The State of China’s Gaming Market

[Music] welcome to the novic gaming podcast where it is our mission to explore the business and future of video games we bring together the industry's brightest Builders investors and thinkers to keep a pulse on current events dissect emerging Trends and games share Lessons Learned and have a great time this podcast is also part of novic growing ecosystem which ranges from free and premium research to Consulting and AD advisory services for more information visit [Music] www.nic.edu overwolf is the guild for in-game creators whether you're a gamer Creator or game studio overwolf is the ultimate destination for integrating ugc in games

for Game Studios overwolf offers curse Forge for Studios a white label solution that lets game makers and Publishers easily integrate mods safely and seamlessly into their games both existing and new at zero cost it's battle tested by triaa Studios and games including Maxis with the Sims 4 Studio wild card with Arc take to interactive and others for creators overwolf is the all-in-one platform that enables creators to build distribute and monetize in-game apps mods and Game servers in 2022 overwolf paid over $160 million to in-game creators proving that they truly value the talents and contributions of The Gaming Community you can check out everything over wolf has to offer at overwolf decom or check out the details in the show notes and with that let's jump into the episode hi everyone I'm your host Aaron Bush and today I'm delighted to be joined by Josh y Josh is on the cusp of a career change

but is a longtime reporter having worked at organizations like the South China Morning Post and Reuters most recently but I wanted him to hop on the podcast today because for years Josh's work has been one of my go-to resources for staying on top of what's happening in China's gaming Market as well as Tech more broadly he's expertly covered all of the big Chinese companies in our space all the regulatory news what's going on with AI right now and more so today we're going to discuss the state of the Chinese gaming industry what the big players are up to and what we can learn from what's different over there so with all of that said Josh welcome to the novit gaming podcast thank you Eric it's a pleasure to be here awesome so before diving into all the details Josh could you just quickly tell us the story of your career how did you get into reporting and what all did you cover yeah so um I restarted my journalism career when I was his still in University uh I was writing for school's

newspaper and actually I started as a philosophy major but then I realized that you know the world is really not about cohart Logics you know it's more about people's feelings and people's you know emotions and all that so I became you know a school newspaper reporter uh so that's like 10 years ago so I've been writing for like 10 years so uh at the time I reported a lot on like you know Chinese immigrants uh uh ethnic minorities you know issues you know on campus and and around the University of Pittsburgh I went to University of Pittsburgh and after that I went went back to Hong Kong and started my career uh at South chin post um as a as a business reporter later you know specialize and focus on Tech and with gaming and entertainment and social media as my bread and butter a couple years ago I moved to Reuters and another terrific uh another terrific organization and with that it's also like my focus has been you know on uh software Online Entertainment uh online service is and just I was the main um

software industry reporter so that's how it all started but then I feel like you know gaming really became a focus for me a highlight for me because I grew up when I was still at new University I grew up with a bunch of Asian kids they really bonded through playing you League of Legends together that was the time when League of Legends really took off right and I was like wow you know the power of uh a Competitive Gaming esport is really kind of a new experience that unlike anything we have seen before so that kind of you know swn the seed in me and then when I went Kong Kong when I do bus uh did business reporting uh what what came to my mind again is that you know like few people knew that you know Riot was owned by tenson you know it's such under told story at the time uh you know tenson was you unleashing a bunch of you know new interesting games not just tenson right met East you know a bunch of you know new crop of Chinese gting companies for me that was just you know like the most fascinating story I Dre you know um we writing a book and

writing you longling stories about it and I just kind of re put myself you know on on on on on Forefront of the this news beat and then You' been able to break a lot of uh very interesting stories and then tell it to the rest of the world that's awesome and so if you look back at the past several years of you doing reporting as your career um especially in gaming I'm just curious are there any stories that you like firmly remember that stood out to you at the time or were just really interesting to go through as they were as those events were unfolding yeah yeah I think um a few stories come to mind right U like just said you know at the time the League of Legends took off so um sort of the rise of you know Chinese Esports right uh you know at the time uh it was just kind of a bunch of Geeks that I said you know playing and then all of a sudden you know you got you know big major leads you know coming through and then the formation of you know the Chinese League Legend leads you know like op um that was crazy and um and then when Chinese teams won uh the the worlds you know couple years ago we're

talking about 100 million you know users uh watching tuning in to watch the game and that's like you know like a crazy amount you know like even even even even Super Bowl you know it doesn't doesn't that doesn't wish that level and now you know it's it's a bit of a very interesting you know transition period you know people are are kind of you know making different moves about how they kind of position orts and all that so it's still ongoing story so that's one story that really comes to mind I guess it's more gradual collection of stories and than one specific story and um I think also on the just you know gaming product side of things um what was very fascinating at a time was I don't I don't know if you remember the explosion of you know the Battle Royale genre right that was first time yeah like that was the first time I felt like you know Mobile gaming really kind of solidify it place in the gaming ecosystem because I mean no before that we got like honor Kings a bunch of bua um but there still

