China and Video Games

It’s becoming increasingly obvious to many that China is having an ever-increasing impact on the video gaming industry. This might affect the sort of games we see, how some aspects of gameplay works and may influence the success of the eSports scene.

In this month’s article, we’ll look at some of the factors causing this change and what some of those changes are.

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As we’ve mentioned before, the Chinese market is the biggest games market out there. In 2018, it was estimated to be worth $37.9 billion and easily remained number one in the gaming market in both terms of revenue and in the number of players.

It’s estimated that there are 619.5 million active players in China. To give some comparison figures to that, it’s estimated that in the USA around 66% of the population play video games, which is roughly 211 million players. In the UK that drops to around 37 million.

So it shouldn’t be surprising to anyone that China makes up a huge proportion of both online and offline player bases.

What does that mean in real terms though? Well, in November 2017, English was no longer the primary spoken and written language in Player Unknown Battle Grounds (PUBG) – it was taken over by Chinese.

On the one hand, this kind of change is loved by both Chinese investors and Western developers – which we’ll touch on later.

But on the other, it hasn’t gone down as well with Western gamers. As the number of Chinese gamers has swelled, there’s been a backlash from some Western gamers. Racial slurs in matches have become more frequent and there has been a call for Chinese players to have separated severs, in amongst claims that they have a higher percentage of cheaters.

Brenda Greene, the creator of PUBG strongly condemns this kind of behaviour, and whilst she acknowledges that there are cheaters among Chinese players, she feels the majority of them play PUBG passionately and in good faith.

But how much this will affect things in years to come is yet to be seen.

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As mentioned above, it’s not just Chinese players that are getting involved in video games. Chinese investors are also putting in their lot with the industry too. Whilst there are plenty of small firms and independents who will be investing, it’s impossible to talk about this without looking at the two biggest players: Tencent and NetEase.

Tencent is the world’s biggest games company and has games like Fortnite, PUBG, League of Legends and Ring of Elysium to its name – some partially owned and others wholly.

NetEase has a number of its own games, but it’s also a partner of Blizzard and as such, operates local versions of World of Warcraft, Diablo, Hearthstone and Overwatch; some of the world’s biggest heavyweight games. It now also has the licenses to develop versions of Minecraft and EVE Online.

Some Western gamers see these investments as meddling and fear what this could mean for the video game industry. They believe that this is opening the doorway to microtransactions becoming the norm (a common, popular practice in China) and an increase in free-to-play games. It should be noted that this is entirely speculative.  

But there could be some positive benefits to the industry having funding provided by Asia. Their involvement gives developers the opportunity to be funded when they may not have been able to do so otherwise and means that they may not be forced to go through publishers like EA, Ubisoft and Activsion. This would allow developers to create games without being stressed by economic pressures that Western publishers seem to be pushing.

This could mean that Western publishers would need to become more accommodating of their developers so as to not lose them as customers. This could have unexpected benefits, such as games not being forced to release before they’re ready; more diversity in games; and a move away from the microtransaction climate which is increasing regardless of Chinese influence.

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In recent years, the eSports scene has exploded.  Back in 2012, viewership between both frequent and occasional viewers of eSports was around 123 million. In 2018 this rose to 395 million and is expected to rise to about 644 million by 2022.

In 2017, the China Money Network released a report on how many eSports viewers were from China. It was a staggering 250 million users, which accounted for about 64% of global eSports viewers. So it’s a huge thanks to Chinese viewership that eSports has taken off in the way that it has.

But it’s not just the viewership they’re having an impact on. So are their eSport teams.

China won every major tournament in League of Legends in 2018. And at Blizzcon last year, China’s team beat Brazil to win the Hearthstone Global Games Championship too. And that was just in 2018.

On top of all of this, Tencent (the giant video game company we mentioned earlier) is investing heavily into the eSports scene. They announced a $15 billion investment plan in 2017, which they’ll put into effect over the next five years. They’re hoping to accelerate the industry within China with new leagues, tournaments, associations and even unnamed e-sports themed industrial parks.

All of this means, if you’re into eSports, you better be prepared for a Chinese wave.

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It’s not all going well in China though. In March last year, the body which licenses video games in China shifted from the State Administration of Radio, Film and Television (SARFT) and the Ministry of Culture to the Central Propaganda Department. At that point, China halted licensing new games, which plunged the industry into uncertainty for 9 months.

Games are now being licensed again but the rules to get them licensed are a lot tougher.  Figures in the government and state media have over time expressed concerns about video games, worrying that they are too violent and therefore violate their socialist values.

Aside from this, there’s also been concerns about the addictive effects of gaming on children and the state have pushed for developers/publishers to adhere to increasingly strict measures to restrict the gameplay of minors. This is because they’re also worried about the rise of myopia in China (short-sightedness). If you’re interested, you can read the document here (view it on Chrome to see it translated).

As part of the new approval process, they will bar games that contain pornography, gambling, violence, historical misrepresentations, and any other content they deem inappropriate – which may have an impact on Western games looking to get published in China. And they really do mean it.

But this law change had a massive impact on the industry in China as well. 45 companies saw their shares drop and 38 companies had their stock value slump by 20%. Tencent’s share price dropped by 14% and loss $160 billion in value in 2018.

However, since games have started being approved again, Tencent’s shares went back up 4% and NetEase saw an increase of 1%.

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As their player base grows, it’s not just the Chinese investors and companies that will be looking at directing their focus onto this huge money making continent. It will be Western companies too.

For example, Keywords Studios announced in their 2017 report that they wanted to get into the Chinese market. Whilst this British company doesn’t have any games to their name, their artists have worked on Batman Arkham Knight, Mass Effect Andromeda, Halo 5, Gears 4 and Just Cause 3. The audio team worked on voice recording and sound design on The Legend of Zelda: Breath of the Wild, Dark Souls III and Watch Dogs 2. The localisation team contributed to League of Legends, FIFA, Clash Royal and Assassin’s Creed.

Why should you care about this seemingly unheard of company? Well, that’s kind of the point; even the smaller and lesser-known companies’ care about breaking into the Chinese market. These are all signs of change in the gaming development world.

So, what does all of this mean for those in the gaming industry? Well, perhaps it’s time to start learning Chinese.

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Have we missed anything? Is there anything key about this that we’ve missed? Let us know!