According to reports quoting sources, Microsoft Corp is stockpiling Chinese video game content in order to replicate Sony Group Corp's success with "Genshin Impact," cementing China's transition from a land of players to a hub of blockbuster developers.
The U.S. software giant and Japan's technological vanguard have been offering big money to small developers for years to nurture programs and license titles, but the impact of "Genshin Impact" has added a sense of urgency, according to sources.
Since its release two years ago, the action role-playing game from budding Shanghai studio miHoYo has generated billions of dollars and raised the bar in multi-player, cross-platform games - the type that Microsoft and Sony are looking for in China for their Game Pass and PlayStation Plus subscription services, according to sources.
Analysts believe that the growing Western interest in Chinese games reflects the maturation of China's game development industry. According to Daniel Ahmad, senior analyst at researcher Niko Partners, Chinese games are now on par with big-budget Western games.
"Chinese game developers are trying to standardise their development tools, create advanced production processes, invest in really large-scale teams," Ahmad said. "Ultimately, that helps provide them with the competitive edge to reach a broad audience both in terms of geography and platforms."
According to two industry sources, Microsoft has been assembling a team to scout for Chinese games. The Xbox maker has primarily filled its subscription roster with big-name titles, but is now wooing independent studios with big-money offers, according to sources.
Simultaneously, filings revealed that Microsoft is expanding its subscription service to personal computers and handheld devices, heightening the appeal of Chinese developers such as miHoYo, which have built a reputation for multi-player, cross-platform compatibility - "Genshin Impact" being a prime example.
One executive, whose studio signed a three-year licensing agreement with Microsoft to feature its game on Game Pass, said the US company recently offered a licensing deal many times larger for a sequel.
"We are not signing it yet because we think that when we fully complete our game, it will get an even better offer," the executive said.
Microsoft paid $2.5 million to feature action game "ARK: Survival Evolved" on Game Pass and $2.3 million for sequel ARK 2 - both from U.S. developer Studio Wildcard, which is owned by China's Snail Games.
Another developer, Recreate Games in Shanghai, said last year that it had signed a deal with Microsoft for its upcoming multi-player title "Party Animals" to launch exclusively on Xbox.
"Xbox contacted many projects in China and these projects primarily focus on developing console and PC games," said Chief Executive Luo Zixiong.
Microsoft was slower to launch in China than Sony. In 2017, the Japanese company launched the "China Hero Project," a gaming accelerator program aimed at assisting Chinese developers in publishing games on its PlayStation. It has supported 17 titles, seven of which have made it to the market.
"We've been quiet for the past two years. But the programme is still very much humming along," Kuangyi Zhou, former manager of the China Hero Project, told Reuters in April. "We are proud of all the games which have successfully emerged from the programme... There is no doubt that a new batch will be coming."
In 2019, Sony partnered with miHoYo, a little-known studio working on "Genshin Impact." The game, which became a global hit a year later, is available for personal computers and handheld devices, but the console version is only available on PlayStation.
According to two people familiar with the situation, Microsoft regretted missing out on "Genshin Impact." It spoke with miHoYo early in the game's development but did not reach an agreement, according to one of them. The other person stated that the experience is driving Microsoft's more aggressive pursuit of Chinese developers.
"Picking up 'Genshin Impact' made Sony a lot of money," the second person said, declining to be identified because the information was not public.
There is no public data on "Genshin Impact" console revenue, but Sensor Tower data from May put the figure at $3 billion for mobile devices.
For much of the twenty-first century, Chinese gamers primarily played imported titles because home-grown games were perceived as having lower production values. Even China's gaming behemoth Tencent Holdings Ltd began by publishing foreign games in China.
As the market grew to become the world's largest, local studios invested more in developing higher-quality games. The trend was accelerated by regulatory restrictions on new games and import limits, as well as the return of engineers from top-tier studios such as Ubisoft Entertainment SA and Activision Blizzard Inc.
Gaming executives now hail "Genshin Impact" as a watershed moment in the industry, praising its production value and seamless cross-platform gameplay. Apple Inc (AAPL.O) even used the game to demonstrate the power of its premium devices, such as the new iPad Air, which is outfitted with the company's latest M1 processor chip.
Another landmark was the release of "Naraka: Bladepoint" in 2021 by NetEase Inc, China's second-largest games company. While most Chinese titles are free to play and make money from in-game purchases, "Naraka: Bladepoint" sold over 10 million copies despite its $20 price tag, demonstrating confidence in its production value.
According to two sources, the game piqued the interest of both Microsoft and Sony. According to one of them, NetEase prioritized Microsoft, who made the game a Game Pass exclusive in June.
