In the Hot Seat: Three ways Western developers are leaving a fortune on the table in China

[music] Hello, hello everyone and welcome back to In the Hot Seat, the video interview series where we talk to some of our fantastic speakers before they take to the Pocket Gamer Connect stage through our global events. Now today in the hot seat I have someone who knows the sort of east to west intersection of gaming all too well and she's joining me today actually right before her upcoming talk at PGC Summit Shanghai. Cla Yang overseas business development lead at Kingsoft. Welcome to the hot seat. Cla it's so good to have you join us.
Hello everyone Claire. So I've been doing business development for eight years or so. Well, it's been a long time. So I've been an assist for a publishers for investment developers as well. So uh and there's something interesting to share.
Yeah.
Yeah. We're so excited to have you today. Thank you so much for taking the time to to talk to me.

Um so Cla I want to ask you you spend your days at Kingoft obviously structuring partnerships M&A and financing across this sort of east to west divide. So I want to ask you how did you get up how did you end up working that in that particular sort of seam between China and western games? How did you find yourself where you are today?
So before I joined guy gaming I've been always in private banking. So I have some finance background and my best speed for my passions is probably been in gaming. So uh uh so choosing to be a business development seems to be the most like appropriate uh opening for my for me to enter this industry and uh I joined gaming industry first in the publishers in China. Um and they've been publishing Gardenes and Subway Surfers, one of the most like

popular casual games back in the day. And that kind of begins with starts my career uh in in gaming. And then uh I think my second chapter uh important chapter would be me helping my games uh the uh Russian European uh studio who's been expanding to China. So they they were um in a so-cal strategic partnerships with Sydream Sky which is the first uh company that I work for in gaming. Uh and then and I heard that they want to expand their business in China and since I was uh your publisher back in the day why don't I joined you until the war broke out. So uh there's some tormoids and politics and then I switched to Kingoft which I've been is my fourth years now. So at King still mostly

scouting games from the west to the east and uh King also has its own portfolio. So I think 80% of our revenue comes from in-house titles. So um we do offer a lot of uh code developments or maybe be uh zero to one of full dab cycle to uh some top IP holders. So um if the games that we create became very successful then it lease my weight and were investment. So basically that's my career path. I think it's really interesting too because Cla as I was sort of preparing for this interview I was looking into you in your role and it's a role that probably barely existed a decade a decade ago and now that China sort of makes up up to what is it 20% of global player spending and 38% of growth just some numbers there you're sitting in a really interesting gap now which is

probably one of the most valuable seats in the industry you're at the bridge between two sides you know
um well it depends on because I think for most developers in the US, China is still a black box.
So,
exactly
especially I think in Europe and in maybe in North America, no one knows what to do with China and policy keeps changing
and on top of that there are a lot of local uh license you need to get. There are different platforms there are different you don't have Google plays and then payment is different community is different so for a western developers to understand the strategy in China is very different it's very difficult on the opposite um many Chinese developers and publishers choose to go overseas as well so you can see I think in pop go we're
four out of 10 the mo the top growth in

games are from China because competitions in China in the Chinese market is very intense. That's why a lots of uh local developers choose to
[snorts]
uh publish in the west as well. But that's out of my expertise actually. So I would say my uh my strengths is still in bringing games into China and helping the western developers to understand the market.
Yeah. Interesting. And CL that leads you on nicely to my next question. So within these deals um that you're facilitating
and see overseeing what's something that you've seen up close that's stuck with you the kind of thing that gives you a read on this market that you think that you want to share with everyone. You know we we all know that crossber deals really fall apart because of money. It seems to be other things. So what are your thoughts on that? Um so there are questions before signing and there were issues after signing. So

before signing I think it's still um they don't have an exact idea how much money they can make in China. Um, so a lot of like indie or mid-tier uh developers which I'm targeting the midsize studios um they don't have that many people or inside to explore or do research for a market that's very very far from them. So they might have the concept that okay China is a huge market but they don't have an idea exactly how much money they can make here. Um, so very often we say if you want to have a publisher and you probably would need a team of three up to five people so that the partnership can can continue because there's still some localization work and some technical support we need

