looking beyond covid-19: the online gaming sector – ‘new infrastructure’ investment and technical innovation set to boost the online gaming industry in china
jan 14, 2021
shanghai, january 14, 2021——cushman & wakefield recently released the report - looking beyond covid-19: the online gaming sector – ‘new infrastructure’ investment and technical innovation set to boost the online gaming industry in china. according to the report, in china, there are many factors that have driven the growth of the online gaming sector in the country over the past several years, but two basic reasons for industry growth are: the growth of the general economy, and increased spending power.
today, even though the business presence has been established for many online gaming companies, many (established and emerging) companies are still seeking to expand their commercial activity, and this is evidenced when examining office leasing activity rates in city markets around china. for example, when considering the number of grade a office leasing deals completed in china’s four first-tier cities, according to cushman & wakefield research, between q1 2020 and q2 2020, companies in the tmt sector (which online gaming companies form a part of) were responsible for 23.4% of deals done in beijing, 22.0% of deals done in shanghai, 19.7% of deals done in shenzhen and 23.4% of deals done in guangzhou.
the scale of the online gaming industry in china (2015-2020)
during the early part of this year, much of the country was locked down to prevent the spread of the covid-19 virus that had emerged from wuhan. during the lockdown period most people in china were confined to their homes. in many instances, with little else to do, many people turned to the internet for entertainment and as way to pass the time. online games were collectively one such home entertainment medium many citizens in china turned to during this time.
broad data has revealed that at the end of q1 2020, the general entertainment industry in china saw a decrease in business activity and a resultant drop in business operating income. on the other hand, it has been revealed that the annual growth rate for operating income enjoyed by internet-related entertainment companies in china reached 15.6% over the same period.
one government policy that is expected to add further impetus to the development and growth of the online gaming industry in china in the future is the ‘new infrastructure’ investment plan, and in particular, investment into 5g technology and networks.
with the online gaming market in china expected to benefit from this new investment, more and more users and businesses are turning their attention to this sector. according to cnnic, the number of users in the online gaming market in china reached 532 million until march 2020, with 7.8% growth over just 9 months.
driven by ‘new infrastructure’ investment, the prospects for online gaming industry growth in china are also appealing. according to data from iresearch and qianzhan, the scale of china's online gaming market in 2019 was approximately rmb 288 billion. qianzhan institute believes that the scale of the online gaming market will exceed rmb 300 billion mark.
the scale of the online gaming industry in china (2015-2020)
shaun brodie, head of occupier research, greater china, cushman & wakefield, said: “understanding the impact of the covid-19 outbreak and the market potential, many new business opportunities (like cloud gaming) will emerge for online gaming companies in china. accordingly, online gaming company executives and corporate real estate practitioners will have to rapidly reassess the situation and formulate new real estate portfolio stratagems as ‘new infrastructure’ investment and technical innovation is set to boost the online gaming industry in china in the years to come.”
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cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. across greater china, 22 offices are servicing the local market. the company won four of the top awards in the euromoney survey 2017, 2018 and 2020 in the categories of overall, agency letting/sales, valuation and research in china. in 2019, the firm had revenue of $ 8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
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