Last month, China’s top courts published a judicial review on cryptocurrencies, online game coins and tips given to live-streamers. Such transactions, including transfers and conversions, are now included in money laundering activities. Chinese officials pointed to criminal usage of virtual currencies and game coins to evade China’s capital controls and to enable cross-border transactions.
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This increasing effort to curb illicit financial activities conducted via digital assets highlights the Chinese government’s staunch approach to cracking down on cryptocurrency. However, one unintended consequence of this action could be the impact on China’s vibrant video game industry, which brought in 303 billion yuan (US$42.7 billion) in revenue in 2023.
China’s video game industry has consistently experienced growth, owing to factors such as China’s massive market size, high internet usage and mobile penetration rates and its strong game production companies. China’s gaming population numbers some 670 million strong, consisting of nearly half of its population.
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The market opportunities for video games in China are extremely large, with distinct market segments based on player preference, platform and other factors. One example can be seen just in the platforms leveraged by Chinese gamers, with many splitting their time between mobile, PC and console games, with a major preference for mobile games.
Popular titles such as Honour of Kings, Fantasy Westward Journey and Genshin Impact attract millions of users, with some contributing to billions of in-game revenue.
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