The Rise of Chinese Mobile Games in the U.S. Market

The coronavirus pandemic has significantly increased app usage across the United States over the last year, as individuals prioritized staying at home and minimizing social interactions. This trend has been particularly beneficial for the mobile gaming sector, with titles originating from Chinese development studios experiencing a notable surge in popularity.

Revenue Growth in the U.S. Mobile Gaming Market

During the fourth quarter, revenue generated by games available on both the U.S. App Store and Google Play Store reached a total of $5.8 billion. This represents a substantial increase of 34.3% compared to the same period in the previous year. Furthermore, this figure accounts for over a quarter of all global revenue within the mobile gaming industry, as detailed in a recent report by Sensor Tower.

China's Growing Influence

Chinese-developed games accounted for as much as 20% of the total mobile gaming revenue earned in the U.S. during the aforementioned quarter. This effectively positions China as the leading exporter of mobile games to the U.S. market, driven by the success of several high-performing titles.

Publishers based in China secured 21 positions within the top 100 highest-grossing games during this period. Collectively, these titles generated $780 million in revenue within the U.S., the world’s largest mobile gaming market. This revenue stream is more than triple the amount recorded just two years prior.

Key Titles and Emerging Studios

Well-established Chinese games, such as the first-person shooter Call of Duty – a collaborative effort between Tencent and Activision – and Tencent’s PlayerUnknown’s Battlegrounds, continue to dominate the charts. However, smaller Chinese studios are also rapidly gaining traction within the U.S. market.

Mihoyo, a relatively unknown studio outside of China, has garnered significant attention within the domestic gaming landscape with its successful title, Genshin Impact. This role-playing action game, characterized by its anime-inspired aesthetic, ranked as the sixth-highest-grossing mobile game in the U.S. during Q4, amassing over $100 million in revenue during that timeframe.

Notably, Mihoyo has operated as an independent studio since its founding in 2011. Unlike many gaming startups that actively seek substantial funding from industry giants like Tencent, Mihoyo has only secured a limited amount of investment throughout its history.

The studio also distinguished itself by bypassing major distribution channels, such as Tencent and phone manufacturers Huawei and Xiaomi. Instead, Genshin Impact was initially released on Bilibili, a popular video platform among young Chinese audiences, and the game downloading platform Taptap.

Further Examples of Chinese Involvement

Magic Tavern, the developer behind the puzzle game Project Makeover – one of the most downloaded mobile games in the U.S. since late last year – represents another emerging studio. Founded by a team of graduates from Tsinghua University with offices internationally, Magic Tavern is recognized as one of the first studios with Chinese origins to achieve success in the American casual gaming market. AppLovin, a gaming company backed by KKR, holds a strategic investment in Magic Tavern.

Additional popular games in the U.S. also demonstrate connections to China, even if not directly owned by a Chinese entity. Shortcut Run and Roof Nails are products of the French casual game developer Voodoo, which received a minority investment from Tencent last year. Tencent also maintains a strategic investment in Roblox, a gaming platform geared towards younger players and preparing for an initial public offering.