Esports is China's new ping-pong; Black Myth: Wukong faces backlash; Bilibili lands Fall Guys mobile; H1 earnings wrap -- China Gaming News Roundup
I didn’t say it. Deng Yaping, the Serena Williams of ping-pong, said it at the Global Esports Summit.
Esports is China’s new ping-pong.
(OK, she said, “I hope China’s esports can be like ping-pong, always representing the world’s top level.”)
Anyway, off to this week of roundup.
👾 Esports is China's new ping-pong
So the 2020 World E-sports Summit and Tencent's Annual E-sports Conference took place in Hainan's Boao. The speaker list is star-studded. Yang Lan — China’s Oprah — and Deng Yaping were the two biggest names in attendance. Many read this as esports going mainstream.
Not a whole lot new got announced, though. With a bunch of government officials in the audience, Tencent flaunted some through-the-roof viewer and growth numbers, revealed some sponsor deals and everybody went home feeling pumped about esports.
Here are some numbers shared at Bo’ao. Honor of Kings World Championship Finals attracted 570 million viewers (this makes absolutely no sense but whatev, Tencent). More than 3 million people signed up to participate in various levels of Honor of Kings tournaments. In 2020, China has about 400 million esports consumers, 70% of which are under 35. The pandemic brought about 26 million new esports consumers, according to Tencent and Nielsen.
(I skipped it partly because it took place in Hainan. Hainan has a very uneven record of attracting businesses.)
In retrospect, though, I should have written about this because this esports-to-ping-pong analogy may be important down the line. We all know how China used its ping-pong diplomacy to thaw the Cold War with the US 50 some years ago. Now with a new Cold War brewing in the background, how esports may factor in will be fascinating.
With esports, a few things are worthy of attention. First, China wants to turn gaming into a new vehicle to not only drive the digitalization of industry but also to export Chinese culture to the rest of the world. I’ve written about this two weeks ago when Fu Hua openly spoke about this in Beijing.
Tencent lies in the center of all this as the company now controls a lot of the gaming and esports scene globally. Now Tencent has a huge opportunity here but also face plenty of challenges. Needless to say, esports’ becoming mainstream with the backing of the government will make Tencent richer and more powerful than ever, especially given how it has pledged to invest $70 billion in ‘new infrastructure’.
But Tencent is also acutely aware of the changing tides in geopolitics. People have told me that, in many cases, Tencent feels like it’s walking on thin ice because it does not want its gaming business to get mired by the increasing hostility between China and the US. On that front, I’ve also written about how the WeChat ban may put Tencent’s gaming assets at risk if things continue to go sideways.
But as things stand, if Western democracies don’t get their acts together quicker, esports opportunities will continue to stay in China as we see that China is already hosting gaming expos and esports tournaments with live audience.
🙉 Black Myth: Wukong faces backlash
BMW continues to make headlines this week but perhaps there’s more bad news than good.
Essentially, Game Science’ boss Feng Ji was accused for making vulgar comments on Weibo. Feng said things like the success of the demo had attracted so many job applicants that he had been “licked so much that [he] could no longer get erected.”
To be fair, the context of the rather long post conveys that that sentence was written in a joking manner. He didn’t explicitly refer to female applicants. It could be that he’s saying that he’s impressed by the quality of these applications. But Feng didn’t rein in his extremely crass way of talking after his first post. In another post published two days later, Feng doubled down by saying that he had “come a few times [after checking people’s comments on the demo]… Now I feel pressure in my pants!”
Now the language is very sexual. No question about that. And one thing is rather clear. Game Science has had a tradition of operating by this kind of humor, and it is often blended with overt sarcasm and self-deprecation. These are recruitment ads Game Science had put out in 2015. The following pictures are captioned “Don’t fuck your colleagues”, “Mandatory self-pleasuring”, “Fuck off fat-ass” and “You have to crunch” respectively.
So if you read the descriptions, they are essentially telling prospects the followings: the company has many perks so you won’t have time for office romance; the company will ask you to relentlessly test your own games so you won’t have time to play other games at work; the company cares about your health so your gym expenses will be reimbursed; the company will ask you to crunch but normally you can come in any time.
Now you be the judge for this company’s character and ethos. People will continue to argue where the line should be drawn. At the end of this newletter is an SCMP video created by a non-gamer coworker (so excuse the inaccurate use of terminology) in which some netizen comments are included.
A few more things about Game Science. In an interview with Chinese media, Feng said BMW is still nowhere as good as even the best games released six or seven years. So by that logic, he said the game is still very much behind games like the first The Last of Us and Middle-earth: Shadow of Mordor. In the same interview, he also alluded to franchises and games like God of War, Uncharted, The Last of Us, Monster Hunter, Sekiro and the Legend of Zelda. He said that BMW is gunning for those games.
Lastly, Game Science said that while they are hiring, they are not running short on investment and will be selective with new hires.
Feng Ji in a video he and his team made when they were still in Tencent. He basically was mocking himself in this video. (Picture: Tencent)
📱 Bilibili lands Fall Guys mobile
Speaking of people being terrible, Fall Guys brings out the worst in mankind. This picture below captures it all.
