China’s video game industry sees first revenue drop in 14 years

China’s video game industry revenue fell in the first half for the first time since data became available 14 years ago.

The largest market in the sector in the world has been heavily impacted by intense regulatory activity by the government.

Combined industry revenue fell 1.8% to 147.7 billion yuan ($21.8 billion) in the six months ended in June, according to a report published Thursday by China Audio- Video and Digital Publishing Association, a state-supported industry group.

The numbers mark the first drop since the data began to be published in 2008 and reflect how China’s massive video game industry, once marked by rampant growth, has been hit hard by the Chinese government’s efforts to tighten oversight over the industry. including reducing the number of licenses granted for new games and limiting screen time for teenagers.

The report also shows that the number of players nationwide dropped for the first time to 665.69 million from the 666.57 million reported in December.

Chinese game companies’ domestic revenue fell 4.25% to 124.5 billion yuan.

With heavy regulations at home, companies are turning to foreign markets for growth, where revenue rose 6.16% to nearly $9 billion in the period.

China froze approvals for new video games for nearly nine months before resuming them in April. However, industry giants including Tencent and NetEase have not yet received licenses for new titles to be launched on the market.