Zelda with waifu; Boycotting Huawei/Xiaomi platform tax; Alibaba Cloud Gaming; BIGC2020 — China Gaming News Roundup
Jack Ma in 2010: I'd rather starve than make video games. Alibaba in 2020: Making US$537 million in 1H with just one game.
Hi team,
It’s insane how we’re approaching the end of the year. While many of us are still stuck at home or stranded in a city, the mid-autumn festival is here. And this year’s mid-autumn coincides with China’s National Day holiday. In short, this marks the beginning of the end of 2020. It’s like Thanksgiving in that Christmas is the only thing left for the year. Except in China, it’s Chinese New Year. And I borderline have PTSD just thinking about CNY because Wuhan locked down the city literally on the second day after CNY.
Meanwhile, insofar as games are concerned, holiday seasons are usually packed to the rafters with game releases. As such, drama is bound to ensue. Now we are seeing the two most anticipated games in China boycotting Huawei and Xiaomi. With more PS5 and Xbox news coming in, we have oodles of content and company drama to get excited for. Anyway, as things stand, I plan on streaming a bit of Genshin Impact and Cyberpunk 2077 on https://www.twitch.tv/joetheruthless. Let me know what you think.
🚀 Genshin Impact is off to a fast start
As I’m writing up this newsletter, Genshin Impact has 112,000 concurrent viewers on Twitch on its launch day.
It has more concurrent viewers on launch day than Fortnite. (Picture: Twitch)
I’ll revisit Genshin again in the next issue as I’m working on a story about it. But here are some quick facts on the game’s astonishing accomplishment even prior to launch day.
The game is the top free game in five different markets and within top ten in 54 other countries on iOS.
It is remarkable that it ranked No.5 in the US ahead of launch. (Picture:Qimai Data)
Now let’s look at its pre-registration numbers. Outside China, it has seen 5.2 million pre-registration. In China? The number is at the absurd level of 16 million (9 million on its official website, 3.91 million on TapTap and 3 million on Bilibili).
Now on launch day, in terms of grossing, it’s already surpassed Douyin (TikTok’s China-only version) in China.
Let that sink in. miHoYo is doing something extraordinary. I think it’s safe to call it: this is by all metrics the most successful launch of a Chinese game. Ever.
Anyway, for your edification, here is a post from last month about the alleged US$100 million budget for Genshin.
😡 Boycotting Huawei and Xiaomi app stores
There’s no two ways about it. Taxing 50% of games/apps revenue is outrageous, and that’s been the tacit agreement amongst China’s Android-based app stores for years. In a world where Epic, Spotify and Tinder are already raising hell about Apple’s 30% tax, 50% seems unbelievably anachronistic.
There are two tidbits which I wish I had included in this article: a. how we got here with the 50% tax; and b. what the arguments are for reducing platform tax (since it appears that there are still many platform sympathizers out there).
Chinese app stores are products of a tumultuous evolution. In the beginning, essentially all tech companies that were interested in the mobile internet rushed to set up their own app distribution channels. The tax rate at the time varied wildly depending on platforms. At the time, price wars and races to the bottom were the order of the day. Zero tax rate was not an unusual phenomenon. But eventually, after the battle royale kicked into high gear, the app stores run by smartphone manufacturers ganged up on all the smaller fish in the pond and wiped them out. Then thanks to the absence of Google Play, app channels on Android have come to agree that the mind-boggling 50% tax rate should be the market standard.
Now as to the second point, for those who are unfamiliar with the platform tax debate, a prevailing argument against high platform tax essentially goes like this: in the beginning of the mobile internet, platforms were building up the ecosystem so a 30% platform tax is reasonable but now while only minimum maintenance is required, 30% seems like a daylight robbery.
