What the Heck’s Going on in China’s Video-Game Market, the Largest in the World?

The Dragon in the Game Room has a situation. 

By Adam H. Williams, Senior Associate at E911-LBS, LBSglobe.com, for WOLF STREET:

The opening of mainland China’s video game market to the world, combined with the rapid adoption of smartphones in China, has helped drive the extraordinary rise in global video game sales of the last decade. China’s gaming-industry revenue soared tenfold from 2008 through 2017. In 2018, China’s 620 million video game players spent about $38 billion on video games, or about 28% of the global market and half the global mobile market, which made China the largest video game market in the world, ahead of the US at $30 billion; and it helped make video games the largest form of entertainment in the world, with $138 billion in revenues, ahead of TV (see our chart of the global growth of video games by category).

In early 2018 something within this market changed, albeit very quietly at first. The government banned all new video game sales for the entire year! Additionally, they began to impose usage restrictions potentially impacting your social credit score.

Major Chinese tech companies have been seriously hurt by these blows. Tencent is ostensibly the largest gaming company in the world, though it may be better-known as the provider of WeChat. Due to the new game bans and usage restrictions, its stock is down about 25% from all-time highs in early 2018. The other major Chinese gaming company, NetEase, has experienced similar woes, with layoffs already announced. Its shares have dropped 35% since the end of 2017. One can only assume smaller operations have been feeling the pain outside of the public eye.

At the end of 2018, the ban lifted and approvals started coming out – but the loss of a year isn’t going to be recouped overnight, particularly since many titles may have lost their luster. Moreover, the approving regulator in February of 2019 asked for companies to stop submitting games for approval, as they had to deal with the backlog the ban generated. This means the ban is effectively back for the time being.

This slowdown/stall in China has pummeled projections for the gaming industry worldwide and shocked the markets. Gaming revenues are now expected to decline in 2019.

Global Impact

The Chinese gaming market is unique in several respects: its size, its culture, its barriers to entry, and the huge role that government plays.

Between 2000 and 2015, all foreign game consoles were banned for official sale, forcing gamers into a deep PC game culture. This culture revolved heavily around netcafes where paying for access was part of the way of life.  When the consoles (Xbox, PlayStation, Nintendo) were finally approved, they proved to be prohibitively expensive and gained little traction.

The rise of the smartphone, however, finally provided an inexpensive and common platform and China’s pent up gaming desire exploded. Most of the video-game growth globally in the last 10 years has been driven by mainland China coming online beyond normal demographic increases and general smartphone market.

Meanwhile, the government maintains tight controls over what is allowed in the market. Spending too much time gaming is seen as a social ill with real repercussions. This approval ban also affects foreign games and associated capital flows.

Quirks of the Chinese market

China requires foreign games to have local partners. Beyond this, all games must receive official approval, and numerous games are banned (not always for clear reasons), or publishers are required to alter the games.

There are also accusations for knockoffs of games. While rarely mentioned in major news, it is a significant part of trade talk discussion – this is a multi-billion dollar issue as players struggle to access the Chinese market while their products are being copied often wholesale as this USCC report notes.

Consumer spending patterns are also wildly different. Pay to Win in China is seen as a legitimate course to “victory,” whereas in nearly all other game cultures it is viewed with deep disdain. It is curious to note that, “micro transactions accounted for 88 percent of PC games spending in 2016,” according to a report by IHS Markit. Similar spending is likely on mobile. In other words, Chinese spending was not on games per se, but on in-game purchases, accounting for the majority of revenue in both the PC and mobile markets.

Chinese players also tend to switch games quickly. A game will become fashionable; urbanites will buy their way to powerful characters to gain face; and then they will quickly move onto the next fashionable game fad.

Many big gaming companies desperately want access to the Chinese market, but they aren’t getting it. Certainly, the government bans and delays haven’t helped, nor has what can be called a “cultural gaming crackdown.”

Why the Crackdown?

So, why the crackdown? Issues of Political Acceptability, Social Order, Good Behavior, Health (particularly eyesight), and Frivolousness are all cited for the approvals ban and obstacles. So the state is limiting game use. Tencent has already implemented in-game controls over playtime and amount of play available to minors, at the request of the Online Games Ethics Committee. The state has set limits on when you can play and how long you can play – children under 12 will be limited to just one hour of play per day, 13-18-year-olds get two hours – and overall there is a ban on play between 9pm and 8am. There is also talk of using facial recognition to help enforce the limits. There is talk that too much play will impact social credit scores.

Furthermore, Authorities have been cracking down on gambling, so if in-game transactions are deemed to be gambling and the practice banned, the sales losses could be even more extreme given the micro-transaction nature of the market.  Interestingly, Chinese laws on things like lootboxes are actually some of the most comprehensive in the world.

Chinese Acquisitions, Market Access, and Global Impact

With the internal market struggling, one item rarely talked about is that major Chinese companies have been quietly purchasing stakes in foreign studios. While not nearly as sensational as Chinese property acquisitions, this acquisition binge is very real yet difficult to understand due to the closed nature of many of these deals. Epic Games for example, the creator of Fortnite, is actually 40% owned by Tencent, making the pain of games like Fortnite not getting approval cut even deeper.

Tencent, in particular, has aggressive efforts to gain international sales. Recently, Epic Games launched its own game-store, and aggressively expanding, offering lower commissions, and (unpopular) exclusive titles.

Unfortunately, Epic has been accused of several privacy scandals, allegations including harvesting PC data and system modification without permission. And Fornite has had several security compromises giving serious concerns of privacy and data protection.  The store itself is not nearly as mature as its main rival Steam, lacking many features.

While obviously more customers are good for business, attempting to buy your way to success doesn’t seem to be going so well. If Chinese Tech companies are forced to liquidate foreign game investments due to capital shortfalls, there could be major ripple effects difficult to anticipate but likely impacting globally.

