HONG KONG (Reuters) – Looking to follow in the footsteps of Sony’s successful partnership with Chinese video game Genshin Impact, Microsoft is looking to source Chinese-made games. The Chinese games industry is moving from a player-only market to a development base for hugely popular titles, and MS’s move is likely to confirm this trend.
For years, Sony and MS have poured millions of dollars into small developers to grow and license programs. However, the massive success of Genshin Impact has had an effect that strengthens MS’s sense of urgency, sources said.
The action role-playing game (RPG) “Genshin” was developed by a young studio in Shanghai called “miHoYo”. It made billions of dollars in the first two years of its release and set the bar for “multiplayer” and “cross-platform” games that can be played on a variety of devices and devices.
These are the types of games Sony is looking for in China for monthly subscription services called PlayStation Plus and MS Game Pass, the sources said.
Analysts say the growing interest in Chinese games in the West reflects the maturity of the country’s game development industry. Daniel Ahmad, senior analyst at research firm Niko Partners, said Chinese games are now on par with big-budget Western games.
“Chinese game developers are looking to standardize their development tools, create advanced production processes, and invest in building very large teams. It will give us a competitive edge to reach a wide range of users in terms of platform and platform,” explained Ahmad .
Microsoft has formed a team to discover Chinese games, two industry sources said. Until now, it has mainly distributed games from big brands with its own subscription, but now it is said that it is offering a huge amount even to independent studios and asking for partnerships.
MS is also expanding its subscription service beyond the Xbox game console to PCs and mobile devices. This will further increase the attraction of Chinese developers such as Mi Hayu, who have established a reputation for developing multiplayer and cross-platform games such as Genshin.
An executive at a studio that signed a licensing deal to distribute its games on Microsoft’s Game Pass subscription service three years ago said the company has recently offered an entire series many times that much. “I don’t have a deal yet because I think I will be offered an even bigger amount once the series is complete,” he said.
According to the filing documents, MS paid $2.5 million to distribute the dinosaur action game “ARK: Survival Evolved” on the Game Pass and $2.3 million to the “ARK2” series, indicating a high market price. Both are the work of Studio Wildcard, an American developer owned by Snail Games of China.
And an executive at Recreate Games, a Shanghai-based game developer, said it struck a deal with Microsoft last year to distribute an in-development multiplayer game called “Party Animals” exclusively for Xbox.
MS did not respond to a Reuters request for comment.
MS fell behind Sony at first. In 2017, Sony launched the China Hero Project to help Chinese companies develop games for the PlayStation. He supported 17 works, 7 of which were commercialized.
“After two years of silence, the program is still going strong,” Kuangyi Zhou, the former head of the project, told Reuters in April. “I am proud of all the successful games that have come out of this program, and I have no doubt that there will be new ones to come.”
In 2019, Sony partnered with the then unknown Mihayu. Released a year later, the company’s “Genshin” was popular worldwide. The game is available on PC and mobile devices, but the console version is exclusive to PlayStation.
According to two sources, MS regrets losing Genshin. The company reached out to Mihayu during the early stages of its development, but did not reach an agreement, one of the sources said.
Another source said that experience inspired MS to find Chinese developers now. “Sony made a lot of money by discovering Genshin Impact,” said one of the sources.
Sales figures for Genshin Impact on the PlayStation are not disclosed, but Sensor Tower data shows that sales for the mobile version reached $3 billion in May.
Chinese game players have played games imported from abroad for a long time in the 21st century. Domestic games are said to be of poor quality, and even Tencent Holdings, the leader in Chinese games, initially offered foreign titles.
As the gaming industry grows to be one of the largest in the world, local studios are investing more in developing quality games. The race to develop has accelerated as Chinese authorities have restricted the approval of new online games and also limited the number of imported titles.
The return to China of engineers who had worked at world-class studios such as Ubisoft Entertainment and Activision Blizzard also helped improve quality.
In addition to Genshin, in 2021, the survival action game “NARAKA: Bladepoint” developed by China’s second largest game company “NetEase” also achieved great success.
Most of the games in China are free, and they make money from in-game purchases. This is because the quality of the work has been appraised.
MS and Sony are eyeing the game, according to two sources familiar with the matter. According to one of the people, NetEase prioritized discussions with MS, and decided to start exclusive distribution on Game Pass in June.
(Reporter by Josh Ye)