isn't there still wasn't a consensus whether you know a hardcore gaming uh experience can be replicated uh onto like a smartphone right but then with pubg mobile and then you know knives out and all these These are full-fledged you know open you know like big battle was a third person shooter uh just got crammed into a little device that you can play and it was crazy so uh and then all these kind Chinese companies just rais the clock to Pro uh to produce these kind of products and to me that was like okay you know maybe this is serious like no this is not just no candy crush anymore right we're we're in a whole different level and um and a lot of companies are capable of doing that so I feel like that was uh also other interesting story no those are great those are all huge pivotal moments for our industry in which China uh companies in China you know we at the the tip of the spear and bringing those those movements to life so that's fascinating um and I teased it in the intro that

you're on the cusp of a career change but uh maybe you can quickly fill the audience in on what you're up to next and then we can dive into the the meat of the discussion sure yeah so uh you know I spent the past couple of years at roers recovering the Forefront of the the gaming industry and now I'm on you know I'm I'm in the process of joining V which is Asia's biggest Esports company as s head of international comps right this opportunity came about because I I knew Dino who the the founder of the company and then he's you know lobbying me a couple of times like know Josh come on board you know uh this is a big opportunity and like I said you know Esports is such a such a a big uh phenomena in China right now you know people talking about you know the industry is kind of facing a bit of adjustment so um I feel like the story is kind of uh fell out of focus a bit but um I I think you know it's because of that you know in me there's a fire

that I felt like you know this is actually still a long-term story maybe people's attention span you know it's it's short and then they they just should face some obstacles and then they kind of forgot about it but I think the fundamentals are there so so like you know they say that you know you go in when people are not looking right so I feel like this is this is a bit of a time that you know people underestimate the industry and then U you know do really wants my help because you know if you're if you're actually paying attention right now we have a lot of big moments you know facing Esports you know our Esports are trying to get itself uh into uh you know maybe the Olympic conversation you know Esports World Cup is happening so these are all Next Level stuff uh because you know in China La last year uh Esports already became a metal sport an Asian game right so I started I mean it's very interesting I started uh covering Esports uh when it first as a SE game so southeast Asia game as a a metal Sport and then was it up and then it you know got to HS and then now we talking about you maybe at

Next Level so Dina has this you know idea and then the lobby very hard you know he he wants you know people to really be able to help V get out there because previously espo is just more of a 2B company you know comfortable not comfortable but more focused on building out his Chinese business but you probably are aware that you know Savvy uh invested a bunch in vbo and then me you know that up tells but you know you know's Vision to we push the company outside in the transport so right now it's a very interesting time so you know for me it's it's a it's a great Challenge and you know being at this company actually I get to touch so many different products right you know like it's not just one particular product I don't get stuck in one particular product so for me um yeah that's you know that's what I'm up to right now that's exciting and I'm excited to see where where the business goes from here especially if they're really pushing on expansion I was going to ask this question later in the conversation but since we're talking about Esports now I'll I'll pull it up

you know as you alluded to there's been quite a lot of change in the Esports landscape like in the west several businesses have had massive Cuts companies that have gone public have basically been forced to go private again there's been bankruptcies major turnover and in the in the big leagues and even some leagues have had to shut down or or restructured themselves how does that compare to what's going on in the China Esports landscape is there a similar business model shift going on has it been healthier over there over the past couple years how how does it contrast to what we we see in the west I mean I don't want to sugarco it right cuz you know the the the industry itself is facing an adjustment uh due to a couple of things you know uh gaming prod Cycles as well as you know uh sort of postco you know people are trying to really figure out a sustainable business model and those are sort of the the long-term you know factors that we been live with and in China uh industry is facing some you know transition but I would say that actually bso's know uh

position and then you know uh Financial Health is still very healthy that's why you know I feel like this is right time to go in because what I see is the opportunity right like you know uh sponsorship money right now is still nowhere compared to you know Sports you know sponsorship money but we are still but but but at least in bf's case you know we've been able to be able to stabilize it and then you actually is in a steady growth so we don't see a declining interest uh and and and and you know Brands and companies trying to commercialize and advertise through Esports um so for me that's you know when I asked you know about about all the question you just asked and then he he he he told me that he was like yeah so you know we are we we're not we're not um you know kind of cator in any sort of sense actually you know we're seeing a slight uptick sure we would love to grow to be stronger we are on a very kind of solid foundation and but if you just look at the upside this is is it's crazy right you know um this is the

the the the goal that we're trying to try trying to reach I feel like another story of that is that you have to look at you know how how it was back you know in in in the beginning when ESP started the company like you know you know telling me that they're knocking on people's store knocking on Brand store to you ask them to collaborate you know to maybe you know uh figure out some you know so some some ways to kind of work together but now it's actually a little different right because uh the honor of Kings the elite people were actually knocking on ouro were trying to you know uh sponsor these the the these you know competitions so it's very different U and you know because the sort of broadcasting table uh the product placement can only fit fit in so many products so it's amazing like you know this is is again other under told story that really kind of you know got my interest so you talk about orts right now in China we're talking about kind of being able to really connect the China ecosystem with

