China’s smaller cities spend the most on video games nationally: Report

People visit the stand of Tencent’s mobile game ‘Glory of Kings’ during the 2020 China Digital Entertainment Expo & Conference (ChinaJoy) at Shanghai New International Expo Center on July 31, 2020 in Shanghai, China.

Zhou You | VCG via Getty Images

SINGAPORE — Video games are booming in China’s smaller cities, with citizens there accounting for more than half of revenue nationally, according to a recent report by Niko Partners.

“76% of gamers in China live in Tier 3-5 cities, accounting for 70% of game revenue,” Niko Partners said in a synopsis of its China Gamers Report.

Cities in China are classified by tiers based loosely on population and economic size. For example, places such as capital Beijing and Shenzhen are generally considered tier-one cities, while lower-tier cities are smaller.

The country is the world’s top game market and will generate an estimated $40.85 billion in revenue this year, according to Newzoo.

“What we think is happening with the smaller tiers is … there are more and more gamers adapting to uses of mobile devices,” Lisa Cosmas Hanson, founder and president of Niko Partners, told CNBC in a follow-up interview.

With “fewer things to do for entertainment” in smaller cities as compared with their cosmopolitan peers in Beijing and Shanghai, “gamers spend their time with little cost entertainment which can be social.”

This could also be attributable to improved mobile data and broadband infrastructure, Hanson added, with “lots of Android smartphones available at lower price points.”

In a country of 1.4 billion people, even China’s smallest “cities” can have a population of more than 1 million each.

For video game publishers looking at China, the analyst said: “If you really want to draw the attention of people throughout the country, Tier 4, Tier 5, these places can’t be ignored.”

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