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China: The gaming superpower continues to march West

Console, mobile, online and middleware - pay close attention to China's significant investment in the games business, says Matt Martin

ChinaJoy was overwhelming. It's difficult to emphasise the scale of the region's largest consumer and trade video game event, which took place last week. Partly because it was my first time to Shanghai and so I was hit by all the assumptions and cliches I expected.

ChinaJoy is bigger than E3, it's hotter than E3 and it's louder than E3. It feels barely regulated - thousands of video games accompanied by rock bands, posing booth babes and BMX riders slinging their bikes around. DJs bang out ear-splitting beats and hundreds of cosplayers mingle to create a glorious, sweaty mess. This is video games, essentially. Beautiful people showing off, some immaculate in their tailored cosplay, some wearing floppy wigs and poorly made swords. Geeks sit on the floor trading cards. Amateur photographers swamp the pretty girls as you're handed promotional food and free credit vouchers for games you've never heard of.

With 200,000 visitors over five days - split between five separate aircraft hangers full of games and another two hangers housing business-to-business booths - it's clear one man isn't going to be able to capture the complete story here. I can present and receive business cards in the traditional manner (to give; use thumb and forefinger of both hands with thumbs on top. When receiving; study the details and read names aloud), but I can't string a conversation together.

"Tencent has fingers in the pies of the biggest game engine in the West, the biggest online PC games and the biggest console games publisher"

What was equally hard to understand, or what became a concern as the week went on, was the lack of Western faces attending ChinaJoy. Part of the event is focused purely on design, on business and on video game social issues. Yes, a majority of The China Game Developer Conference is in Chinese and only translated into Japanese. But there's a chunk of content delivered by either English speakers or translated for attendees to take away some valuable knowledge. More importantly beyond that, the real business, like any event, is done in the hotel bar and lobby. And that's where attendance seemed thin on the ground.

I spotted a couple of significant Western faces, mainly representing big business. A few publishers, the usual middleware and engine pioneers, talent representatives, investment banks and mobile phone operators - but very few creative talent. That may be a concern for those that claim independence will be the future of the games business, or those running smaller companies that feel their strength lies in being nimble and adapting to new trends. As developers are fond of saying, you need to be first or best in this business. China's already an established market, so you're not first anymore. In which case you'd better be developing the best game you can make.

Evidence of China's significance in the global gaming market is clear. Local free-to-play MMO company Snail Game, which employs over 3,000 people, has just convinced four banks to loan it almost $100 million for one game, Black Gold Online. It's taking it worldwide, and putting its money where its mouth is by dedicating $32 million of its own cash on top to market Black Gold Online outside of China. The MMO market may have gotten a bad name in the past three years by sucking up investor money and coughing out poor product, but that was funded by VCs who didn't know anything about games and publishers who fluffed their projected numbers on the back of World of Warcraft. If there's an MMO revival it'll come from companies like Snail Games, backing F2P titles with their own well-placed cash.

In mobile, a company like CocoaChina is pulling in $12 million in sales a month, 95 per cent of which is from its local region, leaving only 5 per cent of those as international sales - clearly, international markets are its next target for growth.

It's not just those online and mobile formats we see as the future of the industry where China is investing, but the oldboys in console gaming too. Who backed Bobby Kotick's investment syndicate to buy Activision's independence from media giant Vivendi? Tencent. Yes, it's the operator of Call of Duty Online in China. And it's the same Tencent that owns League of Legends creator Riot Games and a nice little stake in Epic Games. So that's fingers in the pies of the biggest game engine in the West, the biggest online PC games and the biggest console games publisher. I can't wait to see how that informs the products that come out of Activision's mobile games studio...

Some of these investments aren't new, but the trend is clearly increasing and there's evidence it's for the better. What would have happened to Cyptic Games in 2011 after it was dropped by Atari? It would have become another footnote in the story of imploding MMO studios had it not been picked up by Perfect World, a company that immediately understood the value of a talented team and combined their development passion with its own knowledge of the free-to-play business.

"If there's an MMO revival it'll come from companies like Snail Games, backing free-to-play titles with its own well-placed cash"

Riot and Cryptic are companies that knew where to look for investment. These companies opened dialogue early with Chinese business while everyone else was sniffing around investment from VCs hungry to get a slice of a Facebook gaming market that no one really understood (or at least, they knew how to exploit the investment, they just didn't understand how to make Facebook gaming into anything other than a get rich quick scheme).

And this isn't just private investment - the local government is getting behind the games business because it understands the value that it brings to the region and the importance of exports to the economy.

So that's console, PC, middleware and mobile markets all covered. And all are predicted to grow over the next 24 months at the very least. China isn't an emerging market, it's an emerged market. These peaks are growing fast and if you don't start climbing you'll be left at the bottom. China doesn't have all the answers - browser gaming remains incredibly popular throughout Asia but it's unlikely to be more than the moderate success it is in small pockets of Europe - but it's a region using a home field advantage, strengthening business in cities like Shanghai as well as making bold moves in the United States, amongst others.

There's no doubt that China is a really hard region to do business in from a Western perspective, for various obvious and obscure reasons. But since when was easy business a rewarding or worthwhile thing to do? What was apparent from the few Western companies I met during ChinaJoy is the dedication and passion they have for creating a new business in and around a booming market.

As one veteran and ex-console developer said to me, as he tries to build a mobile gaming company with strong ties in Asia: "Travel to different places and work really hard to create an exciting new business or sit on your arse at home making games for Sony - what are you going to do?"

What I see in China is an economy and culture that's building for the long-term, both in and outside its own boundaries. Businesses in the West need to ask themselves if they see that same support around them right now, and if not, whether they want to become part of what could become one of the most exciting opportunities for growth the games business has enjoyed for a very long time.

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Matt Martin avatar
Matt Martin: Matt Martin joined GamesIndustry in 2006 and was made editor of the site in 2008. With over ten years experience in journalism, he has written for multiple trade, consumer, contract and business-to-business publications in the games, retail and technology sectors.
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