the rest of the world um so that's why you know Dino is very hard on the point of uh integrating with you know the Esports World Cup as well as you know potentially Olympics you know and doing all that cool um well I appreciate you you breaking that down uh but let's go ahead and and zoom back out obviously China's gaming Market is now the second largest gaming Market in the world but is very close to being um on par with the size of the US gaming Market I think just off by like a couple billion um in annual revenue um and obviously its trajectory over the past couple decades has been pretty Monumental and there are a lot of you know elements of the rise that I think many of us are are aware of the rise of like piggybacking off of big platforms really leveraging mobile Etc but as you kind of look back at the rise

of China's gaming Market are there any elements to that rise that you think might surprise people who haven't been paying super close attention or have just been far away from that landscape yeah I mean if you're talking about 10 to 20 years ago 20 years ago that is like when World of Warcraft you know first came about right I feel like that was that was a big moment for China um actually I think that swn the seed for you know now we're talking about China life service you know free to play and all these kind of you know paradigms that's you know associated with know chines gameing industry right so world Warcraft you know came out that was the first time you know China really kind of embraced a big forign game in such a massive way that that we're talking about tens of millions of people playing it together that that's that show the power of you know what what online you know Pizza entertainment can can can really kind of get to uh the potential the enormous potential of you know uh

such a big online game right it's like you're playing in one Province and then you know you matching up with another guy you another propit you you guys are next to neighbors that was unlike anything we've seen before and what I said that you s a seat for for for future developments because that's when a period of time that all my friends you any cool friends you know they they went to a uh internet cafe and just spent time doing uh playing world Warcraft and unlike in the west where you know you guys grew up with console games you guys buy games and own games you know that kind of solidify the the the consumer Behavior where your own games right you know but um with with world Warcraft you know because so massively popular people are so used to just uh going logging in and playing games and that not owning them right and that uh in some cases um they're free to play you know uh but we we grab a lot of times you have to buy credits you to play for a certain duration uh but still that kind of

consumer Behavior cemented during that period of time so now a lot of people talk about yeah I don't understand why was you know like uh the Asian market is is such a such a way it it really started that you know the MMO period uh the M MMO era uh kind of this this where you know consumer Behavior formed and um so yeah I wouldn't call this a surprise but you know I feel like this is a under told story that that comes up a lot that to explain to a lot of the Western audience that why life service are are you know de have been developed you know in such a sophisticated way in China because you know everybody trying to model their business model uh with with Warcraft the top yeah and then that translated into that translated into later on the the big PC nmos and then later on um the the mobile gaming era and when you know online uh Mobile payment really uh became a reality you know this thing just got super are charged and then now this is sort of the

most profitable and most mature way to Lear a game interesting yeah I didn't realize that World of Warcraft sort of sent a a benchmark that inspired kind of set a baseline for many other games to build on top of um I guess a a similar question uh in terms of what we see today obviously there are differences in the composition of China's gaming Market to other parts of the world it's very mobile Centric very free to play um Centric um but are there other elements to China's gaming market today in terms of how it differs from other parts of the world that similarly like might surprise people who aren't paying close attention yeah I think it's the the the the story is actually interesting because it's a bit of a course correction story like I I just told you uh you know now people associate you know Chinese gaming with just life surface and uh you know uh free toplay

games I like things are coming in Full Circle right you know Chinese Gamers taste a matur like I said before they couldn't afford again and now they they you know the the spending power has increased and then the taste has matured so now we we talking about a lot of chines companies trying to make triple A games right because that's what the the players want they're like okay we're play we were satisfied with you know the big uh you know maybe that the big MMOs maybe with like you leer Graphics but but now we want the top the top right like that's why we're talking about blackm Wukong and you know like a lot of a lot a lot of hype is you know sort of rallying around these titles is because they represent you know whether China's able to uh make these kind of top of the line the Triple A games right so it's kind of national pride on the line you know or like you know Chinese Industries you know Pride on the line because we're so good at you know oper was it uh running a game uh but that now you know can be produce like artistically the

highest level yeah so yeah a lot a lot a lot so so you know you see a lot of the companies are trying to push these kind of uh Triple AP you know Sony you know they they they they they started you know kind of uh have have accelerated trying to to to help you know a lot the console game uh developments in China you know b a couple years ago and then if you look at Last senal by it was a 10 cent you know that got past at the uh uh Gates of War um that's also a very interesting Endeavor all of that now point to the direction that Chinese gaming fans they want to see a CH you know main China Triple A quality game really interesting um and we'll get back to to some Nuance of that a bit later especially in terms of like how this can be a tactic for Chinese companies to also expand internationally when they're under pressure at home in some way uh which which leads me to just a a big