Of Note: only about 5% of Chinese game profits are by US companies, and only 25% international – 75% of the market is internal. This dovetails to the trade war concerns as outsiders struggle to get a piece of the market which remains mostly closed. This is a big deal, as many major players are going all in on mobile, with hopes to get a piece of the cake, but are not allowed in.

Also of note: No Chinese game has ever made it big outside of China. While some titles have gained limited popularity – usually in limited markets – there has never been a global success.

Looking Ahead

Will China’s love of spending money on mobile games last? Will micro-transactions continue to be popular as incomes become debt-constrained and central authorities limiting playtime? Will Pay-to-Win mechanics be fashionable in a time of tight wallets? With Chinese consumers cutting back their game spending (by choice or by force), plus the de facto ban on new games, the result is likely more financial impact. If the game market worsens, it could easily have global repercussions not just on game market, but even on the Chinese economy overall. By Adam H. Williams, Senior Associate at E911-LBS, LBSglobe.com, for WOLF STREET

In the US video game industry, there are already layoffs and closures — the beginnings of a major shakeout. Read…  Video Game Industry Stalls, Stocks Plunge. What’s Going On?

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  94 comments for “What the Heck’s Going on in China’s Video-Game Market, the Largest in the World?

  1. Petunia says:

    China knows how to copy not innovate, that’s why they will never be the giant economy people fear. The Japanese copied and improved to become a manufacturing powerhouse. The Chinese copy and degrade.

    • Unamused says:

      No refunds.

      • Chris Garbor says:

        Dictator for Life Xi (Mao 2.0) will do the same with other industries in the coming years.

        • roddy6667 says:

          The first 32 Presidents of the US were “Dictators For Life”. The 22nd Amendment was not ratified until 1951.

        • Javert Chip says:


          Sigh. Explaining basic civics sometimes brings enlightenment…we’ll see:

          There is a wee tiny difference between “Xi dictator for life” (and the Chinese army if you don’t believe it) and open US presidential elections every 4 years.

          Yea, yea, I know: you’ll find some horribly disqualifying problem with the current system (which nobody claims is perfect), but just where else on planet earth is there a better system with a reasonably-sized population?

          o Canada, Britain, Germany, India? Nope – party leader is PM (90%+ of population doesn’t get to vote for the individual who ends up being PM)
          o Russia, China, Cuba, Venezuela – you’re kidding, right?
          o Egypt, Syria, Iraq, Iran – you don’t even want to go outside election day (and, actually, very few other days)
          o Saudi Arabia, Dubai, Jordon – nope it’s divine right of kings
          o Italy, Spain, Greece – again, parliamentary system & they elect the stupid party of the month
          o France – maybe

        • Just Some Random Guy says:

          “90%+ of population doesn’t get to vote for the individual who ends up being PM”

          Much higher than 90%

          Canada has 338 seats in the house of commons. Which means only 1/338 Canadians (roughly since not all seats have the exact same number of voters) actually voted for the PM.

          337/338, or 99.7% of voters do NOT.

          It is extremely rare that what the PM wants doesn’t happen in a Parliamentary system. The PM is head of the ruling party and all members vote the party line. It’s essentially an elected dictatorship. Every 4 or 5 years the voters decide which party gets to be dictator, and that’s it.

          The American system, while not perfect, is the most democratic system I can think of. You have 3 branches of govt each independent from each other and within the legislature, you have 2 sub branches, also independent of each other. That’s a hell of a lot of checks and balances. And voters go to the polls every 2 years, vs 4 or 5 years as is the norm in Parliamentary systems.

          People love to whine about the lack of bipartisanship. I love it. The less the govt does the better. The fewer things politicians can agree on the better. The odd time something does get passed, it has been vetted by both the voters and branches of govt over an extensive process.

    • Howard Fritz says:

      Not true petunia many Chinese firms like Alibaba and Huawei are demonstrating that they can, in fact, innovate as well as American companies.

      • Petunia says:

        You obviously have never tried to use the Alibaba website.

        • Howard Fritz says:

          Judging a company far larger than Amazon based on one website how intelligent.

        • MCH says:


          Remember it works well for China. That’s Alibaba’s core market, and remember Prime Day is a copy of Alibaba’s singles day.

          Also, you should see how powerful Tencent is in China, the mobile life of China runs through WeChat, if you don’t use it, it is inconvenient as heck.

        • curiouscat says:

          You obviously have never used a Huawei phone.

        • Quack says:

          Huawei phone is great, been using it for two years. The only problem it has with 4G of prepaid T-mobile while in the US, have not try any other provider. The rest of the world is fine.

        • Petunia says:


          I’m intelligent enough to defend an argument without resorting to insults…

          Considering that Alibaba had Amazon as a template they have no excuse. They can’t even copy well.

        • Petunia says:


          It occurs to me that the more China curtails games, the more time Chinese people will stay on their messaging and shopping websites. More convenient for the govt to surveil people on a limited number of sites.

        • MCH says:


          China locks down the system for two reasons. One is social control, hence no Facebook, no Twitter, the other is to ensure their companies in key areas that the government deems critical. Note, people don’t care about Walmart stores or Amazon online services. But they do care about cloud storage being in country.

          Yes, it is protectionism, but it is also part of the power games. China has this experience of being humiliated by the west, and it doesn’t care to repeat that experience. For China, the logic is simple, it needs to control its own destiny, in turn that means it must be number one. No exceptions.

      • Chris Garbor says:

        Alibaba is a joke. 40%+ companies on Alibaba are FAKE! Even higher % is product counterfeit.

      • Realist says:

        I wonder wether the main reasons Washington has taken Huawei into the crosshairs are :

        -Huawei’s equipment is manufactured in China, thus the US has difficulties to introduce their own surprises into Huawei devices.

        -The equipment of Huawei’s US competitors are manufactured in China, thus the Chinese haven’t the difficulties of their US counterpart to introduce their own small surprises into the equipment

        -The US apparatus realized that the US is/has lost the 5G competition.

