According to reports, 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 nation of players to a hub of blockbuster makers.
The US software giant and Japan’s technological vanguard have been paying significant money to tiny producers for years to foster programmes and licence titles, but the influence of “Genshin Impact” has added a feeling 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 shows the maturation of China’s game creation sector. According to Daniel Ahmad, senior analyst at researcher Niko Partners, Chinese games are now on par with big-budget Western games.
“Chinese game makers are attempting to standardize their development tools, build innovative production methods, and invest in really large-scale teams,” Ahmad explained.
According to two industry sources, Microsoft has been assembling a team to spy for Chinese games. The Xbox creator has primarily built its subscription catalogue with big-name titles but is now pursuing indie studios with bigmoney 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 inked a three-year licensing agreement with Microsoft to promote their game-on-Game Pass, said the US company recently offered a license deal several times larger for a sequel.
“We are not signing it yet because we believe that once we have completed our game, we will receive an even better offer,” the executive explained.
Microsoft paid $2.5 million to showcase action game “ARK: Survival Evolved” on Game Pass, and $2.3 million for sequel ARK 2 – both from US developer Studio Wildcard, which is owned by China’s Snail Games.
Another developer, Recreate Games in Shanghai, stated last year that it had inked a deal with Microsoft for its planned multi-player title “Party Animals” to premiere exclusively on Xbox.
“Xbox contacted several projects in China, with the majority of these projects focusing on developing console and PC games,” stated Chief Executive Luo Zixiong.
Microsoft did not respond to requests for comment via email.
CATCH-UP PLAY
Microsoft was slower to launch in China than Sony. In 2017, the Japanese company announced the “China Hero Project,” a gaming accelerator programme aimed at assisting Chinese creators in publishing games on the PlayStation. It has backed 17 titles, seven of which have made it to the market.
“We’ve been rather quiet for the previous two years. However, the programme is still going strong “Former China Hero Project manager Kuangyi Zhou told Reuters in April.
In 2019, Sony teamed 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 portable devices, but the console version is only available on PlayStation.
According to two persons acquainted with the situation, Microsoft regrets missing out on “Genshin Impact.” It met with miHoYo early in the game’s development but did not strike an agreement, according to one of them. The other source stated that the experience is motivating Microsoft’s more aggressive pursuit of Chinese developers.
“Picking up ‘Genshin Impact’ made Sony a lot of money,” said the second person, who declined to be identified since the information was not public.
There is no official statistics on “Genshin Impact” console revenue, however Sensor Tower data from May estimated the sum at $3 billion for mobile devices.
EVOLUTION OF THE MARKET
For much of the twenty-first century, Chinese gamers primarily played foreign 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 developed to become the world’s largest, local developers invested more in generating higher-quality games. The tendency was accelerated by regulatory constraints on new games and import quotas, as well as the repatriation 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 even utilised the game to demonstrate the capabilities of its premium gadgets, such as the new iPad Air, which is outfitted with the company’s latest M1 CPU chip.
Another watershed moment 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 faith in its production value.
According to two sources, the game piqued the interest of both Microsoft and Sony. According to one of them, NetEase prioritised Microsoft, who made the game a Game Pass exclusive in June.
