More than half of Chinese children and teenagers struggle with nearsightedness, Xinhua declared last year. This problem, it added, relates to the amount of time spent playing video games. “The vision health of our country’s young people has always been of great concern to General Secretary Xi Jinping,” the news agency wrote, using one of President Xi’s official titles.
Beijing has many levers available to curb online game usage. For instance it has mandated that teenagers’ playing time be capped. But the most draconian tool deployed so far is to slow the approval process for new games. Internet giant Tencent, also the world’s biggest internet games operator, lost as much as $180 billion in market value during the nine months the authorities suspended the licencing process for games.
To turn things around, Tencent gave some of its most popular games a patriotic makeover. Take PUBG (Player Unknown Battlegrounds) Mobile, which pits players against one another on an island in a battle to the death. It was rebranded locally as Game for Peace, which Tencent claimed, “pays tribute to the blue sky warriors that guard our country’s airspace”. What’s more important, though, is that Tencent got rid of the gore (see WiC452).
In the new version, characters that are shot don’t bleed; they kneel, surrender their loot box and wave goodbye. The verdict of tech blog TechCrunch: “Very civil. Very friendly.”
That strategy worked. In May, Tencent was finally given the approval to monetise the game by selling in-app purchases (called IAPs) such as costumes and weapons for the rebranded version.
In just 60 days, China has gone from a non-monetised market for the shooting game to accounting for $241 million – or 28% – of the $860 million the title has grossed to date on iPhones. These figures do not include spending by Chinese consumers in the Android sphere.
According to Tencent’s latest financial report, the number of daily active users for Game for Peace has reached 50 million. This has helped Tencent become the world’s top-grossing games publisher as of July, raking in more than $679 million from in-app purchases, 39% higher than in the same month a year ago. In its second quarter results, online games revenues grew 8%, reaching Rmb27.3 billion ($3.85 billion), driven primarily by smartphone games like Game for Peace.
The strong performance of Game for Peace also puts its ahead of competitors including Epic Games’s Fortnite and NetEase’s Knives Out. In July those two games earned about $40 million, a monthly return that has been consistent since the start of 2019.
“I have to say, when it comes to making money from games, Tencent definitely has its way. It’s no surprise that even NetEase can’t beat it,” a financial commentator wrote.
There are a few things that set Chinese gamers apart from their global brethren.
For a start, they are more willing to spend on IAPs. “The number of transactions made by Chinese gamers is slightly, but consistently, higher than the rest of the world,” a recent report from GameAnalytics said.
Orange See, the chief operating officer of Aither, a Hong Kong-based game developer, told WiC that Chinese players are particularly prone to spending money at the beginning of the month, when they have a greater amount of cash on hand. To that end, publishers like Tencent and NetEase tend to offer incentives during that time period to promote greater spending.
This willingness to spend big on IAPs such as new weapons – purchases that give players a competitive advantage – makes the China market particularly lucrative. Not surprisingly the big gaming companies are desperate for access to these more profligate consumers.
However, getting approval from the local regulators remains a lengthy and tedious process. In addition to a long queue of new games already submitted and awaiting approval, every change made to existing formats requires that the developer start the approval process all over again…
For our interview with an eSports star, see WiC461.
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