Standard & Poor's (S&P) recently announced that China will overtake the United States as the world's largest consumer market within the next five years. According to GO-Globe.com, Chinese online gaming revenues will reach $18.5 billion by the end of 2015, with 266 million players.
With nearly 75 percent of urban households approaching middle-class status in the next decade, China has emerged from a consumer vacuum, skipping whole generations of technology and customs. In video games, unhampered by the global domination of a few first-party giants, they've forged their own way - through mobile, online, and their own social channels. The Chinese gaming industry is a fragmented landscape of carriers, platforms, publishers, and developers. We can quickly forget any ambitions we might have to feed them our heritage franchises - they're busy making their own.
"It's important to search for a partner you can respect and trust, yes, but it's equally crucial to acknowledge your potential associates share the same ambitions for the global gaming market as you do"
Eutechnyx first came to China in 2007 with $16 million in funds and a goal: find a way in. Free-to-play karting games dominate the Chinese racing scene (remember, they never had Forza or Gran Turismo), but we sensed an underlying demand for something more. Along with their growing wealth, the Chinese had developed a passion for western brands, consumer electronics, and, perhaps the greatest status symbol money can buy, cars. Knowing a racing game with officially licensed cars had not yet been created in China - and given our heritage with the genre - we set out to make our free-to-play game, Auto Club Revolution (ACR), the country's de facto online licensed motorsport experience. But it was clear we needed knowledgeable partners to help us navigate such a unique, complex territory.
It's Not a One-Way Street
I won't be the first person to tell you that finding development and publishing partners for your game in China is a critical first step. But there's nuance to it.
Understand that China is not a slot machine to simply insert games into for a payout - they have their own companies, with their own interests in selling at home and abroad. It's important to search for a partner you can respect and trust, yes, but it's equally crucial to acknowledge your potential associates share the same ambitions for the global gaming market as you do. A successful venture requires not only thinking about how they can further your goals, but how you can further theirs. What does your game bring to the table, and how can you leverage that advantage to the benefit of all sides involved?
And that question isn't strictly limited to gaming interests. ACR has officially licensed cars from over 50 of the world's leading manufacturers, including BMW, Ford, VW, McLaren, Bugatti, and Bentley, as well as some new partnerships yet to be announced. These companies are all keen to influence young Chinese consumers with their brand, and ACR gives them an opportunity to engage directly in one of the world's fastest growing car economies, which we used to bolster our worth.
For Eutechnyx, our starting point was ChinaJoy, Shanghai's digital entertainment expo. If you're serious about working with the Chinese, this is the perfect place to start. Be prepared to spend a lot of time in China, in-person, meeting people and companies, earning trust, and learning how business is done for one-fifth of the Earth's population.
After weighing a number of prospects, we found our perfect partner in KongZhong, (NASDAQ: KONG, $331M market cap), who had been hugely successful in China with World of Tanks and were now looking for more western content to champion in the east. Four years after our initial reconnaissance mission to China, we thought we were finally set. But we quickly realized we still had a great deal more to learn.
Localization is More than Just Translation
If you think you're going to walk into China with your existing titles and not make any changes, think again. The key to success there is the ability to adapt your product to local tastes.
"Within the next 3-5 years, the biggest names in Chinese publishing will play an increasingly larger role in what we've come to believe is 'our' games industry"
China is a nation of 1.4 billion people - and they aren't lacking in content that caters to their own unique cultural experiences. Again, it's not just a one-way street of us dumping games on them. They have their own game developers already, making really good games that are localized. So, yes, they get to dictate terms to some degree, and you have to respect that power.
Brace yourself for intense feedback - from your partners and players. Within a week of announcing ACR in China, 5,000 comments were rolling in each day on KongZhong's ACR forums. Because of the country's overwhelming predilection for karting games, we had to redesign the basic handling of our vehicles to provide a softer landing into this new style of racing for them. Drifting around every corner was a required feature - 'non-negotiable', we were told. In recent years, grinding has quickly fallen out of favor with Chinese gamers, who care far more about eSports and multiplayer events now than ever, and we've had to keep up with the times, matching that demand with our product in various ways.
The Next Wave
Within the next 3-5 years, the biggest names in Chinese publishing will play an increasingly larger role in what we've come to believe is 'our' games industry. EA, Activision, Nintendo, King, and Zynga might be household names for us, but what of Tencent, KongZhong, NetEase, and Shanda? Time and again I am blown away by the commitment, passion, and sheer output of all the companies I've met in China - and you can be certain these emergent powerhouses have their eyes fixed on our territory.
And that's a good thing! It means more competition; more perspectives, tastes, and ideas. More games. And it's going to create opportunities here to aid Chinese game makers in the same way they've been guiding us over there. But we have to be willing to meet them on their level to make it work.
Good luck in your travels!