        • kam says:

          HuaWei shamelessly stole technology from Blackberry and Nortel, via Chinese Military Intelligence.

    • Unamused says:

      => they will never be the giant economy people fear.

      Take a good look at their debt and their accounting practices and tell me with a straight face there’s nothing to fear.

      Not to single out the Chinese, you understand. Tomorrow I’ll ask the same thing about the EU and US.

      • Petunia says:

        I didn’t look this up but hear the Chinese economy is roughly the size of America’s now. If true, it takes more than 3 Chinese people to produce what 1 American produces. I am neither surprised nor afraid.

        • Unamused says:

          Non sequitur.

        • Petunia says:


          It does follow that if two economies are roughly equal in gdp but skewed in population, then one must be more productive than the other. Simple logic Dr. Watson.

        • Unamused says:

          You changed the subject, Petunia.

          I asked you to comment on China’s debt and accounting practices, which you avoided with some limp handwaving about relative productivity.

          In other comments you claim Chinese companies are practically incapable of innovation, exposing your motivated lack of knowledge and antipathy towards people different from you.

          Why not blame Chinese companies for buying up US technology while absolving US companies for selling it to them? You know you want to.

        • Petunia says:


          Chinese accounting is a joke, it is whatever the communist party wants it to be. I believe the Chinese banking system has a balance sheet of 49T to our 19T. Steve Bannon says that maybe 10% of our 19T is non performing, he estimates that 80% of China’s 49T is non performing. He has the ear of the president and worked at Goldman, so it’s not me saying it.

          It’s not my fault that Chinese culture doesn’t deal well with failure and hides it. I am only pointing it out. I am very interested in what is going on in China and have spent a lot of time paying attention. I give them credit for the one belt one road initiative, it is a low tech way to invade and devour Eurasia.
          I think Apple gave away the store, F them, they deserve what they get. I think the search engine morons will learn a hard Chinese lesson as well. Huawei is a front company of the Chinese military, if you want your data going there, it’s ok with me….I could go on.

        • Unamused says:

          => Steve Bannon says that maybe 10% of our 19T is non performing

          Investors in US federal debt are going to be very disappointed to hear that. Good luck funding next year’s budget deficit. I hear it’s going to be another doozy.

        • A Citizen says:

          Um… No, the Chinese economy isn’t even “roughly” the size of the US.

    • Les Francis says:

      For every 100 shoddy Chinese products there are 10 very good ones.

      In the fullness of times when the Chinese people realise that there is no infinite money tree there will be a sudden demand for quality products.

      But then again there’s the old saying. The Chinese know the price of everything – the value of nothing.

      • p coyle says:

        i don’t think the chinese are alone in making that particular (mis-)assessment.

    • Keith says:

      That’s a serious misread of the situation. Taiwan is genetically as Chinese as China is – there is no absence of innovation, they dominate semiconductor manufacturing and packaging. If you survey literature in any technical field of interest to China, but in particular in AI, you will see they’re at the forefront.

      They do copy, they do have disdain for western property rights, and they are constrained by their state in ways western companies are not – but it would be a serious error to believe they aren’t innovating – they are.

      • Vic says:

        I’m an average Car Guy, and have a good collection of tools in the garage, many of which were made in Taiwan. All are excellent quality, way above the cheap Chinese stuff found at Harbor Freight and elsewhere.a

        • Chris Garbor says:

          Taiwan makes decent quality products. Taiwan is not Chinese Communists, but Taiwanese.

          However, when I want to buy junk tools that are low cost, made in China, only can use once and throw away, I shop at Harbor Freight. Just walking around in that store gives me a headache from all the fumes de-gassing from the merchandise.

      • Petunia says:

        I wasn’t including Taiwan as part of mainline China. We haven’t done that since Mao took over.

        • Unamused says:

          Google up “Chinese innovation” and avoid further personal embarrassment. You’re welcome.

      • Javert Chip says:

        And they are not & never have been communist…

      • kam says:

        Taiwan is not Chinese. Not politically nor culturally. Most native Taiwanese hold China in disdain.

    • Nicko2 says:

      ALL growth in the world today is happening in TWO regions, Asia and Africa. China leads the way on both continents. That’s all one needs to know.

      • Bobber says:

        And is that good for them, or anybody?

        Some of the things that are growing include overpopulation, pollution, debt, wealth concentration, decline of local community, etc.

        • nicko2 says:

          People in Africa are the same as anywhere else; they want a good job, good education for their children, and access to luxuries of the 21st century- water, electricity, Internet, mobile phone ect….

    • Adam Williams says:

      Petunia – I strongly recommend reading the USCC report if you are curious about IP and gaming as it relates to China. It goes quite in depth with some great examples. I will say the one area where China does seem to have some innovation is VR Games.

      NetEase’s Nostos looks very interesting – I am personally watching it. It’s ambitious in all the right ways but seems cautious. I wonder though – as it’s a pioneering game. VR Headsets are also very expensive, but we shall see there may be a cheap but decent Chinese VR set which could open the market. I am too jaded about games to get super hyped, but it definitely caught my eye.

      the idea of VR is very popular in Asia – I have read enough webnovels to know that a large swath of disaffected youth wishes for a world in which working hard can get them ahead, and which they have the ability to explore outside of the concrete jungle. I wouldn’t be surprised if the first big VR game came from China, Korea or Japan. American companies are desperately chasing mobile as I allude.

      A nice video about Nostos – https://www.youtube.com/watch?v=X7GD6tn7qnw

  2. I saw it all firsthand what video games would do to the minds and lives of the feeble uncoordinated flunkees since day one the day pong hit the pinball arcades. I wanted to write a book on it but I was too busy playing pinball machines all day long every day. It simply boggles the mind how it could have taken this long for the rest of the population to figure it out.

  3. Howard Fritz says:

    It’s worth noting that in China folks often spend exorbitant sums on these online games because they serve as status items. Why I don’t know.

