Last year was a rollercoaster year for the video game industry in China. It was threatened by strong new legislation, new data proved its growing cultural significance, and the continued introduction of Western brands taught us more about its nature. So we sat down with two experts in the field – the head of foreign investment at Leiting Games in China and an executive at a Chinese gaming analytics firm – to discuss these events and get their advice on how IP licensors can explore opportunities in Chinese video games.
Video games are extremely popular in China. A recent survey found that Chinese gamers over 18 years old spend more time playing than in any other country, with an average of 12.4 hours a week. By contrast, U.S gamers played 7.6 hours, while the global average sits at 8.5 hours.
Perhaps that’s why, in early September, the Chinese government passed a volley of new legislations that clamped down on children playing too much. In 2019, China restricted children to a total of 13.5 hours a week. In September, they’re adding that children can only play between 8pm and 9pm. And only on Friday, Saturday, Sunday and public holidays. A hefty restriction.
Is further legislation on the horizon? And will it halt the industry there? Maxim Rate, head of foreign investment at Leiting Games in China and founder of Westward Gaming Ventures, expects the market will see some changes. But he isn’t overly concerned about the health of the industry.
“I believe [the passing of legislation] is going to be continued, but it’s difficult to say to what extent and with what specific terms. It’s not going to mean the market will close down or die off or anything like that,” he explained to us. “It’ll adjust. It’s already adjusting. The most important adjustment we see now is that most of the companies focus on the international markets rather than just the domestic market. I think, in a sense, that’s one of the reasons the legislation was passed – to force companies to diversify a bit.”
Even though the future is uncertain, Maxim is confident that the Chinese market hasn’t lost its appeal to international studios.
“There are like 1.5 billion people in china. The audience is huge. The size of the market is the largest in the world. Total revenue from the top ten grossing mobile games in China was about $30 billion. You wouldn’t want to miss out,” he said.
It would seem Maxim is correct. China is still an enormously desirable market for a game. In fact, western IP owners like Warner Brothers clearly don’t want to miss out. In September 2021, Chinese developer NetEase, with IP licensed from Warner Brothers, released Harry Potter: Magic Awakened into China, grossing more than $200M in less than 2 months after it launched. Its resounding success was likely a relief; There have been a number of lacklustre attempts to bring western IPs to China. Most notably, the Marvel: Contest of Champions remake, which rapidly declined after showing initial success.
Through Maxim’s experience and his work helping Chinese games break into the international markets, the success of international IP licensed games often comes down to two key factors.
“People try to bring IPs that are really big in their respective markets but are really not popular in the Chinese market. If we take Western comics like Marvel, they’re mostly okay in China – sometimes a hit, sometimes a miss,” Maxim explained. “But characters like the Punisher or Hell-Boy probably would never be popular in China because they just go way overboard with violence and things. They’d never find their audience in China. They may never be allowed to be published in the first place!”
Other experts agree. We interviewed a veteran of the Chinese gaming industry, and now executive at a gaming analytics provider. In the case of Harry Potter, she noted that Magic Awakened was particularly successful because it adapted the IP so that the audience felt like they were part of the Harry Potter world themselves.
“It was not limited to the leading character. You aren’t Harry, you aren’t Ron – you’re yourself. You learn and interact with different wizards and witches. That’s what made it so special.”
We heard similar views when speaking with other experts, confirming how important IP is.
“The number one consideration is whether the IP is politically correct,” one expert said. “The audience will be very sensitive to different interpretations and whether it’s in obvious contradiction to what are the popular mainstream values in China.”
Finding out which IPs will work in China is a tough process. Maxim explained that the process can vary, IP to IP. But it is extremely important to test out an IP before making a big commitment.
“Take a couple of chapters from the book, scenes from the movie or levels from your game, adapt it to the new audience and give it a try,” Maxim said. “See if it is something [the potential new audience] can even understand at all before you decide to go all in.”
If that’s going to work, Maxim stresses that it’s important to build strong connections in China who can help evaluate the IP and shape how you adapt it.
“Gameplay can be such a powerful tool but it can also be such a big reason for failure. Ten to twenty years ago there were a lot of movie IPs made into games. Many games with strong IP failed because their gameplay was kind of meh and the real gamers cared about that.”
Good gameplay can even attract new fans, who weren’t interested in the original IP. For example, many people love The Witcher 3 game, but have never read the original books.
“Sometimes I play a game and it’s based on some IP I don’t really care about, but I’m exposed to it because I love the gameplay. I wasn’t really a fan of Warhammer that much but the game itself was fun. Through [the high quality gameplay] I now understand that, actually, Warhammer can be fun.“
Ultimately, the fact that you need good gameplay mechanics is a good thing. Maxim notes that it provides a safety net. It can prove that an IP has potential, in a way that movies and literature can’t. As Wizards Unite confirms, games can be a powerful vehicle for promoting an IP in a new market.
If you’d like to share your experiences licensing IP into games or with the Chinese gaming market, drop us a line at contact@layerlicensing.com. We’d love to talk.
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