topic that's super relevant to what's going on which is regulation um regulation on miners on business models on game approvals on all sorts of of of elements of what runs China's gaming Market um and we don't need to rehash what all of the regulations are I feel like our audience has is aware of the highlights but can you maybe dig one layer deeper and speak to like what the actual impact of these regulations have been on the gaming ecosystem like how has the company landscape or just the ecosystem landscape changed because of the just as a result of like new rules that have been set forth or how priorities have shifted at all however you want to take that I'm just curious to hear your uh hear your thoughts 2017 uh we have about 10,000 you know approval so you to to to formally uh

release a game in China you need approval from the government we have about 10,000 approvals granted that year and the past couple of years we're talking about uh fewer than 1,000 and this year actually it's bouncing back quite you know in a strong web uh we looking at maybe 15 uh 100 yeah fact check that but you know during the first half of this year uh we're already getting a lot of approvals because uh it's a bit of a uh ongoing kind of dynamic with you know the industry and the government unlike in the US or in the west where the industry self-regulate you know um here uh the game industry does have a very does have to engage government for quite a bit because the Govern win is regul long story short you know you see the trajectory of you know uh game approval become a lot tighter that's for sure and so with that being said you know regulations is a part of the gaming uh landscape you know the feature of it right you know you have to kind of live and breathe uh and be comfortable with

it you know if you talk you listen to all earings call by big companies they're saying that you know this is the new normal so if somehow you have uh uh somehow you feel like it's going to go away it's not going to go away but with that being said uh how that changed the the Chinese gaming landscape you know that because you have to get approvals that's why actually you have to partner with like you know big companies right you have to power with you know companies that that we know what the government wants and then you can be able to comply with a lot of different rules so yeah I I I would say that you know uh we we're seeing a a bit of consolidation you know because of uh the the the regulation here another thing that you have to understand you know the regulation side uh with with China is that is is actually you know the industry is in constant conversation with uh with with The Regulators so that's why this sure we see uh an increased number of you know

game approvals um that's a sign that that's indicative of the government's know willingness to uh to to see more products on the market and uh so yeah I guess you know roughly that's sort of the delay land right now yeah I guess to just double click into your consolidation Point um it it makes sense to me just big picture that if there are going to be um game approval freezes or or time periods in which it goes really slow but also just more rules that you have to pay attention to that favors larger companies who can withstand um you know darker Winters uh where you can't launch new games has a bunch of other big games that are already on the market or other parts of your business you're you're probably fine although you don't love what's going on um but if you're a startup who's working on their first game or their their their second game that could put you in a really

difficult position can you speak to like any shakeup in the market that you saw because of these these regulatory challenges yeah it it is uh you know we are now at a a point in time where it's very difficult for these kind of you know smaller teams that's for sure uh you know in the past you know um when regulations are are you know there are a whole lot more loost um it was easy easier for them to kind of find way to um to to get their their products on onto the market so for these companies you know for smaller teams right now is for sure without doubt very difficult uh because like you said you know it's a very uh complex process and you know getting approvals and all because of you know that's the landscape it is that you know a lot of them have to kind of you know find ways to get funding from tent or like somehow align itself with these kind of you know industry dry Giants and um a lot of them because of you know tyght regulations at home they're also

thinking about going overseas right you know um they're launching their products uh overseas from day one actually they they kind of plan and conceed the product from the Geo as International product so that's why you're seeing a lot of very interesting you know maybe you know a smaller Workshop you type of uh titles coming onto Steam and other places and then they're made by new Chinese companies uh so yeah that's sort of the the landscape of banks yeah well which is really interesting and I know you primarily follow the larger companies and just like the big changes that happen around Tack and entertainment but do you have any sense of like what the impact of this has been on like the Venture investing markets like has that like been crippled in China because of these actions or is it coming back to life as game approvals are starting to to reverse course do you have do you have any sense of what that that looks like yeah the BC side of things you know is

it's very quiet uh you know due to a lot of reasons not just not not just regulations you know um so the the funding site of things you know um investors interest uh also changed um so right now it's very difficult unlike you know in previous years when you get uh you know big Investments and all that but that being said I think right now the Chinese the Chinese gaming Market is so competitive if you really do have a very strong team and and you will you you'll get noticed so for example a couple years ago when when Gen first uh arrived right everybody was trying to think okay how can I was get the next me imp right how do I you know develop that if you have a team that are capable of doing that you know um you get you know picked up and know this byy you know big players very quickly so I'll point to it's not you know genjin you know look like or anything like that but you know kind of in the same genre curo games uh

is a it's a very interesting uh company um they just launched weathering waves I have you heard um theyve been making a lot of uh waves no pun intended uh different you know uh platforms um so it's also open world story driven uh uh anime style game and um yeah they getting a lot of interest you know they were invested by Hero gains which is our uh sister company B sister company and then more notably pensent right you know pensent is a big backer right now because everybody sees that you know um there's opportunity in this in in this vertical yeah so you have a strong team and then you you are uh Savvy enough to be able to position your your your game uh towards the the the the big giants there's opportunity that gotcha and do you have any sense of how the regulatory environment could shift um you know over

