US to overtake China as the world’s largest gaming market: report

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Teenage gamers playing a multiplayer video game on PC. (Image credit: BigStock/fxquadro)

The US will replace China as the world’s largest gaming market in terms of revenue in 2019, according to a report from game market research firm Newzoo.

The US has not held the top spot since 2015. Its market is expected to bring in $36.9 billion globally in 2019, whereas China is projected to gross around $36.5 billion during the same period.

The Chinese government’s nine-month freeze on monetization approvals in 2018 weighed heavily on the year-on-year growth rate in the Asia-Pacific region, which fell to 7.6%, much slower than other regions. However, the report forecasts that China will reclaim its position as the largest gaming market by revenue in 2020.

In 2018, China suspended the game licensing process for nine months as it reassigned game regulation responsibilities to the State Administration of Press and Publication (SAPP). The process resumed in December, but just a few months later, the regulator issued a notice requesting local authorities to stop filing applications so that it could process the backlog that built up during the freeze.

In April, the SAPP started accepting new applications for game approvals under a new set of guidelines, which reject low-quality and copycat games, as well as poker and mahjong games. Game research firm Niko Partners estimated that the new rules would reduce the number of approved games to around 5,000 in 2019 from the 8,561 in 2018.

Among those hit hardest by the uncertain regulatory environment has been gaming giant Tencent. The company saw stagnating game revenue in Q4 2018 and Q1 2019. In May, the company scrapped China plans for hit mobile title “PUBG Mobile,” which can’t monetize due to the lack of an approval, and replaced it with a more patriotic “Game for Peace.” According to data from mobile app intelligence firm Sensor Tower, the new title raked in $70 million in May.