(Source:www.economictimes.com)
The U.S. software giant and Japan's technological vanguard have been offering big money to small developers for years to nurture programs and license titles, but the impact of "Genshin Impact" has added a sense of urgency, according to sources.
Since its release two years ago, the action role-playing game from budding Shanghai studio miHoYo has generated billions of dollars and raised the bar in multi-player, cross-platform games - the type that Microsoft and Sony are looking for in China for their Game Pass and PlayStation Plus subscription services, according to sources.
Analysts believe that the growing Western interest in Chinese games reflects the maturation of China's game development industry. According to Daniel Ahmad, senior analyst at researcher Niko Partners, Chinese games are now on par with big-budget Western games.
"Chinese game developers are trying to standardise their development tools, create advanced production processes, invest in really large-scale teams," Ahmad said. "Ultimately, that helps provide them with the competitive edge to reach a broad audience both in terms of geography and platforms."
According to two industry sources, Microsoft has been assembling a team to scout for Chinese games. The Xbox maker has primarily filled its subscription roster with big-name titles, but is now wooing independent studios with big-money offers, according to sources.
Simultaneously, filings revealed that Microsoft is expanding its subscription service to personal computers and handheld devices, heightening the appeal of Chinese developers such as miHoYo, which have built a reputation for multi-player, cross-platform compatibility - "Genshin Impact" being a prime example.
One executive, whose studio signed a three-year licensing agreement with Microsoft to feature its game on Game Pass, said the US company recently offered a licensing deal many times larger for a sequel.
"We are not signing it yet because we think that when we fully complete our game, it will get an even better offer," the executive said.
Microsoft paid $2.5 million to feature action game "ARK: Survival Evolved" on Game Pass and $2.3 million for sequel ARK 2 - both from U.S. developer Studio Wildcard, which is owned by China's Snail Games.
Another developer, Recreate Games in Shanghai, said last year that it had signed a deal with Microsoft for its upcoming multi-player title "Party Animals" to launch exclusively on Xbox.
"Xbox contacted many projects in China and these projects primarily focus on developing console and PC games," said Chief Executive Luo Zixiong.
Microsoft was slower to launch in China than Sony. In 2017, the Japanese company launched the "China Hero Project," a gaming accelerator program aimed at assisting Chinese developers in publishing games on its PlayStation. It has supported 17 titles, seven of which have made it to the market.
"We've been quiet for the past two years. But the programme is still very much humming along," Kuangyi Zhou, former manager of the China Hero Project, told Reuters in April. "We are proud of all the games which have successfully emerged from the programme... There is no doubt that a new batch will be coming."
In 2019, Sony partnered with miHoYo, a little-known studio working on "Genshin Impact." The game, which became a global hit a year later, is available for personal computers and handheld devices, but the console version is only available on PlayStation.
According to two people familiar with the situation, Microsoft regretted missing out on "Genshin Impact." It spoke with miHoYo early in the game's development but did not reach an agreement, according to one of them. The other person stated that the experience is driving Microsoft's more aggressive pursuit of Chinese developers.
"Picking up 'Genshin Impact' made Sony a lot of money," the second person said, declining to be identified because the information was not public.
There is no public data on "Genshin Impact" console revenue, but Sensor Tower data from May put the figure at $3 billion for mobile devices.
For much of the twenty-first century, Chinese gamers primarily played imported titles because home-grown games were perceived as having lower production values. Even China's gaming behemoth Tencent Holdings Ltd began by publishing foreign games in China.
As the market grew to become the world's largest, local studios invested more in developing higher-quality games. The trend was accelerated by regulatory restrictions on new games and import limits, as well as the return of engineers from top-tier studios such as Ubisoft Entertainment SA and Activision Blizzard Inc.
Gaming executives now hail "Genshin Impact" as a watershed moment in the industry, praising its production value and seamless cross-platform gameplay. Apple Inc (AAPL.O) even used the game to demonstrate the power of its premium devices, such as the new iPad Air, which is outfitted with the company's latest M1 processor chip.
Another landmark was the release of "Naraka: Bladepoint" in 2021 by NetEase Inc, China's second-largest games company. While most Chinese titles are free to play and make money from in-game purchases, "Naraka: Bladepoint" sold over 10 million copies despite its $20 price tag, demonstrating confidence in its production value.
According to two sources, the game piqued the interest of both Microsoft and Sony. According to one of them, NetEase prioritized Microsoft, who made the game a Game Pass exclusive in June.
(Source:www.economictimes.com)
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