China registered more than 22,000 new game-related companies during the first half of 2020. The data comes from the commercial database Tianyancha, which tracked all registered Chinese companies with the word “game” in their titles or descriptions. The number of tracked game-related companies grew by 9 percent for the period, reaching 260,000.

However, gaming analyst Liao Xuhua advises taking the data with a grain of salt. While acknowledging that the new data is encouraging, Xuhua points out that it’s not fully representative of the actual Chinese game market.

“According to our previous research, only about 5 to 10 percent of these companies have active, actual gaming businesses,” Xuhua told the South China Morning Post. “We are also anticipating continual reshuffling [of the industry]. Although the market as a whole is growing, the industry will eventually eliminate a lot of the smaller players.”

Xuhua notes, for example, that just 583 new games have been approved for release by Chinese authorities so far this year. With tens of thousands of new game companies registered, only a small fraction are actively developing and successfully releasing games. While the Chinese game market saw an impressive 25 percent growth in the first quarter – hitting $10.3 billion in total revenue – only a few industry players shared in that income.

Nevertheless, the figures are encouraging for China. In 2018 and 2019, the country lost more than 22,000 game companies. During that time, the Chinese government instituted a 9-month moratorium on new game licenses. The policy provided the US an opportunity to overtake China as the largest gaming market in 2019.

These figures indicate that China’s game market is one of the few bright spots as the COVID-19 pandemic slows economies worldwide. China’s 720 million gamers are projected to propel the country back into its former place as the world’s largest game market.

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