter 2 Part 2 update in December, it returned to the top 10 of the Bilibili popularity ranking, showing a different response depending on the flow of major updates that were conducted on the pre-release server. Not only that, but unlike the closed market, users tend to actively look at and share overseas trends, such as communicating with overseas users and jointly responding to issues related to updates that will be applied to the game in the future.

As such, the Chinese game market is difficult to predict as trends that have not been seen before continue. Therefore, it can be an opportunity, but it is still difficult to approach rashly. Foreign licenses were issued three times in 2023, but they can be suspended at any time depending on the government's policies. In particular, there is room for cases like 'Dungeon & Fighter Mobile', which has been put on hold due to recommendations to strengthen the prevention of overindulgence even though it has received a license. Fortunately, there have been reports that the person who proposed the recent regulations has been replaced, but it is not certain what policies other officials will propose. Since they have announced that they will listen to opinions until January 22, it is necessary to watch what additional measures will be taken after that.

One thing that is certain is that as the Chinese game market has become so unpredictable, the proportion of targeting overseas markets will increase even more within China. Major game companies have already been focusing more on overseas game shows since last year, and this year, various new games such as 'Black Myth: Wukong', 'Girls' Frontline 2', 'Zenless Zone Zero', and 'Ming Chao: Wuthering Waves' are announcing overseas releases or tests and are starting to target the market.

In addition, as the number of games that support cross-platform from mobile to PC to console is increasing in China, the console game market is expanding. In fact, according to the 2023 Chinese game industry revenue announced by the China Audio-Visual and Digital Publishing Association, console game revenue was 2.893 billion yuan (approximately 528.3 billion won), an increase of 22.93% compared to 2022. In addition, with the emergence of console package game masterpieces such as 'Black Myth: Wukong' and the resumption of the 'China Hero Project', which supports Chinese console game developers, the possibility that the console game market, which has been relatively sluggish, will be revitalized is increasing. For a while, Korean console games were absent and could not receive licenses, but with the release of various console game masterpieces such as 'Lies of P' and 'Dave the Diver' last year, as well as 'Stellar Blade' this year, it is necessary to pay attention to and prepare for the expanding Chinese console game market.

At one time, the Chinese game market was considered like El Dorado, where it was difficult to open, but once opened, the opportunity for a jackpot would easily come. During the time it was firmly locked until 2020, such rumors became more frequent as people were more immersed in the nostalgia of past jackpot cases at a time when it was difficult to access. Of course, various problems such as the credibility of publishers and partner companies were mentioned due to the closed nature of the Chinese market, but they were considered as opportunity costs for success. However, the Chinese game market, which is slowly opening the door that has been firmly closed for a while, is showing a different trend from what has been rumored in the industry. This is the result of an ecosystem that has developed independently in a vast market, and has evolved over the years to adapt to or minimize the impact of various regulations. I hope that Korean companies will achieve good results in the Chinese market, which is showing signs of opening up again, by re-examining the trend and reviewing the trends of 2024.

웹진 인벤윤서호 기자
2024-01-09