The growing popularity of games in Guangzhou
Guangzhou鈥檚 video game industry has been expanding immensely. Find out the driving factors for such rapid growth and how it impacts the local office market.
Over the past 10 years, advancements in telecommunication and mobile technology have fuelled the rapid expansion of China鈥檚 video game industry. More recently, the evolution of players鈥� tastes, preferences and purchasing habits has prompted game companies to make swift adjustments to gameplay and monetisation.
Guangzhou鈥檚 video game industry participants听closely monitored market trends听补苍诲听integrated local resources听to expand and reform. By 2023, the local industry鈥檚 annual sales reached RMB 106 billion, accounting for around 35% of China.
Factors driving the success of Guangzhou鈥檚 video game industry
- Guangzhou is home to听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.
- 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听a compact supply chain.
- Strong engagement in听industry trends听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听overseas markets. With well-thought-out initial planning and effective content localisation, online games are estimated to contribute RMB 21.4 billion to Guangzhou鈥檚 exports in 2023.
- More recently, a number of game developers in Guangzhou achieved astounding user growth with听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鈥檚 video game industry and office market share a听mutually benefited relationship听鈥� the former contributes to office demand while the latter facilitates industry growth.
The video game industry generates听new demand听for office听space听鈥� 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鈥檚 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鈥� 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鈥檚 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.