    • raxadian says:

      Because they are status symbols. Just like expensive wrist watches used to be one.

      Is a way to show the world “Hey, look at me I have money and I am in!”

      With these new rules the Chinese game market will shrink and shrink and shrink.

      I will be surprised if at least 40% of game companies don’t outright disappear in the next few years.

      More so if gaming makes the chinese government threat you like a third class citizen.

      • Unamused says:

        =>I will be surprised if at least 40% of game companies don’t outright disappear in the next few years.

        But not disappointed.

      • char says:

        Uhm, It has been true since Pong that 40% of game companies disappear in a few years. Would even claim that making entry hard makes it easier for game companies to survive.

        Problem with the chinese threats is you can’t threat a loser with becoming a loser, he’s already one. But it does destabilize a society.

    • MCH says:

      Cause sex is more expensive by far. That leads to kids and the need to educate them. In game pixels have none of those needs.

  4. The video games industry went “slamtilt”.

  5. Unamused says:

    People sometimes ask why I’m so keen to avoid video games. It’s simple, really. Bad things happen.

    Video games are sometimes secretly modeled on certain important, complicated, intractable problems, which are then marketed to gamers to see if anybody can come up with a solution. It’s how Eli figured out how to dial the ninth chevron on a Stargate, so Dr. Rush beamed him up to his starship and they all ended up getting lost on the other side of the universe, starting a new civilization, and having to get sealed up in hibernation units, probably forever.

    I must know ten guys this has happened to. All I know is, it’s not for me.

  6. Paulo says:

    “Spending too much time gaming is seen as a social ill with real repercussions. ”

    Amen. While I cherish the right for an individual to choose, I applaud the truth in this statement. It is my opinion that video game playing is an absolute affront to everything worthwhile.

    I am somewhat cynical in my belief that the powers of our so-called western civilization prefer a dumbed down population of consumer driven milch cows, not taken to questioning or developing expectations. Instead, if people buy and play video games, are impaired with drugs and alcohol, in debt, lust after products and borrow ever more to obtain same, why the rich and connected will be able manipulate and control more of everything.

    What a waste of human potential.

    This winter I had to fly in a Dash 8 between Edmonton and Calgary. We were low altitude and able to see all the farms and ranches, coulees, an occasional airstrip, school bus stops, businesses, and frozen lakes and rivers. I found myself pressed against the window wondering about what I saw, how people lived, how things have changed, and the lives of my wife’s Ukranian relatives who homesteaded this land? Being a pilot for the last 45 years I was particularly interested in the private airstrips and ranch hangars. The 30 year old across the aisle from me played a video game for the entire 43 minute flight, never taking his eyes from the screen. His right thumb moved non-stop; a blur of movement. As we were on final into Calgary he glanced up quickly then returned to his game. Short final…still played. Flare for touchdown, he looked up for the few seconds it took to settle onto the runway and all the while his thumb continued its convulsive action, pounding away at some kind of enter button on the screen. Slowing down and taxiing in he returned to his game, and played non-stop while we waited for the shuttle, and bused in to the terminal. He might as well have shoved a needle into his arm and nodded off. What a flight. What a waste of time. I totally understand why China has taken this course. I suppose the opium wars are fresh memories for them.

    • Keith says:

      The opium wars – what a great reference – it does echo.

      • sierra7 says:

        “The Opium Wars……”
        You mean we have to go to China to see this kind of behavior? LOL!!

    • Tang says:

      Yeah. The 30 year old you saw was a modern opium addict. Nothing surprising Count the no. of modern opium addicts next time you are in City area. They are much much more now than the average non addicts.
      The social media, the apps often games, chats etc made them dance on the streets, talk and staring on the HP while crossing busy streets. Not just China. Women can walk the dog and play games on the HP at the same time. Family over weekend meals the poor kids are left to themselves while the two adults busy themselves in absolute silence staring at the handsets. The opium dealers strike riches the first day they IPO. What morals and human decency? For these modern opium dealers it matters very little if their venture fails. Just go forth and publicise the next flavour.
      Attract more addicts, zombies to come on board.

    • Bobber says:

      That’s a very funny if pathetic description of how people kill time today.

      We tend to pick on people who watch TV and play video, but what about time spend following sports, knitting, 1000-piece puzzles, romance novels, etc. These are all mind-numbing, sedentary, and solitary activities.

      Not everyone wants to create, produce, etc. Some people like to follow and consume the work of others. The key is to have some balance between creating and consuming.

      People who produce/create too much often lead tortured unfulfilled lives as well. Many executives will sacrifice their personal lives to collect green paper and attract superficial recognition from strangers. Some have lost all ability to empathize and treat employees like numbers or slaves. In my view, that type of pursuit is equally dissatisfying in the end.

    • Adam Williams says:

      Paulo – I love some of your comments, but you seem to think games are pong or honestly I don’t know what you think. – I suspect you also decry people wasting their lives watching TV – which I agree – but fundamentally TV induces Alpha brain patterns, making people susceptible to marketing and propaganda, and is quite literally Mindless. Gaming on the other hand is Beta (active thinking)/Theta (meditative) inducing, which neurologically speaking is dramatically different.

      Games have many proven benefits – in addition to entertainment and providing an escape to a world where young adults can actually get ahead (a common saying – trying to play by the rules in the real world never works – but in games you can succeed). Games are one of if not the most effective methods of teaching short of jacking into the matrix and having that information dumped straight into your cortex.

      Increased motor control – Surgeons who game show 30-40% less errors in there cuts and are more accurate in their surgeries. Sounds good!

      Games like Minecraft and other builders have taught more to young people about construction, planning and budgets than schools ever did, likely inspiring future architects and construction workers, filling a desperate desire for someone to teach actual skills. YouTubes Primative Technology is another manifestation.