from the developers and they constantly hesitating. So they're not sure it's like, oh, we we we still want to focus prioritize um um on on our games in the west, which makes sense. I mean,
but I mean
um with probably just three to four extra team members, you can make I don't know 10 times or 100 times of money. And I don't they they understand the math mostly because they simply they just don't know. They don't know. Yeah.
Yeah. Yeah. So that's I think that's actually the biggest issues before signing. [snorts] Um
and after signing there still are an important gap in understanding the strategy in China because I think especially for mobile games uh in the west the way they do they publish a mobile game is more like climbing up a

mountain. That's actually something I wanted I talk in the PGC summit. Um so they have a build and then they tested they soft launch it in more territories. They kind of um improving the retentions and then they start doing more way. It's like climbing up the mountains. But in China is
so in China is why you have a huge dam and you're kind of using a holes. Um okay the mechanic is China even for mobile games we have this so-called wishlist system very similar to PC and console so even for mobile gamers they wish list the games half a year before the game was launched. So the way we do UA is well not the traditional UA we call them content advertising well ahead of time. So, say if you launch a game in July this year, you

probably start advertising everything from January
and you don't see that converting to download right away because your game is not launched yet, but that would convert to wish listing numbers and um that actually confuse a lot of our partners in the west because they they keep asking us what's your UA plan and uh what's your marketing plan? And and we're saying this is our marketing plan. We do chat. We do all this communities. We do the Chinese versions of Instagram, Twitter and uh YouTube. All of this kind of campaigns happen well the time of time. And this why we think it's important that we have this kind of um say user generated contents or contest competitions uh with the users

to
keep filling up the tank and then once the game is launched you will have probably if if you're good I mean for example for other games with skins we usually have millions of downloads at day one So it it's like once you hit the launch date your server will be flooded by millions of user instantly even not in the first you for sure can reach that in the first week. So the idea is very different
that's super interesting.
Yeah. Yeah. So that kinds of uh so for that I already uh tells you a lot when we discuss our marketing strategy publishing strategy with some partners and that's very difficult to tell your the developers even before signing because there's a

lot for them to understand to to take in. Yeah.
Yeah. I can imagine. So Claire, we as I as I've said, you you work at this sort of intersection between Chinese um and Western games. What's a misconception I want to talk about the myths a little bit. What's a myth misconception each side has about the other that you think quietly costs them that you that they need to avoid?
Okay. Well, interesting. um a lot of issues can be solved. It's not like um they cannot be solved. The only thing that uh that's really challenging or maybe stopping the western developers to enter the Chinese market would be the censorship system because there's lots of like sensitive contents here and
while at the stage of design um

my st for example like lucky battle to what extent that is acceptable And on top of that, there's a no goal. And of course, there's a way to fix it. But once again, there's a matter of cost and time, right? And other than that, I'm going to be very honest here. There's some way to bypass this kind of censorship. So, um there's always the great market that you could do. So you can do things in the
in in the fast way which uh is not something we can do but uh I'm sure there are partners in the local market that can help. So
there's always loopholes, right?
Yeah. Yeah. So I would say for that the most the best way is still to have your team to come to China because I don't think you can find any of those those

information online. Um, so I'm I'm aware that the studio going to spread online, but so I can't really give you all the details, but I'm saying that there's definitely publishers that going to uh um
that will help you out in that regard.
Yeah, exactly. So, but if you're thinking about for midsize studio for for I think that makes more sense for midsize studio. you think you you value IP or you think your games has a potential becoming an IP, the best way of course is always to find a decent publishers that can work your way through uh getting the license and doing all this kind of marketing and there will also be a lot of cross industry collabs co-branding opportunities with all this kind of local brands that open opens you up uh with with a lot more opport