the rest of the year or deeper into the future maybe it's maybe it's totally unpredictable um but what are your thoughts on looking forward I think I I I can say that you know for the rest of the year it's looking like you know uh we're getting a quite friendly uh regulation regulatory landcape um because like I said you know the sheer amount of you approvals that been uh issued uh over the past six months has been very pleasant so if you look at uh the the Chinese gaming industry actually I feel like the bounce back of the industry is the told store right people maybe it's still early on so that's why people felt like we ar so sure we're not so sure about it but uh now you see uh you know ten you know putting out you know big titles like you know dnf you know Dungeons and and Fighters mobile right um that's that that that's a that's a very profitable uh product and then you know in the pipeline you got you know Delta Force uh if you I don't

know if you see the trailer also little amazing and then by the way these games are a lot of them are you know developed with you know console and PC in mind that either in dela Force I think maybe it's you know like console PC ver it's not even like a mobile game so they kind of I contradict uh T's reputation as a as a mobile first company but that ATT test to the point where you know the Chinese companies we want to do a triple A G also what was it uh Arena breakout infinite which is uh you know Arena Breakout game mobile coming to PC also very high quality games so this year is it's going to be exciting I mean it's already very exciting like I said weing waves black myth call looking back you know maybe this one of the more more excited years because in the past couple years actually I don't know Innovations been kep boring uh but this year maybe you know the second half of the Year could could be Pack-a-Punch cool sounds like the

floodgates are are opening but the looking longer term is is more difficult um so I guess Switching gears and and looking Beyond China's walls as a result of these tighter domestic markets a few big Chinese gaming companies have definitely prioritized growing in international markets and and obviously that's not new this has been been the case for a long time we've seen companies like tensent have really aggressive m&a strategies over the years or companies like uh like netes or even hoyo with with ginin impact and others like have a very International approach to to launching new games and hitting multiple markets but I'm curious how you think this will play out over the next decade uh because with this Rising wave of AAA games which naturally are more comp and in global markets how do you think

China's imprint on the global gaming industry or uh you know its market share potential how do you think that could change over the next few years because of these shifts that you're seeing yeah I think like you said uh on the investment side things you know tenson have been investing uh foreign Studios for quite a while now um that been successful um so that's not new but I do want to point to R now we are at a very interesting period of time very interesting year that um that the Homegrown you know uh Triple A video games you know from from China you know it's about time right you know we we see you know whether where whether they're really at that level so uh you know pens and Bill they all Studios and North America Europe you know across the world they are gearing up you know themselves you know towards that go so uh I think right now is a bit of a time that you

got to show your you got to show your uh your results um so we will see I mean you at this point time you know we we saw that you know I read it to earlier the last sen though um that's probably one of the most promising you know Development coming out of tenset uh because prior to that because prior to that you know they they essentially p a lot of tuition um you know a lot of you know projects kind of got sh a lot projects you know got a lot of projects got sh you know some of the projects right now are just you going through difficult times so wasn't it wasn't clear but now yeah I look I would say that right now it's about time for them to like show some products yeah so I guess how how I I see this is there is an element of this which is games that are being made in China that are bigger production value um they're they're coming online they're targeting the the whole world

and they probably will have some type of impact and then there's another piece of it which is games that are not made in China but they're made by ensent and nety who have set up shop um around the world uh primarily in North America uh with new Studios and they're doing that because the the older model of m&a of acquiring other businesses with proven IPS and such that's not as possible um anymore for geopolitical reasons and so they're taking this other path Which is higher risk I guess because you're not um getting something that's already proven out but it's also potentially a higher reward because you're starting at zero and have the potential to build something pretty big and meaningful even though it takes more time to get off the ground and I know I know nety has leaned very heavily in into that um tactic and and 10 cent to some degree

too I'm not sure about others U but I'm curious what you think like specifically about about that part about how Chinese companies have been kind of skirting the regulatory lens by starting Studios from scratch um in places like the US um and hiring uh like Western teams to build those games like do you think that um strategy is going to stick for the long run and become more meaningful for these these businesses or do you think that will just continue to to evolve as geopolitics continues to evolve yeah think was it geopolitical pressure is definitely a factor um but I think you know overall if you really want to to look at you know penson Z sort of you know vision of things that these vision of things right uh for them okay on on the IP side of things right if you keep licensing others people's IP uh you know if you got to share Revenue so um when

the market is so competitive you best you one factor consider whether you really want a very you know dated IP maybe still have some ho but you know we we're not so sure and then that's one factor right so we now see I actually did a story on this you know Reuters couple months ago that that homegrown IP is a price possession right and actually if you look at you know the gaming market right now I don't think fans are are you know crazy about oips so um you know there's there's a bit of a realization of that so and then second uh if you look at you know these kind of global Chinese conglomerates um they want to build up the actual production capacity you know they talk about in in Ton's case they talk about the industrialization you know uh the game making you know game making uh process you know with intenson right so they want to they want to actually

