Summary of Key Points
In the first half of this year, Chinese game companies' revenue from overseas markets increased by over 30% year-on-year (reaching $12.37 billion), marking the largest growth in nearly six years. This success is not due to the “blue ocean” nature of the global mobile gaming market, but rather because Chinese manufacturers have managed to capture a share of the market amidst declining global mobile game downloads and in-app sales, as well as rising customer acquisition costs. They have done this by improving efficiency (through rapid iteration and AI applications) and strengthening their industry chain (including payment, marketing, and localization services). Additionally, the barriers to entering overseas markets have lowered, allowing smaller companies to enter the competition. However, the future will hinge on the ability to retain customers and provide localized experiences. Emerging markets (such as Southeast Asia and Latin America) and core markets (like North America) offer opportunities, but each requires a tailored approach.
Detailed Analysis
1. Growth of 30% is not due to a “blue ocean”; it’s about taking share from existing market
Many believe that the growth in Chinese games overseas is due to an expanding global mobile gaming market, but the opposite is true: the overall global mobile gaming market is shrinking. Inorganic growth in overseas markets declined by 6% in terms of in-app sales and 4% in downloads in the first half of 2026. Chinese manufacturers have managed to gain a share in this environment where it’s becoming harder to attract users and their willingness to pay has decreased.
How did they achieve this? Firstly, through long-term operations (for example, “Whiteout Survival” has generated nearly $5 billion in revenue). Secondly, by consistently releasing new products. Thirdly, Chinese manufacturers have a fast iteration cycle, thanks to an industrialized system developed from domestic competition, which enables them to quickly test and localize games at lower costs. Data from Sensor Tower shows that 38 Chinese companies made it into the top 100 global mobile game publishers in June, accounting for 41.6% of revenue, indicating a rise in overall competitiveness.
2. AI as an accelerator for overseas expansion
AI has played a crucial role in driving this growth by lowering the barriers and costs associated with entering foreign markets. Previously, tasks such as language translation, content production, and ad optimization took weeks or months; now, AI can complete these processes in hours or even days:
- Translation: AI handles multi-language localization without the need for specialized teams.
- Ad Optimization: Liftoff’s AI platform can optimize ads in just a few hours (previously, this process could take weeks).
- Content Creation: The time required for creative content production has been reduced from 18 days to 1 day.
AI makes it possible for smaller companies to enter overseas markets. For example, with half the effort, they can now target 3-4 markets instead of just one. IDC data shows that 78.5% of overseas companies are using AI in their marketing strategies, and almost all service providers are offering AI solutions, which is one of the reasons for the bustling BTOB (Business-to-Business) sector.
3. The end of traffic dividends: Higher customer acquisition costs require a shift from acquiring new users to retaining them
The growth in global mobile game users has peaked, and the cost of acquiring new customers is increasing. The average cost per installation (CPI) globally has risen from $0.43 to $0.56 (a 30% increase), with the U.S. market seeing a more significant rise from $1.31 to $1.71 (about 12 yuan). Moreover, installing a game does not guarantee user engagement or payment. The traditional approach of spending heavily on acquiring new users is no longer effective.
The industry consensus is now to focus on retaining existing customers. Leading companies are exploring ways to make games more engaging for users, while smaller companies are working on smaller, more manageable projects. 52% of global studios are focusing on such projects, which helps control risks and avoid direct competition from larger players.
4. Opportunities in emerging markets, but tailored approaches are needed
Despite the overall market decline, there is still growth in certain regions, requiring different strategies:
- Southeast Asia: With a large user base and active mobile internet usage, entertainment and social apps have seen significant growth (94% and 99% respectively). Chinese apps hold a 24% and 22% market share in Indonesia and the Philippines, respectively. However, localization (language and culture) and payment infrastructure must be addressed.
- Latin America: Young users with strong entertainment demands; Chinese apps dominate the entertainment and social app categories (over 60% market share). Challenges include high exchange rate fluctuations and low commercialization efficiency, so effective operations are essential.
- North America: The most competitive and expensive market, but also where the highest revenue is generated (32% of Chinese overseas sales). High-quality products and refined operations are necessary to establish a foothold.
5. A mature industry chain: Overseas expansion is no longer a solo effort
The BTOB section at ChinaJoy was more lively than ever, reflecting the improvement in the game industry chain for overseas expansion. Payment companies, ad platforms, data analysis firms, and localization services are all playing a role, with foreign investors accounting for over 46% of participants. These services act as “toolkits” that help manufacturers handle payment, marketing, and data issues, freeing them from handling everything on their own.
Previously, a game company might only be able to target one market; now, with these services, they can easily enter multiple markets. This division of labor is creating a positive cycle where growth in overseas expansion drives the development of related services, which in turn lowers the barriers for further entry.
Conclusion
Chinese games can continue to grow overseas, but the days of easy profits are over. Only companies that are patient, use AI to improve efficiency, and understand localization will survive. Those seeking quick gains are likely to be eliminated. Both emerging and core markets offer opportunities, but a tailored approach is needed for each.