opportunities and potentials of the IP and I think in the nowadays they they need to realize there are still partners who can take on like this because it it's going to cost a lot of time as well on both
for example the way we work with angry words we work with script we do a lot of dev work on our end as well so we probably by the time we sign uh till the date we launch there are still roughly a year of gap and we spend I don't know 60 70% of time red develop redeveloping the game so by saying that we add something that's not existed in the game we're not doing localization it's not s not he's basically building another layer of game play on top of the

original so that the Chinese players has their own playground and um there's a lot more you can do with the communities also with the streamings because the way um we streamed games is very different and I think everyone would understand um nowadays though a lot of this kind of uh user acquisitions switching the streamings as well. So your talk at PGC Shanghai is about how a midsize studio can thrive within this landscape that seemingly only is giant everywhere you look. Now
I want to ask you the headlines right now are all about the giants. You know Tencent Netis Mihoyu at the top of these global charts. So where you sit at Kingsoft, what does that landscape actually feel like for a midsize established company like yourself? I mean Kingsoft's been making games since what 1995 if I'm not wrong. um too big to be an indie, too small to be 10 cent. So you you kind of are within this middle round of a place as a mid-size

studio. So what are your thoughts on that?
So uh I think there's those chances for the midsize deal uh especially for the Chinese market because of the uh wishless mechanics. So it kinds of brings us on the equal playground. So as say we have six months of time 10 cent have six months of time to build up the wish list number moneywise it doesn't set us that apart for example like 10 cent has a billion we have 1 million but in exchange of time you can still build up the numbers by a lot of community efforts so that's why when I'm scouting games I'm I'm always looking at games and IPs that have very strong uh uh social interactions and that um there are a lot of sharable contents and sharable loot inside the

game. That's what kind of gives uh the opportunity opportunity for the game to thrive. Um when we're trying to build the organic download, some of the games doesn't work that way. Uh, and for indie developers, they don't have to because they're targeting at a very niche community that's really loyal to their games. So, the strategy is different. But if you're midsize studios, um, say I'm going to use like Angry Birds. So, they they've they've been very popular back in there for sure, but nowadays they're in the kind of just looking at the charts, right? They they have a very stable and casual in in the casual game genres. Money is stable. You know, they're everything is very mature. But on top of that, we can add level editor. We can add a a

theme park kind of like four guys game play onto it. None of that has been like um um so not available for testing to the public yet, but there's a lots of ideas um that we we want to try for the Chinese market. Yeah. So that makes sense if you're one year massage studio, which means you have enough people. So you're not a team of 10 or 20 that might actually you might not even have enough hands to support them. But if you say on both sides the publisher size and the developer size you have people probably 30 50 I think that's good enough for you to to kick off and start imagining things that are big. Um, another case that I can share would be Gustto. The g the game was once a very popular

hit uh on Steam. Um, I think in 20 late 2022 in early 2023 and then what Kingsoft did is we had uh we licensed the IP, we built the mobile version from zero. So we don't have the source code scope, we just have the art access and uh we we follow the original game play and build the entire new mobile versions out of it. And we we didn't like commit to a a dev team of like 100 people. That's not the case. So it doesn't make sense. Um so it start gradually growing from probably 30 to 50 to over 100. And now the game is successful. We have say millions of de youth and then we have a more a bigger and bigger team to to support that. So that's something you can try for a

midsize studio. So you start like at a modest uh burn rate and once you build up the commote you build up the you had the fe feedbacks from your community then you have the confidence to scale.
Yeah that's really interesting. It brings me nicely to my next question. So a lot of people assume that these giants that dominate the headlines, especially when us in the west are looking at the sort of studios and publishers that are making waves in China, they think that they hold every advantage. So you clearly don't um you're giving a talk about it as I mentioned. So without giving away too much of your PGC talk, why should that assumption sort of surprise people that they don't hold all the advantage?
True. So I think uh the idea is if you look at the communities that or the players uh or maybe just the general