kind of break through all the silos and then you know they they own the capability of produce these kind of high level games because that's what uh you know why you said you know wrestle gam want you know they want Triple A and that even in China you really have to show that you have the capability with top-notch Graphics everything else to to to to to to convince that you know people that you still like sort the the the the the big dogs in the industry right right so from a in so capability buildup perspective that's also called for yeah so uh from uh sort of the production capability B point of view right um you know that's also a factor that you know that's why they're building up you know big in-house Studios you know on different continents and then I I think you know maybe the third thing is uh just talents you know uh these companies want to really do want to source different talents you know in China uh everybody's very good

at monetization life service but uh when it comes to Art you know especially if you want to grow International expand internationally Le you need to have you know uh uh foreign talents that more t to the sort of artistic preferences of uh Western players right so previously like you said maybe investment is in a good enough and that that you brand that as a different product you know like Riot like supercell you own products but now if you really want to kind of build up the in-house capability um you have to do that and then in the long term that's the direction to go and like I said right now it's in a very interesting time you know it's a bit of a sort of mature you know check out to see whether they are doing it well yeah uh and that's all um a good wellth thought out answer and it's also an interesting time because of AI and in the west AI is all the rage um where it's probably you know even in gaming it's more hype than substance right now

but we still are seeing like really interesting things happening on the fringes and now even a lot of big companies are talking about how they're excited for the efficiencies and cost savings um that will come with with with AI and it's you know creating a a startup and and Venture boom around it could you tell us about what that looks like in China is the excitement at a similar level in the games industry to what we're seeing elsewhere in the world or are there like other unique aspects to like how teams and entrepreneurs are are thinking about this technology in the games industry in China I imagine it's not too dissimilar right I mean in China he I saw AO reach um but then like you said right now we are you know at a point where we don't know how to actually neger it into like you know fully developed products you know there more gimmicks features that we try to test things out and uh yeah so some of the art can be done you know very quickly with with with AI we have a few

incidents where you know people picked up that you know such such and such art Works were developed by Ai and then you know people just kind of rioted against it um so are you re are we really ready enough toh put that to work right now still a question what I would say is that if you listen to your uh tenses earnings call they are actually quite cautious I mean they they talk about AI a lot but that they're quite cautious about AI actual AI products roll out right you know promising AI uh uh products roll out it's because of that right you know you know uh I guess in their case you know the you know the the executives are saying that you know right now it's still they even not kind of you know like they're not the most aggressive type let me just say but I when I went to a lot of the different conferences you know they do talk about AI agents you know being being interesting you know um uh an interesting news case you potentially be

deployed into games you know uh NPCs a and NPCs uh but still early talk so uh we have to see what comes out gotcha that makes sense um and especially curious in the case of tensent because not only is it the largest gaming company in the world but it's also just one of the largest tech companies in the world and especially in China is just positioned to have a touch point on basically everyone's life and in a multitude of of ways and is like a core source of of R&D um in the country of of where like AI Innovation would probably come from in part um and so what we see from tensent will just be really interesting and could be telling for um what other companies think to do o over time but I guess we have to wait for that story to play out some more um but with that I actually thought it would be interesting to spend a few minutes talking about specific companies companies like 10cent netes Etc and just get your take on like what's interesting

or notable about these businesses right now that you know if you're not paying close attention you probably wouldn't see and maybe we can start with with 10cent um I'm curious what your general outlook for the largest gaming company in the world is but um also if there's just anything super interesting to you about the the business right now yeah I I think I I sort of touched on you know some of the big kidos that up B really uh just now right and I think and other I think an interesting um thing about penson right now is they're really thinking about the platform strategy maybe in the west you know people already took the Roblox success for granted and then now you know all these kind of Chinese ging companies that thinking along the same line how do we kind of replicate you know robotx success but in a Chinese context when they talk about mini games uh so like n Mini apps and all that um they'll we actually you talk you know like listen to their exact they're thinking along that line so many apps is essentially you know you you

pull out uh you you pull up WeChat and then you know within we had you search a certain games or like there's a there's a panel you get up for interesting games and then uh it it load immediately right you know instantly so it's like like games you know on maybe different messaging apps you in the in the west have tested before but not to the same level success but right now they're actually uh getting quite a bit of traction on we when you listen to the T exective talk about this they're really thinking about platform strategy this is odd right because you feel like okay maybe this is like a Facebook you know H5 games that type of you know like that's that's more what we thinking about but then in their mind they're really planning they're really kind of referencing the Roblox platform strategy what they see for for for for for reat is so much more complex and so much more sophisticated that's one aspect of it uh and I think you wanted to talk about n East too and I I think maybe just kind of

tied into this conversation as well n e is also thinking along the same line right the biggest new title for n is eggy party you know over the past 18 months right yeah if you really think about it the success of eggy party really came about because there's a backing uh that left for you know uh Roblox absence in China you know um that game uh you know feature you know kind kind of feature a lot of same functions as as as Roblox you know ugc Centric you know they they heavily focus on allowing players to uh you know create maps and create levels within that game and then it's a party game it's easy to play so I think yeah I personally feel like you know a part of it because you know Roblox isn't officially available in China but then these kind of big players already saw that Roblox success is a great ref reference and that you know it will be able to uh gain a big marget share in

