Hi, my name is Kenny Liu, and I work in Revenue Strategy at Riot Games. Each week I compile a gaming industry insights newsletter that I share with other Rioters, including Riot’s senior leadership. This edition is the public version that I publish broadly every week as well. Opinions are mine.
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Kliu's Corner: China's Transition to Innovation
Current Events
Despite all the hype this week surrounding Call of Duty: Black Ops 4 Blackout, in my opinion Tencent's "Ring of Elysium is the most exciting battle royale launching this fall"
However, what excites me the most about RoE is not its dynamic weather system nor the fact that its free-to-play, but rather what it heralds for the future of Chinese games: innovation
I love this quote from a Chinese gaming executive: “Going overseas is just like swimming – when there’s a flood one day, you’ll realize it’s a survival skill"
That flood has finally arrived as China's freeze on new video game licenses may last another 4-6 months
"Amid the current uncertainty at home, Chinese game developers are ramping up international marketing. In the first half of the year overseas sales of China-developed titles reached US$4.6bn, up 16% year on year, outpacing the 5% y-o-y growth in the industry overall"
Aside from Tencent's RoE, this week NetEase announced that mobile PUBG clone Knives Out is heading to PlayStation 4, and China’s biggest anime video site Bilibili previewed two games on Steam
Context: The Scramble to Ship
Over the past couple of years, China's gaming giants, Tencent and NetEase, have rapidly grown their development capabilities in the fight for mobile battle royale market share
After PUBG Steam Early Access began on PC in Mar-2017, NetEase’s mobile clones, Knives Out and Rules of Survival, launched 8 months later in Nov-2017
After that, Tencent’s two PUBG Mobile games only took 4 months to ship in Mar-2018, and quickly dethroned NetEase's titles partially due to their official licensed branding
Context: The Scramble for IP
As Chinese mobile gamers' tastes evolved to seek higher quality experiences, this year Tencent and NetEase both scrambled around the world to sign numerous deals with Western partners with well-known IPs:
China
External Party
NetEase
Minority interest ($100M)
China publishing (maybe)
NetEase
Co-development
EVE-themed mobile AR MMO
NetEase
Joint venture
Game development studio
Tencent
Co-development
Call of Duty mobile game
Tencent
Minority interest (10%)
PUBG
Tencent
Co-development
Red Alert mobile game
Tencent
Majority interest (80%)
Path of Exile
Tencent
Co-development
Online games
Tencent
Co-development (& JV?)
New games (& maybe IP licensing)
Tencent
Minority interest (5%)
China publishing
Next Step: Innovation
What each of these collaborations signify is really an in-depth learning opportunity for both Tencent and NetEase to understand how to layer innovation on top of their already incredibly fast production processes
