With the pandemic forcing people to stay home, the year 2020 was a big win for Chinese game developers, but they need to shore up deficiencies in their content design to maintain a foothold in the overseas market, Jiao Juan, chief media and internet analyst at Essence Securities told CGTN.

"Starting from 2021, it's all about the quality of content for games," Jiao said.

"Previously, Chinese games were very strong in terms of user traffic monetization, but their product management and content design were weak," said Jiao. 

"If you want to continue to have a strong performance in the global market in the future, you need to improve the content, what stories or values ​​you want to convey through the game to attract and retain customers," she said.

"That's why many Chinese game makers are acquiring high-quality domestic and overseas game assets and talents," she explained.

Data from Sensor Tower showed that 37 Chinese mobile games saw their overseas market revenue exceed $100 million in 2020, 12 more than in the previous year. The top 30 most profitable Chinese mobile games also raked in a cumulative $9.24 billion from the App Store and Google Play last year, up 47 percent from $6.3 billion in 2019. 

Chinese game developers also saw substantial revenue growth in Europe, the United States, Japan and South Korea, with Japan surpassing the U.S. as the biggest market for Chinese-made mobile games.  The Japanese market contributed $2.8 billion of revenues, an 81 percent spike from 2019.

According to the Sensor Tower report, one reason could be that compared with European and American game publishers, Japanese players might be more adapted to Chinese games in terms of culture and aesthetics. 

Chinese mobile games also maintained an average of 50 percent revenue growth in the U.S., Germany, the UK and Canada, the report added.

Betting on the overseas market

Although well-established game developers are reaping the rewards, smaller companies are feeling the pinch.

Since 2017, Tencent and NetEase, China's two major domestic game manufacturers, have accounted for more than 70 percent of the domestic game market, leaving little room for smaller players to get a foothold.

"Many smaller game makers are looking overseas for opportunities," said Wang Kang, senior manager at Changjiang Securities. 

According to Wang, Chinese game producers are betting big on mobile games, as the sector accounts for more than 70 percent of Chinese game makers' total revenue.

"What China is good at is to analyze gamers' behaviors to attract targeted customers and maximize the profits through in-game purchases," he said.

Payment methods

The mobile game sector is dominated by big companies, which have the biggest budgets and the most resources to promote their products. Many of the gaming giants offer products that can be downloaded for free in the beginning. But when gamers are looking to obtain niftier tools or level up quick, they have to pay through in-game purchases. It's a model widely used by big Chinese game studios.

But smaller and independent game studios don't have deep enough pockets to allow such "charity" for gamers from the get-go. They prefer that gamers new games outright.

Midao Technology is an independent game developer in China that believes that independent games can survive more easily overseas. 

"Overseas users are more willing to pay for new games directly, which is better for us," said Ray Wang, a partner at Midao Technology.

Finances aside, Ray said independent game studios are born with a global scope and are not limited to China or overseas since many of them publish games on Steam, a major international video game digital distribution platform. 

"Once our game is on Steam, we distribute it globally," he said. 

With slowing growth at home, Chinese gaming giants, including Tencent and NetEase, are developing mobile games based on popular titles like the "Lord of the Rings," "Game of Thrones" and "Harry Potter" to expand their overseas growth. These companies have cash to burn and the resources to adapt games for smartphones. The remaining question is whether the end-product will be worth the promotional spending and the hype among gamers.