The Chinese game scene is in a sort of holding pattern at the moment, with an overhaul to the regulatory system resulting in a hold on approvals for new games stretching back to March. It's not ideal for any game creator looking to launch in the country, but speaking with GamesIndustry.biz recently, Vicarious PR CEO Michael Brown said the effects of this hold are particularly concerning for independent developers.
"Already we've seen Tencent take a fairly large stock hit, but what isn't talked about is how this gap in approvals has hit the smaller developers and the smaller publishers," Brown said. "Unless you're Tencent and have financial power to ride this out, a lot of the smaller publishers and developers rely on quick development and release schedules to stay afloat, and that's not possible anymore. It's become a real issue for a lot of people, especially independent game developers within China. It's going to become a real problem for them because they're going to struggle now to release their games."
"A lot of the smaller publishers and developers rely on quick development and release schedules to stay afloat, and that's not possible anymore"
The head of a California-based PR firm might not seem like a natural interview subject to discuss the Chinese market, but Vicarious has more experience and insight on China than one might expect. Since its founding in 2015, Vicarious has partnered closely with Chinese owned-and-operated marketer-publisher New Code to bring Chinese games to Western markets (Brown doubles as New Code's PR director). It has provided marketing assistance and consulted on a number of projects from the likes of Tencent and Netease, including the battle royale shooters Ring of Elysium and PUBG Mobile.
While the time frame for approvals to restart was somewhat up in the air at the time we spoke, Brown's greater concern was the possibility that the Chinese government may seek to roll out new restrictions alongside the process, like aggressive time limits for younger players. There's also some concern about whether the approval process will slow down and fewer games will be permitted into the market. Whatever such burdens are imposed by the new system, Brown has a suspicion who will feel them the most.
"It's not going to affect the top 1% but it's certainly going to affect smaller developers and could potentially mean in the long run, developers and publishers that aren't giant multinational corporations could end up looking overseas for more financial security," Brown said. "If China's approval policy doesn't go back to the way it was, not only is it going to stifle growth overall for the market, but it could potentially mean a development shift toward building games from the start with a more global audience in mind."
This would be a significant change in the mindset of many Chinese developers, Brown said. To this point, the local scene there has been making games for the home market because that's been an entirely viable financial strategy.
"China by itself basically equates to nearly one-third of the global game market," Brown explained. "So if you develop a game within China, that's basically one-third of the entire globe you've already got an audience for. That means even for the AAA publishers of China, they still rely heavily on their core, home audience. As a developer within the Chinese market, you don't really need to consider another market to be successful. If you're successful within your home market, you're a success. But if you're a developer in the UK for example, if you're a success there but nowhere else, the numbers don't really equate."
"As a developer within the Chinese market, you don't really need to consider another market to be successful. If you're successful within your home market, you're a success"
On the other hand, Western publishers eager to access that untapped one-third of the global market have plenty of hurdles in front of them.
"Unless you're a AAA developer with unlimited resources and legal power, you have very limited options to get in the Chinese market," Brown said. "You can go with an existing publisher like Tencent, or partner with a medium-sized publisher. The pros are that you can get your game released in China very easily in terms of the process, the licenses from the government and stuff. But you're also sacrificing potentially a 70% cut [of revenue].
"On top of that, if you partner with a giant publisher like Tencent, the way Tencent has traditionally operated within the Chinese market--and this goes for all publishers within the Chinese market--is they'll take on 10 or 20 games. But within the first couple months, they'll see which three to five are doing really well, continue to support those, and drop the rest. So if your game does not perform well, you're between a rock and a hard place that way."
There are also significant cultural differences between the markets, so art styles and content need to be changed to meet the tastes of Chinese audiences (not to mention government censors). In short, Western publishers have already been creating games with a Chinese version in mind from day one, but the opposite has not been true, and the revamped approvals process may force Chinese developers to adapt on the fly.
"It's worrying because it not only stifles growth at almost every level, but it actively reduces the willingness to be creative and innovative within the Chinese market," Brown said. "Now, the Chinese market has a bit of a stigma for making cloned games. But that's only a section of the Chinese market. A lot of the developers there, particularly the independent developers, are very, very creative.
Even when looking at a game like Ring of Elysium, published by Tencent and very clearly riding the wave of battle royale games, Brown said the developers showed off their creativity in a host of quality of life improvements and new iterations on a successful formula.
"A lot of that doesn't get talked about very often, which is a really sad thing because there are a lot of creative developers from China," he said. "And I feel like these new policies and restrictions, if they go as bad as they could potentially go, are a direct threat to all that creativity and a $38 billion annual revenue industry."
Brown predicted that the next two years would see a significant increase in the number of games on Steam and Western mobile platforms from independent Chinese developers, in part because Vicarious has already seen an uptick in outreach from smaller developers looking to bring their titles West. Brown will presumably provide them with a sympathetic ear; he just hopes the press and players will do the same.
"The more exposure people get and can give particularly small Chinese developers is super important," Brown said. "Ultimately, it's them who are going to be most hurt by this. It's them who need advocates. You don't need to advocate for the Tencents and Neteases of the world; you need to advocate for the people who can't afford to advocate for themselves."