      Games like Resident Evil taught cell biology in their stories and awakening a passion in high school for biology in several now doctors I know

      Civilization and Total War and others have taught me history, economics, warfare, tactics, strategy, geopolitics, history of technology, geography and more. How we stand on those that came before us. They taught me accounting, how to read spreadsheets, business simulators teach all of this. They taught me that budgets matter and resources are inherently constrained. I bet – You put a few Civ and Total War junkies in charge of the US Military budget and you would be amazed how quickly we’d get our spending reduced 40% and somehow increase effectiveness.

      Sim City and similar city manager titles have inspired countless people into architecture or urban planning – I personally know 3

      Games like Harvest Moon or Stardew Valley or even Farming Simulator provide peace and tranquility, introduction to agriculture (a big deal in a country 80% urban), resource and time management, and permaculture ideas. That and my spending time in nature have convinced me I want to live a rural farmer gentleman lifestyle (but alas there’s other things preventing that – namely no jobs, student loans and high land costs and lack of a lady friend).

      Crafting and survival games have taught many how to build things, and technological progression. Chemistry, metallurgy, resource management, time management, forestry, the list goes on. They helped inspire me to become an engineer – and most engineers I know have similar stories.

      Games taught me coding and scripting when I was just 10 because I wanted to know what was going on. They teach physics and computational modeling and math.

      Kerbal Space Program has NASA engineers saying it taught them more about orbital mechanics than their undergrad and masters did. You have 15 year olds who could literally Von Braun a moon landing.

      Games like Grand Turismo has taught many about mechanics, autos and driving techniques in an age when shop has been out of public schools since the late 1970’s. (50 years now)

      Let us not forget language games which time and again are shown to be more effective at teaching or games which have allowed for simulating protein folding, or analyzing astronomical observations solving scientific or mathematical problems that were stuck for centuries.

      Role Playing Games often have fantastic worlds, which teach lore and culture, mythology, religion and more. They are fantasy novels come alive. That and D&D taught me about personal development and how to develop my own skills and a team.

      Online Games let disabled or disaffected find like minded friends across the globe.

      Was lucky enough to be a part of Urgent Evoke – a game meant to try to inspire people into improving the real world – would love to see more of it but alas I am drowning in student loan debt though I have sketched some designs if someone wants to invest ;-)

      Countless studies have shown video gamers, tend to be faster at puzzle solving, pattern recognition, language learning, can track objects better, have more discipline, can help overcome Dyslexia! Multitasking, mental flexibility. This isn’t a small – it’s often orders of magnitude better than non-gamers.

      Games have been shown to slow or even reverse mental decline in elderly – “Many experiments, with elderly participants, show that video game play results in improvement in all of these abilities (e.g. Basek et al., 2008). One study found that such play led not just to cognitive improvements, but also to better self-concepts and enhanced qualities of life in elderly participants (Torres, 2011). “

      Social online games like VR chat likely will be a huge boon to elderly and the bedridden as population’s age – allowing them to connect socially, but also potentially keep working in some or of VR/AR jobs while social security collapses.

      Pokemon Go has done more to combat childhood obesity and getting people outdoors and talking to one another than decades of complaints or top down pushes by federal initiatives.

      Let’s not forget Flight Simulators – given you were on a plane – I will bet all my student loans the pilots had many hours on Flight Sims. Most pilots I know got their start in flight simulators. Other studies have shown that gamers are basically as good as piloting drones as trained pilots.

      (Many of these references come from this Psychology today article if you want to check the sources: https://www.psychologytoday.com/us/blog/freedom-learn/201502/cognitive-benefits-playing-video-games)

      Games have filled a serious void in a world of broken homes, overspecialization and failing schools. They may be our doom, but they may also be our last hope.

      As for China –
      Yes- after reviewing the most popular games in China – most of them seem pretty silly compared to the titles I listed – I personally think this has to do with mobile games being inherently inferior platform and a much different on the ground reality. If you lived in a 300 sq foot box I suppose retreating to a virtual world sounds awesome. China’s culture of Little Emperors has also led to quite a few spoiled whose grandparents give them everything – so maybe in this case the State Stepping in to be the parent is OK. I just still wonder why they aren’t allowed to play more on weekends. ;)

      As for the fellow next to you on the plane – I don’t know – maybe he flew that route twice a week and the view got old? Maybe he was really wasting time and failing to appreciate the real world – I have no idea what he was playing, but I try to withhold judgment on what others find fun. As someone trained in Ariel surveillance and photography for disaster relief, I also enjoy looking out windows – but it’s not for everyone – some get motion sickness or nervous. Who’s to say.

      • 91B20 1stCav (AUS) says:

        how many Square Fours and Red Hunters have you found in disaster areas? A better day to us all…

      • Erle says:

        Heck of a post. I thank you as I was so put off of gaming that I did not know of decent alternatives to killing everyone on a screen.

    • p coyle says:

      the phones/video games are the teevee of previous generations. if you were lucky enough to avoid the opium of your generation, good for you.

      i find your posts pretty much down-to-earth, and even educational and enlightening.

      oh, and i love that you still have that “get off my lawn” edge! we’re gonna need that kind of spirit down the road i fear…

    • Mary says:

      This whole post and comments section has been a window into a phenomenon I’ve never understood. So that’s what people are doing who wander down the street, sit on the Metro, perch on chairs in cafes, etc. thumbs moving wildly and staring without cease at their phones. I could not figure it out. What could possibly capture someone’s attention that completely for that long? Wow…

    • Get off my lawn says:

      The kid would have been much more usefully applying his time had he been writing whiny screeds about how James Howard Kunstler is a crypto-Trumpist instead.

      Comments like this always bring to mind that old quote about great minds, average minds, and small minds.

  7. Howard Fritz says:

    I’m assuming in that wall of text you attempted to make a point about gaming addiction. Next time try this novel approach paragraphs.

    In addition, addiction once meant cigars and hooch, phones seem mild in comparison.

    Also, IQ has been rising how do you think the amazing advancements in technology continue to occur.

    • Dsharmon says:

      “Also, IQ has been rising …”

      False. It’s the opposite.

