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Microsoft launches a race against Sony By Stocksak to find Chinese gaming hits.

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© Stocksak. View of a video arcade after the COVID-19 flu epidemic in Shanghai, China on October 23, 2022. REUTERS/Aly Song

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By Josh Ye

HONG KONG (Stocksak). Microsoft Corp (NASDAQ: ) Chinese video games content is being stockpiled to be copied Sony (NYSE:) Group Corp’s success “Genshin Impact” sources claimed, solidifying China’s transition from a land of players to one of the world’s most important developers.

Sources say that the U.S. Software giant and Japan’s leading technology company have been offering large amounts of money to small developers for years to nurture programs and license titles. However, the impact of “Genshin Impact”, sources claim, has given rise to a sense urgency.

The action role-playing video game by Shanghai’s budding studio miHoYo has made billions of dollar since its release two year ago. This has raised the bar in cross-platform multi-player and cross-platform games. Sources say that Microsoft and Sony want to find Chinese gamers for their PlayStation Plus and Game Pass subscriptions.

Analysts said that China’s game industry is maturing and the West is increasingly interested in Chinese games. Senior analyst at Niko Partners Daniel Ahmad said that Chinese games now have the same quality as big-budget Western video games.

Ahmad stated that Chinese game developers are working to standardize their development tools, create advanced production methods, and invest in large-scale teams. “Ultimately, it gives them the competitive edge they need to reach a wide audience in terms both of geography and platforms.”

Two industry sources claimed that Microsoft has been building a team of scouts to find Chinese games. They said that while the Xbox maker used to primarily offer big-brand titles as a subscription, it is now offering big-money deals to independent studios.

Filings also showed that Microsoft was expanding its subscription service to personal computers, handheld devices, and increasing the appeal of Chinese developers like miHoYo, which have a reputation for multi-player compatibility across platforms – with “Genshin Impact” being a prime example.

One executive, whose studio entered into a licensing contract with Microsoft three years back to feature its game on Game Pass. The U.S. firm offered a more lucrative licensing deal for a sequel, according to the company.

The executive stated that they aren’t signing it yet as they believe that once we have completed our game, we will be able to get an even better deal.

Filings revealed that Microsoft paid $2.5million for “ARK: Survival Evolved” and $2.3 million for its sequel ARK 2 – both from U.S. developer Studio Wildcard. Both games were developed by Snail Games in China.

Recreate Games in Shanghai’s executive said that his company had signed a deal to Microsoft last year for its multi-player title, “Party Animals”, to launch exclusively on Xbox.

“Xbox has contacted many projects in China, and these projects primarily concentrate on developing console and/or PC games,” said Luo Zixiong Chief Executive.

Microsoft did not respond via email to requests for comment.

PLAYING CATCHUP

Microsoft was slower to catch up in China than Sony. The Japanese firm launched the gaming accelerator program “China Hero Project” in 2017, which aimed to help Chinese developers publish games on its PlayStation. Seventeen titles have been supported by the company, seven of which have made it to market.

“We have been quiet for the last two years. Stocksak was told by Kuangyi Zhou in April that the programme is still humming along. “We are proud to have seen all the games that have come out of the programme… It is certain that a new batch of games will emerge.

Sony partnered with miHoYo in 2019, a small studio that was developing “Genshin Impact” in 2019. The game, which became a worldwide hit a year later, can be played on handheld devices and personal computers. But the console version is only available on PlayStation.

Two people familiar with the matter say Microsoft regrets not having taken up “Genshin Impact” One source said that it spoke to miHoYo during the game’s early stages but did not agree to a deal. The other person said that experience is what drives Microsoft’s pursuit of Chinese developers.

The second person said that Sony made a lot by picking up “Genshin Impact”, but declined to identify themselves as the information was confidential.

There is no data publically available on the console revenue from “Genshin Impact”, however, Sensor Tower data put the figure at $3 Billion for mobile devices as of May.

MARKET EVOLUTION

Chinese gamers mainly played imported games for much of the 21st Century, as they were less productive than home-grown titles. Tencent Holdings Ltd, a Chinese gaming giant, began publishing foreign games at its home.

As the market grew to become the largest in the world, local studios invested more in creating better-quality games. The growth of the market was accelerated by restrictions on new games and limitations on imports. This was helped by the return of engineers from top-tier studios like Ubisoft Entertainment SA or Activision Blizzard Inc. (NASDAQ:).

Gaming executives now refer to “Genshin Impact”, a global industry milestone, praising its production value and seamless cross platform game play. Apple Inc (NASDAQ) used the game to showcase the power of its premium devices, including the new iPad Air with the latest M1 processor chip.

Another milestone was the 2021 release of “Naraka: Bladepoint” by NetEase (NASDAQ:) Inc., China’s 2nd-largest games company. Despite being free to download and make money from in-game sales, “Naraka: Bladepoint”, a Chinese title, sold more than 10 million copies despite the fact that it cost $20. This is a sign of its production value.

Stocksak heard from two sources that the game attracted both Sony and Microsoft. One source said that NetEase prioritized Microsoft, making the game an exclusive Game Pass title in June.

News Source and Credit

Stocksak Editorial

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