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Innovation

Are China’s Ambitious Moves into International Gaming Good News for Gamers?

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China’s presence on the international gaming stage has traditionally been a quiet one. Franchises and consoles from the US and Japan dominated the market, leaving little space for other players — with China’s gaming landscape both highly specialized and highly localized to succeed domestically, it was rare to see Chinese games turning heads overseas.

But that focus on the homefront has blossomed into something greater. China’s biggest names in gaming have gorged themselves on the country’s growing stream of eager consumers, swelling to massive sizes as gaming/mobile entertainment have reached peak magnitude. Now they’re setting their sights overseas, but will this be a positive development for gamers everywhere?

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Chinese companies have generally approached gaming from a decidedly different angle than their American counterparts. Mobile gaming is the country’s hottest sector, and the unique makeup of China’s communications networks presents huge opportunities for market dominance. As we’ve noted before (in the above article):

“Since Tencent already operates the largest mobile communication platform in the country, they had the highest capability to draw customers out of the ‘freemium’ payment model. Players can play the game for free, but need to spend real-world money for certain items and power-ups. Since Tencent operates both the game and the WeChat payment platform, they have integrated control over both ends of the equation, with no need for a middle man (it seems to be going well for Tencent, with online gaming constituting 47% of the company’s 2016 revenue). Similarly, WeChat marketing streams can pull players into Honor of Kings, and vice versa.”

Honor of Kings may be a total clone of League of Legends, but Tencent ought to get off scotch-free, seeing as they own a majority stake in League of Legends developer Riot Games. That kind of savviness to expand and claim new ground is something Chinese companies have down to a science.

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At the same time, American companies still undeniably lead the world in game design, innovation and development. Companies like Tencent would prefer to build off existing models, and rely on their larger-scale business strengths to do the heavy lifting.

Zhou Yikun, 19, is a pro e-sports player. He’s ranked as a “Challenger,” the highest rank in League of Legends, and trains under the Chinese team Edward Gaming. Zhou points out that each country has expertise to offer the other:

Chinese gaming companies are powerful with their monetization strategies — you can have a better experience than other players if you pay more. Western companies can benefit from Chinese gaming’s broadcast experience — the seventh League of Legends world championships were held in China, and drew in over 300 million viewers on mobile and computer.

On the other hand, China isn’t quite there yet on designing their own hit games. The more common approach is to earn money by modeling the design of foreign games, or bringing those games to Chinese audiences. For Western gaming companies, it’s also a broad new market to explore.

“Broad new market” might be an understatement, with China estimated to account for a quarter of global gaming revenue, bringing in 37.9 billion USD, this year. It explains why big US names are looking outward to get involved — earlier this month, Valve announced its plans to partner with Chinese developer Perfect World in order to bring their popular gaming platform Steam to the mainland.

It’s a move that puts them in direct competition with Tencent, and one that has not gone down well among Chinese Steam fans, as this piece from Magpie Digest notes:

China’s gamers are, on the whole, very unhappy about this news. To them, it marks Steam’s exit from — not entrance to — the Chinese market, a carefully orchestrated move by a government savvily balancing its fear of uncontrolled media with the fear of a widespread, gamer-led rebellion.

Having previously operated in a “gray area” with fairly easily-bypassed restrictions, Steam’s official entry into the Chinese market now means Beijing will have far more control. A subtly more restrictive Chinese version of the platform appears likely in the coming months.

When Weibo announced a “clean up” operation in April, it was the microblog platform’s targeting of “homosexual content” which understandably received the majority of attention, but the same announcement also specifically took aim at Grand Theft Auto as part of a move to delete “violent and pornographic” content. Earlier this month, EA declared that Sims Freeplay was “going away” from app stores in China, something which commenters on Weibo put down to either LGBTQ content and/or the game’s recent pregnancy update.

This is the reality of operating games and producing content in China, but as several companies have proven, the draw of a Chinese gaming market largely untapped by foreign entities can be too alluring to ignore.

Meanwhile, Chinese companies like HUYA are making the opposite trip across the sea:

HUYA Becomes First Chinese Game Streaming Platform Listed on the NYSE

And it’s not just Tencent getting their hands dirty with mainstream American gaming favorites. Bungie, the studio behind Halo and Destiny, has announced a partnership with NetEase, a 20+ year-old developer in the Chinese internet space, whose projects span online infrastructure, email services, and PC/mobile games.

Bungie CEO Pete Parsons told the Wall Street Journal that their goal was to become a “global, multi-franchise entertainment studio,” with a big focus on being able to self-publish in the future, rather than relying on third-parties like Microsoft or Activision. “Our long-term goal is to become an entertainment company that sustains many worlds simultaneously,” reads a press release.

Noble enough, but Bungie fans haven’t been shy to voice their distaste for the agreement. Destiny has in many ways fallen short of fan expectations, and still needs work from developers before it can be called truly successful. Fans are worried Bungie is spreading itself too thin.

“When you have a train wreck that IS Destiny, how can you consider this when you should be all hands on fixing the mess you created?” wrote one online commenter on an article about the news in The Verge. “That’s a hot mess and now they are going to try focus on two things… they can’t get their only game right!”

Another fan pointed out though that some heavy-lifting from China might be exactly what Bungie needs.

“Why? Other big Chinese game company Tencent acquired 40% stake in Epic Games in 2012. With Tencent’s help and experience in MOBA games like League of Legends, Epic Games is now doing pretty well with its Fortnite battle royale game.”

Chinese companies’ tout a business savvy, massive market size, and forward-thinking approach to distribution. American companies produce some of the world’s most popular games. From a business perspective at least, it’s a match made in heaven that might change the game (pun intended) for both sides.

Cover photo: Halo (xbox.com)

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Adan Kohnhorst
Adan Kohnhorst is a Shanghai-based writer, producer, and multimedia artist, and the Associate Editor at RADII. His work has been featured in publications such as Maxim and the Chinese-language StreetVoice, and he’s an active member of the hip-hop and DIY music scenes in Shanghai, NYC, and Dallas. He learned Mandarin in high school so he could train at the Shaolin Temple, but now just uses it to interview rappers.