      “… how do you think the amazing advancements in technology continue to occur.”

      But they haven’t been. We once played golf and drove dune buggies on the moon. There are reasons why we haven’t been able to go back.

      The United States can no longer produce tritium for its nuclear warheads. The know how and basic ability is lost. They’ve tried in the last decade and failed each time.

      I learned calculus and Latin in high school. Now universities offer remedial English and basic trigonometry as standard fare.

      You have people who think “learning to code” is some exceptional skill. And they really believe it.

      I’ve worked with game developers who have heard about quaternions and waxed keen about their use in gaming. I took them at their word and started in on the theory because it’s such a terrific application of abstract math. Turns out they hadn’t a clue. They just liked the idea of using the theory. They had no clue and absolutely no interest in it any further than that.

      We’re turning into children it seems.

    • Wolf Richter says:

      Howard Fritz,

      I’m confused. Are you replying to Paulo or another commenter? Or is your comment about the article? Please clarify.

      If your comment is about the article, it shows that you didn’t even read the article and just imagined what it might be about. If you actually read the article, you would find out that it is about the current gaming industry in China. This is an article about the huge business of video games, the largest form of entertainment in the world, ahead of TV. And it’s NOT about “addiction” whatsoever. It doesn’t even mention “addiction.”

      So please let us know what you meant to comment on. Thanks.

      • Lemko says:

        cpp Internet workers… You are featured sometimes on Zerohedge ( Eastern Europe ran ) Russian Puppet site filled with massive Pro chinese propaganda in the comments sections, likely from government employees and bots.

        Every time you have articles with china in the Headlines it’s been a few months, you have some seriously pro china posters that have non sense arguments contradicting any perceived negative comments… I think you are on there radar, they will spam viciously and type non sense

      • Howard Fritz says:

        @Wolf Richter

        Yes, I read the article (including the tab detailing commenting etiquette mind you) and was responding to Paulo’s comment about the young man who was playing videos games on his flight. My apologies for the error and thank you for not deleting the comment instead allowing me to explain myself.


        You can buy a tritium gas keychain off of eBay for approximately 11 dollars also I’m not sure what you’re sources are but production has increased:

        @David Calder

        I’ve been reading since the site was called testosterone pit however commented under different aliases and emails until recently.


        Yes, I’ve been too combative as the result of a friend’s son passing away. I was his godfather.

        My apologies.

        • Wolf Richter says:

          Howard Fritz,

          I’m so sorry about your godson’s passing. Thank you for the clarification. Much appreciated.

        • Petunia says:


          I too am sorry you lost someone important in your life.

          My excuse for being combative is, you can take the girl out of NYC but you can’t take NYC out of the girl. The delicate flower moniker is a disarming tactic.

        • Dsharmon says:


          Ever since we stopped producing tritium in 1988, every subsequent attempt to restart production has failed.

          The 2018 Nuclear Posture Review has recently appeared, revealing that we have lost all nuclear military technology:

          “U.S. production of tritium, a critical strategic material for nuclear weapons, is now insufficient to meet the forthcoming U.S. nuclear force sustainment demands, or to hedge against unforeseen developments. Programs are planned, but not yet fully funded, to ease these critical production shortfalls.”

          This is euphemistic. Recent attempts to produce tritium were fully funded, but failed, which failure resulted in new plans for new attempts to produce tritium, which have not yet been fully funded.

          Your link points this out.

          This is a big deal. And it reflects the general decline in ability and technical skill in this country.

        • Dsharmon says:

          And my condolences for your loss.

    • David Calder says:

      I’m not sure if you’re new to this website but the reasons we’re all here is because of the information that Wolf packs into his blog and to read what others have to contribute. We don’t slam each other..

    • Typ says:

      “I’m assuming (that) in that wall of text you attempted to make a point about gaming addiction. Next time try this novel approach (;/:/-) paragraphs.

      In addition, addiction once meant cigars and hooch, phones seem mild in comparison.

      Also, IQ has been rising (.H) how do you think the amazing advancements in technology continue to occur. (?)”

      IQ is decreasing , since @ 2000 or those born third quarter of the 20th century and later. Decreasing meaning steadily trending lower. There are various theories as to why and so anyone gets to pick the one they prefer . Digital presence is one obvious possibility.

  8. MCH says:


    I would not be so sure. It is thinking like that which has doomed many western companies. There is a reason why Huawei has garnered so much attention. Their 5G stuff is genuine, and very capable. But this came from copying guys like Nortel and Ciena in the late 90s early 00s. By the beginning of this decade, they had to innovate on their own for telco gear because their stuff was on par and getting there relative to everyone else, and it was cheaper.

    Now they are applying The same strategy to the mobile phone market. Time will tell, but they are already the biggest mobile phone makers in China. I think they over took Samsung last year.

    It would be a mistake to think that Chinese companies cannot innovate.

    • Petunia says:

      China will land up like the Soviet Union, hitting a brick wall. Innovation comes from repeated failures, and culturally that is not acceptable under Chinese culture or communism. So far, I don’t see that changing there, so I don’t expect any giant leaps coming out of China.

      • Nicko2 says:

        China will overtake the US in 2020 in terms of GDP (PPP). They’re spending $1 trillion on the New Silk Road – as opposed to Trump’s $1 trillion tax-cut for the already rich. Expansion and development into South and Central Asia, Africa, MENA, and Europe is generating high growth rates for all concerned (ie. direct rail and shipping routes from Shanghai to London). China doesn’t need to out-innovate the US, they more than make up for it in raw industrial might.

        • A Citizen says:

          The only industry the Chinese truly innovate is that of financial accounting. As for “Raw Industrial Might” I would emphasize the word “Raw.”

          And no, China will not overtake the US in GDP by 2020. 2030 maybe, but not by 2020 – and not even by 2030 if the house of financial pain they have so diligently erected blows up in their faces.