China and then that's why they're thinking along those lines and um yeah very cool yeah interesting hadn't thought about that but the ugc wave would probably hit China a bit differently than what we've seen elsewhere in the world uh with with Roblox and uh you know fortnite and ufn um how about bite dance I guess first of all like what's going on with bite dance gaming right now because it it seems like they you know several months ago you know they basically said that they were you know going to sell new verse which was like their big publisher and just rethink gaming as a whole in the context of of their their business um and maybe that's changed but I don't know maybe you can just talk about what the heck is going on there and if there is anything interesting still going on would love for you to highlight that too yeah with bance that's very interesting because you know when they first you know became this know new chines giant they they are really trying to rival

tens right um and then tens the B gaming uh footprint they they too think about okay we need to go for Content we need to go for uh gaming so that's a sort of the historical background uh but at this core you know tenson is very committed to becoming platform as well as a Content company but then Biden is still at his core more platform company so I think and a high level thinking at the time when they were like okay whether the newers is actually worth uh continuing to pursue they're like our identity is a platform company so they they kind of they kind of felt like you know gaming maybe it's not paying off right you know they're trying to sell off for us the uh a lot of the gaming projects which a lot of them have got sold uh made a mistake about it one thing that didn't get sold uh is m right Mo to right um uh so the the developer

of the mobile Legends Bank B um it's first of all you know the company got acquired very high variation and it's a very interesting company with a lot of capability and after a few months of you know testing the the the the market and all that I think last month they decided that you know they're not no longer selling it so they look like they're giving it a second try you know at least at some level and then they appointed new head for the gaming division so they represent they're still trying to test out whether you know where they can go with uh some of their gaming efforts but yeah I think that's sort of the the pivot earlier was it late last year when they decided to kind of retrieve from gaming it was because of that thinking right they feel like the weo platform company um content they're still trying to figure out but uh yeah so that's I guess the latest uh de gotcha so still figuring it out uh how about hooe they seem to have figured it

out a decent amount um you know they're the latest you know Mega Gaming Company from China to breakr globally more than once now you know first with ginin impact now with hanon Kai star Rail and I'm sure they're working on a bunch of other interesting um titles what's what do you think about them like are you excited about their future anything interesting that you want to call out that maybe people sleeping on yeah um with with Hoovers you know gen and impact actually before gen and impact you already got like know Hye impact Third only your play you that was TI uh very interesting TI was so wow me this game is so good but then you know when they release a trailer for B the wall sorry when they released the trailer for uh for forg impact and then you got such a big backlash and then I was like I don't know how I feel about this company but now they proved them know twice again right you know success it's onai star uh onai star ra

um and the next one is uh the ZZ so the Z Zone Zero Zone zero yeah uh that game got a lot of hype a lot of you know uh lot of eyeballs in in in in China and then it looks like you know it could be a very big success with them as well so thanks so thanks for sharing your thoughts on you know some of the the biggest gaming companies um in China are there any other companies that are maybe less well known that you think are super interesting that others around the world should be aware of maybe they'll break out and be the next hooe in in their own way uh or you know something else anything you want to call out yeah this you know I think I already alluded to to them before so the developer of uh black metong you I I two so like you know Triple A combat know heavy beames B call right now is the big Chinese game coming out right so game

science this is the developer of it definitely watch out for what they do um they were invested by tenson and then uh espo bosso also invested as into investor so very interesting game and then uh weathering waves you know just came out also like I L to before very interesting combat Focus crossplatform um anime style game so that's uh curo games you know Bas in gu Joo also very interesting company um definitely watch out what they do yeah so like those are the two two games that you know come to M for sure um a couple final questions here before we wrap up um first of all are there any Innovations happening in China right now around China's gaming Market that we should pay closer attention to um maybe it's game design related maybe it's uh technology related or you know something interesting going on in a particular genre um any innovations that you think

could go Global that is starting in in China right now I think with with with games specifically it's the trend of you know crossplatform games being developed in China right like I said it's crazy that you know right now they're really kind of Bridging the different platforms previously we thought that you know China just a a mobile gaming uh mobile games specialist right now um then we moving that expertise to you know the different know traditional platforms consoles and PC Etc and largely you know because you know that that that is because uh the the emergence of M real engine all the more sophisticated engine that can be used in your crossplatform yeah so look out for so look out for you know CH Chinese gaming companies be sort of leaders leading that way of know cross platform games yeah I think the crossplatform trend is is a good one to call out and it's interesting too because it's not new I think you probably could have said that four years ago when ginin impact

