Global Entertainment and Media Outlook 2023-2027: Mainland China summary

Resetting expectations, refocusing inward and recharging growth

Our 24th annual Global Entertainment & Media Outlook offers an in-depth look at how reset expectations and recharged growth will affect 13 E&M segments across 53 countries and territories over the next five years.

Mainland China outlook highlights

It is estimated that the total revenue of China’s entertainment and media (E&M) industry will reach approximately US$479.9bn by 2027. At 6.1%, the compound annual growth rate (CAGR) will be higher than the global rate of 3.5% over the next five years. Internet advertising, video games and esports are the main growth drivers for the E&M industry in China. Segments such as cinema and virtual reality (VR) will also grow steadily.

Download our Mainland China summary (Simplified Chinese only)

Segment highlights

The Internet advertising market in Mainland China is the second-largest in the world after the US. Total revenue was US$94.7bn in 2022. However, this was notably a drop in 2021. Revenue is expected to rise at a 9.1% CAGR to push it to US$146.4bn by 2027.

Mainland China has a well-connected population, with more people online than anywhere else in the world. According to the latest report from the China Network Information Centre (August 2022), there are more than 1bn Internet users in the country, with the number having increased by more than 19mn between December 2021 and June 2022, when Internet penetration reached 74.4%. This means that the addressable market in Mainland China is huge, presenting a lot of opportunities for advertisers.

Mainland China has good Internet infrastructure, including a well-developed 5G network, and a large majority (99.6%) of Internet users go online via mobile devices. Mobile dominates the country’s digital ad market, accounting for 71.8% of revenue in 2022. Total mobile Internet advertising revenue was US$68.0bn in 2022 and will increase at a 12.4% CAGR to reach US$121.9bn by 2027. Growth in the wired sector will be negative, with a -1.7% CAGR reducing revenue to US$24.5bn over the five-year span.

A significant factor driving the growth of the Chinese metaverse market is the country’s massive population coupled with the prevalence of tech adoption among its consumers. Mainland China is the world’s largest consumer market for technology products. This provides a huge potential user base for virtual worlds and other immersive experiences.

According to J.P. Morgan, the impact of the metaverse on Mainland China will be significant, particularly in the areas of gaming, advertising and e-commerce. The metaverse, the bank said, “could digitalise everything in the long term”, resulting in a US$4.0trn total addressable market in Mainland China by converting offline consumption of physical goods and services.

The Chinese government has shown interest in the metaverse since early 2021. In August 2022 the Beijing municipal government announced a two-year development plan for the metaverse, covering 2022 to 2024. This plan focusses on promoting metaverse-related industries and helping Beijing become a benchmark city for the digital economy by demanding that various districts build technological infrastructure and promote its use in different fields, including education and tourism.

In early 2023 there were early signs of a softening in the government’s stance towards the tech sector, with the industry seen as core to Mainland China’s economic strategy after COVID-19 lockdowns dragged on growth in 2022. This will benefit further metaverse development in the private sector.

Mainland China is the world’s second-biggest OTT market, led by a relatively small number of digital champions that compete in a highly regulated environment.

Total OTT revenue will increase at a 7.4% CAGR, from US$18.1bn in 2022 to US$25.9bn in 2027, in line with the global average across the forecast period, making the Chinese market second only in scale to the US.

Despite Mainland China’s status as the world’s second-biggest market for transactional video on demand (TVOD), after the US, it is a relative underperformer. Mainland China’s TVOD revenue will increase at a 2.2% CAGR from US$640mn to US$713mn between 2022 and 2027. In the same period TVOD’s share of total OTT revenue will fall from 3.5% to 2.8%.

This is well below the global average, which will see TVOD falling from 8.4% of total OTT revenue in 2022 to 6.1% in 2027.

Having outstripped North America in 2020 and 2021 to become the biggest worldwide market by box office and admissions, Mainland China’s film sector contracted in 2022. Overall revenue fell to US$5.6bn, down -29.4% on the previous year.

COVID-19 problems led to long-term cinema closures. Another factor in the declining cinema ticket sales was the limited number of US studio pictures, as quota arrangements meant that many of the biggest Hollywood “tentpole” pictures weren’t shown in Mainland China. Licences to screen in Mainland China were granted to 59 foreign films in 2022, down from 73 in 2021 and 136 in 2019.

Now that the pandemic is over, the market will continue to grow rapidly. Buoyed by the success of Avatar: The Way of Water, box office in early 2023 was already higher than in the US. Some analysts, though, felt that Avatar: The Way of Water had underperformed because many COVID-19-wary cinema-goers hadn’t seen the film.

In early 2023 there was some relaxation in the policy towards US titles. Some of the Marvel titles were belatedly given release dates.

Total video games and esports revenue in Mainland China was US$62.3bn in 2022 and will reach US$115.5bn by 2027, increasing impressively at a 13.1% CAGR. Year-on-year growth in 2022 was 13.6%, an increase over 2021, although substantially slower than the 26.7% achieved in 2020. The annual growth rate of video games and esports revenue in Mainland China is forecast to remain remarkably stable over the next five years, remaining consistently around 13.0% throughout the forecast period.

In 2021 Mainland China replaced the US as the world’s largest market for video games, and with its forecast rapid growth rate Mainland China will generate around 40% more revenue than the US by 2027. Alongside its massive internal market for video games, Mainland China also plays a growing role in the global video games business, with Chinese games and games companies gaining increasing prominence in many other established video games markets.

2023 Global Outlook perspectives report

For the E&M industries, 2022 marked an important inflection point. Total global E&M revenue rose 5.4% in 2022, to US$2.32 trillion. That represents a sharp deceleration from the 10.6% growth rate in 2021, when economies and industries globally were starting to rebound from the upheaval caused by the COVID-19 pandemic. And in each of the next five years, the rate of growth will decline sequentially, so that by 2027 revenue will grow just 2.8% from 2026. That’s slower than the 3.1% rate of overall economic growth that the International Monetary Fund (IMF) projects for that year.

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