viewers what I call popcorn gamers they probably take play less than an hour 30 minutes of gaming per day. So this kind of gamers where can you find them? So there's always a Chinese version but I'm just going to leave it. So the Instagram, uh, YouTube, Twitter and WhatsApp. So we have all these kind of Chinese version of this kind of mega apps and you can see tons and tons of content every day, every moment, every second. So content are separated but it's impossible for the giants to dominate those say communities those apps it's impossible. So, how does content, so regardless you're gaming or whatsoever, how does content stand out in this kind of very saturated

um environment? It should be a very human-driven, wellargeted content. And for that, I don't think the giant has all the all the advantages. If he knows your games well, if your games has a very strong sharable look, you can always create a content that can stood out. And especially if you look at Steams, um Twitch, let's do it. A lot of the Twitch uh streamers when they stream the games, they want something that's fun to watch, right? So, and fun to watch means sometimes like idiots moments that you play with your friends, right? [laughter] Yeah. So, that's what what what makes people want to follow them and watch

online that doesn't matter if you're you're in China and all. Sometimes even a very sloppy games have this kind of sense of hum
gives you advantages, right? They don't want to see AAA games, right? for triple A games I go to the U TGA right but
that's true that's true actually the assumption that everybody wants to see is just that it's just an assumption that's not always the case you have dedicated indie players indie game players and you know
um so I absolutely agree with that
yeah yeah and I think that's even more true for Chinese market because we have a huge population and all this kind of apps they are very diverse And
how about that? You have more than enough time to compete with the giants. It's not like once the game you launch, you start doing more UA to com for paid

download. Then in that path, you're competing with the giants for sure. But before that um if you have already a very loyal community um before launch then I think you have all this kind of potential to to become successful. And if you look at the global gaming sort of top top games uh charts a wave of Chinese studios is suddenly climbing those global charts. You know survival games merge gacha. What's driving that glare in your opinion? And does it change the game for sort of midsized players?
Well, if you're speaking of the markets in the west, I think it's very challenging for the studios like for the western studio though because I think um simply because the Chinese studios are very good at making mobile games. the

genes for the western studios I think that's still more piece in console and the entire tokus the pipeline is different so they have to know and Chinese studios mostly for a lot of developers and say engineers their day one industry in the industry is mobile so they don't switch between P and mobile and they all their skill that is catered to developing mobile games. So I also feel very confident that most of the the best mobile games in the world are created by the Chinese.
So that's very difficult for the western developers to to compete. Um I think unless for a few genres say M free games merge games you have dreams you have a lot of in Turkey they have the knowh how

and I think um there's best strand is still at doing UA and understanding the users in the west better than the Chinese studio but just in terms of the play being fun to play. Um I think Chinese studios do have a very strong advantages um in that. Yeah,
they seem to have really sort of taken the market for mobile games. I absolutely agree. Um and Claire, last question for you here. What do you We're very close now to PGC Summit Shanghai. What are you most looking forward to um when it comes to attending the event? And what are you looking forward to sharing with the audience? And what do you hope they walk away from the room sort of knowing now that they didn't know before?
So after the talk in Canada, uh for most

of the developers there, they have absolutely no ideas about China. But I think if I talk in Shanghai since they are here, they probably been talking to the Chinese studio on and off already. Now what I think oh the takeaway for them could be understanding the the new social content driven fire rule that I'm going to share. So why playing with your friends and building it early in your game designs race is important and then believing in your publishing partners. They can do more than just publishing. For example, for King South, we do way more than that. We basically rebuild the entire game for um with that social layers. Of course, like

having the social features is not um I wouldn't say that's more important than the game play itself. you still have to have your own core game plays that's different from the artists and uh adding another social layers doesn't really drive up the retentions but there's a lot can do with that and uh there's a lot more benchmarks um a lot more metrics that you can track down so the way understand why we are building this as important. Yeah. So I think that could be something interesting for them to to to look at.
Definitely. You've got a wealth of knowledge to share with the audience. Claire, um thank you so much for your time today and we can't wait to welcome you to PGC Shanghai Summit soon enough. Thank you, Cla.
Thank you. Thank you for having me.