      • MCH says:


        China is not the Soviet Union in most of the ways that matter. It is not the same military threat that the Russians were in the 60s to 80s. But it is far more capable, the world cannot live without China today, to cut it off is literally to make their own economies collapse. China is more like Japan in the 70s and 80s today than they are like the Russians.

        As for innovation, recommend you look up their innovations in science dating back a thousand years plus. Minor things like gunpowder and the printing press. There was also this text called the Art of War, that has well endured the test of time.

        It is easy to name call, but doing so is not facing up to the truth. As for the Soviet Union, I would remind you that the first person is space was not an American. It is dangerous to simply dismiss a peer because they are culturally different. Yes, China has its challenges, in some ways, even worse than the Soviets, but their leaders aren’t blind to it.

        • Petunia says:

          The space program in the USSR was built by a German in captivity and the US program by another German. Without German ingenuity the 20th century would have been a bust.

        • kam says:

          “the world cannot live without China today” ?

          You’ve got it backwards. China cannot live without the world. China requires imports of raw materials and a continuation of their Mercantilism.

          Comparatively cheap wages and zero environmental laws is what makes China competitive.

  9. Bankers says:

    That was an interesting article. The one point I would question is

    “If the game market worsens, it could easily have global repercussions not just on game market, but even on the Chinese economy overall.”

    simply because “repercussion” or ‘the act of driving back’ has a negative connotation, and when that is transcribed onto the Chinese overall economy it seems almost as a menace.

    Put simply, game playing really is not understood as a productive activity. It could be in a double negative sense, as in not rebelling otherwise, or in terms of some kind of exercise that benefits people (I’m stretching it for you), etc. . In other words the time would be devoted to other activity, as would the money.

    Maybe you are saying game spending is already systemically important to the structure of the Chinese financial system?

    Yet you seem to be calling for it to be more so, because you use the word repercussion as if in response to the heavy handed Chinese management that restricts it.

    So we are left with something of a contradiction, when read this way. Obviously you could be a sincerely concerned party trying to advise those involved towards the need to rebalance policy during the resulting change in consumer habits during a crackdown.

    It is hard to tell for certain.

    • Petunia says:

      Your point that China doesn’t regard game playing as a productive activity is their cultural Achilles heel. While many here also think of it as a colossal waste of time and money, I disagree totally.

      What the Chinese and others here are missing is that game playing is about losing until you win. The Chinese don’t want to play because they might lose. My “basement dweller” will keep at it until he wins.

      • Bankers says:

        I did not mean to imply that ‘game playing is not productive’ is what PRC thinks, though I would be surprised if it did not consider that as a reality. The statement was meant in the wider economic sense, just as digging trenches to fill them in again to straighten one’s political thinking is not generally classed as productive activity – it would be considered the opposite, a misuse and hence waste of resources. Some would argue that it is a lesser waste, or that other people always use the resources that others could profit from and therefore are negative in economic terms unless put to serve a cause. It depends what parameters and objectives are used, shall we philosophise?

        I mean it would also be fair to argue that reaching stage 20 of Zags Cosmic Dustup is a pinnacle of human achievement, who would know better? Others will say that all you win is to lose time. Maybe if someone has time to lose they have already won though, or are they just conceding their own defeat to others by not using it more productively?

        • Petunia says:

          I think you have overlooked my point about dealing with failure to achieve an ultimate result. Perseverance against all odds is what leads to big leaps in progress. Just finding a way to produce something, so as not to seem unproductive, is unproductive ultimately. There is a great opportunity cost to just racking up earnings and not spending on R&D. The Chinese are doing this on a national scale. I find it amusing that they consider failing a cultural taboo but stealing other’s ideas is not.

        • Bankers says:

          As an aside and not in reply as I was thinking this over before reading your reply, I understand that allowing gameplaying as a parent is one way to keep children off the street, focused on something, and circumstance together for whatever eventual opportunity life brings.

          To reply, gameplaying cannot be compared to being productive, because in an obvious material sense it is not. Being productive is considered activity that is physically creative. That does not need to mean factory work or simply generating supply, it might be something as humble as planting a garden, or it might be dedicating time to innovation of a product, and so on. A lot of what people do nowadays is not very productive, is often aimed at winning a share of productivity provided by others. You live in the city, I live outside of the city, the relationship between rural and civil organisation is age old. Cities are hubs of innovation due to the proximity of so much knowledge and human capacity. Perseverance in that environment is very different from methodical commitment needed for productive survival, or the meditative contemplation needed to reconcile invention.

          The Chinese organise where profits are available, China has a large rural population willing to work for low wages to catch up with western levels of prosperity, to re-integrate into the world economy by earning a place in it, by productivity and trade. It is doing that, it is competing after being closed out (or closing itself out) for half a century. Like words, ideas are carried on the wind and once spoken cannot be reclaimed. The demand for recognition is not rejected, but to pay to show recognition is.

    • Adam Williams says:

      Hi Bankers –
      Great Question – I love it and had to check some numbers. Currently, Tencent’s income appears to be 75% from (mostly Chinese) gaming. Tencent was for a moment one of the 10 biggest companies in the world – and has a market cap of ~$450 billion USD (despite being down 25-30% in the last year). China’s stock market is apparently ~$6 trillion market cap – meaning Tencent and NetEase (~$50 billion) make up about 9% of the total Chinese stock market. I would classify this as systematically important. Tencent seems to be listed domestically in China, Hong Kong and the US so the numbers are strange but that seems to be the math.

      As for financial sector – I have no idea – but I do know that WeChat (TenCent owned) basically forms the basis of Urban Life in China, with an insane amount of touchpoints to other areas of the economy, communication grid, delivery services, reviews, etc. I have no idea who really owns that stock, but I’d say it’s important – particularly since it’s one of the few companies up till now going up. If Amazon or Google or Apple took a 30-50% stock dive that’d be an issue. Who knows how much that stock is used as collateral in loans or whatever.