I say screw Fall Guys. But welp, all the more power to Bilibili for landing the domestic publishing rights for Fall Guys. What’s more? It’s bringing the game to mobile.
OK, the story behind the story is: Bilibili is now going after all gamers, not just otakus anymore. An older coworker said that he wanted to play the game with his kid and my teammate Xinmei, who lamented about how “there are so many guards in Assassin’s Creed”, said she enjoys Fall Guys tremendously.
Bilibili is changing tack. In short, it used to be Crunchyroll but it is now YouTube. In terms of games specifically, the company used to only publish erciyuan (anime-style) games but now it is spreading its tentacles to anything from indie games like Dead Cells, AAA console games (unannounced but leaked) to social games like Fall Guys.
Bilibili's vice president of game operations Zhang Feng said it best here in an interview with Youxiputao.
"Ever since Bilibili started to independently publish indie games, it has been gradually trying to break out of the erciyuan world. It used to be the case that we would sign games of which 80% of the users are already on our site. But in the future, we will sign games of which only 20% of the users are on our site. And by then, our thinking and way of marketing will change."
This makes sense. According to its Q4 earnings last year, Bilibili had only about 1.25 million average monthly paying users for mobile games, which means that its monthly-user-to-paying-gamer ratio is somewhere near, if not significantly below, 1:100. As such, Bilibili is motivated to monetize all non-erciyuan fans on its site through a more diverse portfolio of games.
My gaming analyst friend Liao Xuhua said, “I think both of Bilibili’s strength and the weakness has been its heavy focus on erciyuan. On one hand, it allows Bilibili to have a very stable and predictable financial trajectory. But it also has limited Bilibili's opportunity for growth both externally and internally. It couldn't more efficiently leverage its massive user base. In fact, Bilibili already has a lot of content on its site, be it marketing, ad or videos, which already involve un-erciyuan games. But the games Bilibili itself had published had not broken away from erciyuan, which was not exactly in line with the development of the main site."
💸 H1 earnings wrap
Besides 37Games, all other Chinese gaming giants have released their Q2/H1 results. To say the numbers were rosy would be putting it mildly. We are in the middle of one of the, if not the, biggest gaming booms in history.
Here’s the quick list for the gaming revenue for China’s top 20 gaming companies (excluding 37Games) during Q2/H1.
Tencent: ⬆️ 40% (38.3B) Q2
NetEase: ⬆️ 21% (13.8B) Q2
Bilibili: ⬆️ 36% (1.24B) Q2
Kingsoft: ⬆️ 53% (870M) Q2
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Century Huatong: ⬆️16.6% (6.7B) H1
Perfect World: ⬆️40.6% (5.1B) H1
YOOZOO: ⬆️65.27% (2B) H1
NetDragon: ⬆️4.5% (1.6B) H1
CMGE: ⬆️13.9% (1.5B) H1
Zhejiang Daily Digital Culture: ⬆️ 36.6% (1.47B) H1
iDreamSky: ⬆️10% (1.4B) H1
X.D. Network: ⬆️ 8% (1.2B) H1
Giant Interactive: ⬇️ 5.72% (1.2B) H1
Kunlun Tech: ⬇️ 12.9% (670M) H1
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G-bits Network: ⬆️ 31.61% (1.4B) H1 — total revenue including non-gaming
Boton Technology: ⬆️ 11.01% (1.3B) H2 — total revenue including non-gaming
ELEX: ⬇️ 28.9% (908M) H1 — total revenue including non-gaming
—————————————————
That said, while revenue may continue to grow, the number of users may have peaked in many cases. Look at Bilibili’s numbers in Q2 compared to Q1. The company’s 171.6 million MAU actually marks a slight decline from the 172.4 million it recorded during last quarter.
Last but not least, in addition to gaming, Bilibili’s growth in areas such as membership and ad are also definitely worthy of attention. If Bilibili does end up growing its membership and ad business measurably, it will for sure help bolster its gaming business as well although Bilibili is trying to rely less on gaming for revenue. Gaming started to supply no greater than 50% of the company’s revenue since Q3 last year.
As things stand now, Bilibili is about 6th or 7th in the pecking order but in the future it can tie 37Games and Century Huatong in being the third biggest in the games industry in China. Bilibili already has the IPs and influence among gamers that neither of those companies has.
My reading list:
Black Myth: Wukong has given Elden Ring fans another mysterious game to long for
Your iPhone copy of Fortnite is about to become out of date
Mini games in Tencent’s WeChat are turning everyone into casual gamers in China, especially adults
Blockbuster Video Games Mint Millions While Grunts Get Exploited
Video Game Boom Is Also Magnifying Industry’s Ongoing Problems
Gamers are logging millions of hours a day on Roblox
Wired launching new gaming sub-vertical
iDreamSky is working on a new generation of internet cafes
Companies are already stealing Black Myth: Wukong’s assets for user acquisition ad (CN)
Use world-class technology to tell a China story — an interview with Feng Ji (CN)
“Not a whole lot new got announced, though. With a bunch of government officials in the audience, Tencent flaunted some through-the-roof viewer and growth numbers, revealed some sponsor deals and everybody went home feeling pumped about esports.” - good summary of many long pressers I’ve slogged through in the last couple of years, you just saved me some work lol