Over the past 10 years, advancements in telecommunication and mobile technology have fuelled the rapid expansion of China’s video game industry. More recently, the evolution of players’ tastes, preferences and purchasing habits has prompted game companies to make swift adjustments to gameplay and monetisation.

Guangzhou’s video game industry participants closely monitored market trends and integrated local resources to expand and reform. By 2023, the local industry’s annual sales reached RMB 106 billion, accounting for around 35% of China.

Factors driving the success of Guangzhou’s video game industry

1. Guangzhou is home to thousands of diversified video game companies. Not only has Guangzhou incubated industry giants such as NetEase and 37 Interactive Entertainment, but it also houses numerous game start-ups and indie game studios.
2. The growth of games spurred the success of upstream and downstream enterprises, including art and design, hardware and accessories, distribution and retailing, and video game streaming. Coordinated, end-to-end advancements in developing and publishing games and marketing them have formed a compact supply chain.
3. Strong engagement in industry trends ensured frequent release of best-selling games, which helped boost revenue and business growth.

Recent industry trends

• Many game developers in Guangzhou are expanding into overseas markets. With well-thought-out initial planning and effective content localisation, online games are estimated to contribute RMB 21.4 billion to Guangzhou’s exports in 2023.
• More recently, a number of game developers in Guangzhou achieved astounding user growth with minigames, which have shorter R&D cycles and lower costs but higher CVR* and, hence, higher ROI*. (Note: * CVR: conversion rate, ROI: return on investment.)

Video games and offices

Guangzhou’s video game industry and office market share a mutually benefited relationship – the former contributes to office demand while the latter facilitates industry growth.

The video game industry generates new demand for office space – several industry giants opted to purchase office assets or build their own headquarters. Meanwhile, small-to-medium-sized game companies adjusted their real estate strategies, which gradually became an important force in Guangzhou’s office leasing market since 2019.

Figure 1: Distribution of video game company self-owned headquarters in Guangzhou

Source: JLL Research, MapIT

Figure 2: Proportion of Guangzhou office leasing transactions by video game companies (by area)

Source: JLL Research, 2024Q1

Characteristics of game companies’ office demand

The video game industry is highly talent- and technology-oriented. Hence, most game companies cluster in culture and creative parks for industrial agglomeration and budget considerations. Then, with business expansions, some relocate to nearby office buildings with improved hardware and services. Regarding office site selection, these companies generally impose specific requirements on building hardware and software to create a youthful, social and relaxing office vibe.

Table 1: Characteristics of office demand by video game companies

Source: JLL Research

The video game industry is gradually transitioning from ultra-high growth to fostering long-term brand development and quality enhancement. The game companies in Guangzhou could seize the opportunity of declining rents to upgrade their corporate real estate strategies. The game industry is expected to continue to support Guangzhou’s office take-up, especially around emerging submarkets such as Pazhou and Guangzhou International Financial Town, which in turn, could help accelerate infrastructure maturity around these areas in the long run.

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