you know broke out and took over the world and everyone was like whoa what's happening here that like this is a moment um and for whatever reason that type of success has not really been replicated well um in other parts of the world so I think you're right it really has been China's China you know holding the spear and pushing the spear out to the rest of the world yeah CU like if that was just one game right right now we're talking about Paradigm shifts where a lot of the games are going that direction so I mean that that's also kudos to like know uh mhoo for being able to kind of know know uh Pioneer that Trend four years you know prior uh but now yeah you know this is certainly going to be a big Trend yeah and another question for you here I'm curious what your outlook is for gaming in China beyond the most popular platforms today so mobile and

and PC um like what do you think the future is for console VR alternative gaming Hardware uh you know maybe there are interesting growth stories going on right now or you know Innovations and in China's Tech Market that are gearing up for for other other types of Hardware but anything stand out to you beyond mobile and PC that could impact gaming in the country yeah I think you alluded to VR VR is certainly a a big direction that people are thinking about and if you look at a lot of Hardware uh for you know Oculus as well as uh uh the Apple Vision Pro you know they come from China you know so a lot of people are already very familiar with the hardware and a lot of the new VR exort Brands actually also coming out of China I've been to many such conferences you know XR VR conferences and a lot of people people are thinking very hard about this and it really Trace you know China success in

the gameing industry is because the Rival the mobile gaming era right um you know Chinese gaming companies were very fast and very capable of you developing mobile games from the get-go when you know people are still kind of uh looking at it as a niche market so don't be surprised that when VR become more mature a lot of these kind of contents will be made by Chinese teams like set you know because we got a lot of Hardware specialists in China already very familiar with the EOS system and then a lot of homegrown uh xrv Brands and then they be look at like you know an R uh TCL um all these brands are you know doing their their versions of the XR because I guess you know in China this it's it's easier to kind of uh put together these kind of new products because the supply chain is here you know we can quickly kind of you know assemble some demo and then they get

some money and then roll it out to Market and then test it within the Chinese market so if you guys are not familiar with you know uh developments in in the uh if you guys are not familiar with the Chinese market you know certainly look out for you know some of the the VR and XR products coming out China both on the hardware and the software side things but I mean I don't know personally I'm still not 100% sold on uh whether XR VR is going to be the platform the ultimate was platform uh before before we kind of you know digitize ourselves right and upload our Consciousness into Cloud uh I don't I'm I'm not 100% s so on it yet but I feel like all the Sci-Fi movies kind of point to that as the ultimate way of doing it so I don't know um it wasn't we don't get the same level consensus as you know when smartphone came about that everybody feel like okay you know this this is a sure fway for for how how people interact with with Gadgets in the

future yeah I think that's fair but it still is interesting though right especially if uh I don't know how like a company like meta will open or open source their their like operating system similar to how Google open sourced Android in the past and through open sourcing Android enabled companies all around the world um like like in China where much of the supply chain is to to build on Android and Fork Android and kind of create their own ecosystems on it and you know through that got a bunch of the big Chinese tech companies uh that we see today and yeah maybe there's some similar parallel to that over the next decade or so with whatever VR XR is going to be still super early China will probably even have their own competing operating systems and and such too from some of these big tech companies but yeah really curious to see how that goes very final question for you Josh uh we covered a lot here today uh but is there

anything else that you're excited about um uh for the future it doesn't have to be China related but you know any game or company or Trend that has been extra on your mind lately that you want to give a final shout out to another very interesting thing about Hardware was that um you know that the Rival of like steam deck really kind of changed you know the the Rival like you know steam deck is a very beloved know piece of artware by by Gamers right and then um so if you look at a lot of the sort of the steam de Alternatives Hardware had help know gaming PCs like many many of them are Chinese um so a lot of the Chinese new know Hardware uh makers and they're already thinking along this kind of form factors right um uh like yeah Lenovo had like Legion uh as as a legion brand they go with a hHow PC and then a lot of the less or known names you know they Bas shenen I I try I Tred some of

those thought products are very compelling so hell uh it's also very interesting space to look at for um I think was is some of the bigger companies console makers are also thinking about maybe fish it you consider hand again yeah that's a great Point too so we'll be on the lookout for interesting Hardware Innovations to come out of China but also handheld Innovations too I guess it's the benefit of they being uh really complex impr proven Supply chains um kind of at the The Cutting Edge to bring many versions of this to life to compete in the market um but awesome Josh very final question if anyone wants to get in touch with you or or follow along with whatever it is you're doing where where should they go yeah so uh you know I'm very active on Twitter uh so by Twitter Hand by Josh and um you know uh that's the that's the best way kind of trct but we I also have a a a personal website you know if you

um go out to my Twitter you'll find it there um I kind of show all the stories I've done in the past with different Publications and then uh yeah so you know follow me on Twitter that's the best way to you can touch awesome well Josh let's go ahead and wrap it up here great job and thank you for hopping on today thank you Erin it's a very interesting conversation for sure [Music] if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a fstar review and if you want to reach out or provide feedback shoot us a note at podcast nov. or find us on Twitter and Linkedin plus if you want to learn more about what novic has to offer make sure to check out our website www.nic.edu in Consulting and advisory Services again that is www.nic.edu

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