      As I mentioned to Paulo up above – I would not necessarily classify gaming as inherently unproductive – in fact I would suggest the opposite particularly compared to TV – but I am willing to admit that it seems much of Chinese gaming seems frivolous wasting time on a phone, compared to the amazing PC and console titles which offer much more depth. I would also suggest entertainment is a basic human need so there’s that. I’m not really sure people would be out gathering more minerals or something if they couldn’t mess around on their phone. Sure they might read a book or watch a movie – but is that productive? It certainly gets added to GDP.

      I guess my real point was that the Chinese Market grew SO BIG, SO FAST, and is the biggest entertainment sector IN THE WORLD that yeah, This is important. It’s also important because I suspect Chinese growth numbers have been informing corporate strategy trying to get some of the action, but that effort may be misguided – they may not get access to the market, or the gov may simply limit everyone’s playtime or their gaming allowance. Activision, EA and others going all in on mobile games that most customers outside of China don’t like, and aren’t allowed to sell in China seems like a problem.

      Tencent, in particular, seems to have a web of connections, and if it has to sell interest in studios it could have a serious impact on tech sector companies. If they have layoffs (again Netease is laying off 50% of its workforce) that could be a serious problem. Additionally, there must be countless startups in China suffering. I believe I saw a number somewhere saying the backlog of games approvals was like 8000 games – which would imply maybe 4000 companies waiting? That’s a lot – in one year mind you – if they go under there’s going to be ramifications.

      I guess to your point – if I was in charge of China – I’d likely push for parents to implement game controls (usage time, don’t play too late, don’t spend all your money). I don’t like the state being heavy handed, but I don’t think they can count on the parents in this case so much..? I’d favor approving games which taught skills or knowledge vs time wasters. I’d likely try to open my market to international studios to try to win trade war points, and I’d somehow try to push people towards a skill is superior vs buying your way to the top attitude. Moderation in all things I guess.

      • Cynic says:

        Enlightening article for me, in finding out how the other half live.

        I suppose that if we take an historical perspective, playing games on boards and with cards, etc – and usually for money – has been the No1 pastime for those with time on their hands; and one could never have called that ‘productive’.

        Just one of the things that the hairless ape likes to do, in the way that dogs chase balls, their tails and play-fight.

        Somehow, though, I do find it infantile and faintly depressing to contemplate.

        But then I prefer a good book, and then a walk around to see what people are up to in the real world. Neither of which ‘add to GDP’, I will concede.

      • Bankers says:

        Much thanks for your reply Adam, that was not expected nor in such depth.

        I agree with the view of that gaming also has various positive sides, those can be social or educative as well as simply the need for entertainment. As you put it also the limits are hard to define, both individually and for parents, and I don’t have a solution to that either ( well I do and that is an hour screentime for anyone in the house…except me because I am enslaved to ‘serious online study and communication for the common good’ …. OK I’m the boss), the suggestions you made at the end seem sound to me, I hope there are people reading.

        The other point that is hard to define, and same goes for other areas of activity, is how they relate to GDP and how the economy is defined in financial terms. I suppose as long as it is product of the choice by people of how their wealth gets spent then it is an applied metric, but as someone who looks at the economy from necessity upwards then it also appears as slightly like froth or even surplus . So this interaction in times of prosperity with a social and entertainment valuation of worth added , of reward, of structure, is quite fascinating even if I am not sure whether durable or if it is what might actually form one eventual basis of how society functions and interacts eventually – thinking right outside of the box there, but the figures you give are impressive enough to take seriously as meaning gaming and related is a very real presence in our evolution. I am familiar with more traditional media and how that has influenced certain countries (a lot), and so I expect gaming and interconnectivity might be similar but at a much wider level. I note how countries are re-forming their own identities based as much by what they allow as by what they promote – I think it puts many in a difficult position and not always due to their own fault, many have not had the gradual evolution we have had in the west with the formats having been tailored to our liking and ways.

  10. Al Loco says:

    The comment about about getting laid is way more expensive is interesting. Ive lways thought video games have an extrodianary value compared to other leisure activities if broken down to dollars per hour. Not sure if drinking and spending time with friends is better for your social score in China but could be more profitable than gaming. As far as addiction goes, I know plenty of grown adults who watch college football all day Saturday, NFL all day Sunday, then Monday and Thursday all while drinking and/or gambling.

  11. HowNow says:

    Thank you, Adam Williams, for the very informative article.

    • Adam Williams says:

      Thank you HowNow – I worked quite a bit on researching and writing this and I am grateful for your kind words and thankful to Wolf for publishing it on his great website!

  12. Recent concerns with social credit scores, and surveillance suggest Ping has taken the role of a modern Confucius. “The gentleman sees righteousness, the petty man sees profit.” The technological crossover between gaming and gambling makes the confusion even more profound. Bans on video gaming make you wonder about the future of gambling in China, which is big international business.

  13. LouisDeLaSmart says:

    I am not sure, but it seems as if they are asking a valid question> What is the effect of gaming on young people and should it be a controlled substance? Is the question legitimate…yes it is. Does this look like a measure to protect it’s own youth from zombification (lack of social and other critical skills)…it seems so. Is gaming an addiction? Yes. The gaming industry this and that…what about the users?
    To clarify…the brain is a muscle. This muscle is challenged and then it grows (the percent of gray matter and number of neuron interconnections). During the adolescence period there is an inertia towards discovering the world, that we generally use to teach kids and teenagers things. If this window of opportunity is missed, it is not recoverable.
    For details please read book “Digitale Demenz” by Manfred Spitzer. A best seller in Germany, by some miracle not translated to English…I wonder why?

  14. Thanks for discussing your ideas. I would also like to convey that video games have been ever evolving. Modern technology and inventions have made it simpler to create authentic and fun games. These kinds of entertainment video games were not that sensible when the concept was being experimented with. Just like other kinds of technology, video games also have had to progress by way of many generations. This is testimony for the fast progression of video games.

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