Now bringing back to the story I wrote above. What stands out the most about this is the fact that miHoYo (Genshin Impact) and Lilith Games (Rise of Kingdom) are leading the charge for this uprising against Chinese app stores. miHoYo and Lilith Games are arguably the two best and certainly the most promising gaming supernovas in China which are still private. These two companies are willing to go to the mattress with the Hardcore Alliance, which comprises of the app stores of Huawei, Xiaomi, Vivo and Oppo, likely because they know that they have the clout as a collective but they likely wouldn’t get as much bargaining power if they were to try to broker a deal with these companies on their own.
Also, there were unsubstantiated reports in the past in which Tencent was said to have indeed managed to convince these companies to give it a more preferable rate. So while we know that the 50% rate will ineluctably crumble, it is interesting to see which companies will go the distance to become the public enemy of these smartphone manufacturers.
☁️ Alibaba elevates gaming unit, launches cloud gaming
Quick fact No.1: Jack Ma hated gaming and once swore that he would rather starve than capitulate and pollute Alibaba’s great name with online gaming.
Quick fact No.2: Alibaba is now about the fifth or sixth top earning game publisher in China.
Yes, the success of Romance of the Three Kingdoms has taken Alibaba to a whole new level in the video games space.
This is the second time I wrote about Alibaba’s newfound success in its gaming business. In my first story, I explained how Alibaba’s Ejoy acquisition — which is tantamount to poaching the former NetEase All-star team — had saved Alibaba’s gaming endeavor.
And obviously, this time around, we still had to highlight how Jack Ma ate his words as he was vehemently against gaming in the early years. If you look through Jack’s old speeches and interviews, you can quickly tell that Jack sincerely despised online games.
Look, I get it. Especially from his perspective. From the perspective of someone who was a teacher (and proclaims to be a teacher at heart and will remain so even after reincarnation).
Predictably, the argument he gave was also rather pedantic. At Columbia University, he said that Chinese youth couldn’t afford to get hooked on video games because they were the only child of their family given China’s one-child policy. Here’s a link to Jack’s speech at Columbia.
This brings us to the spicy bit of this story: Jack’s son was allegedly addicted to video games. There were a lot of apocryphal stories at the time about how Jack felt like he’s a garbage parent whose negligence led his son down that path.
OK, but there’s a sequel to this. Ironically, there are now almost an equal number of apocryphal stories about how Jack brought his son back from the brink for being the understanding and forgiving father — that’s because his son allegedly graduated from UC Berkeley so now everything is A-OK.
Apocryphal or not, video gaming is bound to take over. Jack Ma was stupid to have fought it. (Yeah I said it.)
OK, victory lap aside, another important piece of news is that Alibaba is launching its B2B cloud gaming platform in the same week as Amazon unveiled its cloud gaming service Luna.
We shall not let this fly under the radar. The cloud gaming B2B market is still in its nascency. Capturing the cloud gaming market from the jump is absolutely crucial. As things stand, Tencent, Huawei and NetEase are the frontrunners in this game.
In terms of consumer-facing products, there isn’t anything super compelling out there in China. I’m working on a cloud gaming explainer these days. In that forthcoming article, I’ll examine all the cloud gaming services in China.
But to give a bit of a teaser as to what is at stake for cloud gaming: I think cloud gaming is not just about gaming but also our future interaction with the virtual world. Call it a metaverse or a multiverse or what have you. There’s something behind the sheer fact that our minds immediately cling to the prospect of cloud gaming when we’re asked the question “what do you do with the ultra-fast, 5G internet?”
🎮 The Beijing International Game Conference
For the longest time, ChinaJoy and the affiliated CGDC were the only high-level gaming expo and conference in China. But now the arrival of the Beijing International Game Conference may become another high-power gaming conference for the world’s biggest gaming market.
My guess is, though, that the very conception of BIGC is largely politically motivated. There are two political factors paving the way for BIGC. The first one is that the local government in Beijing is sensing an opportunity for growth in the sector and it doesn’t want to lose out to Shanghai which has been very aggressive on this front. I wager that there’s a bit of a regional rivalry at play here.
Secondly, the central government has made it abundantly clear that video games need to be closely monitored and controlled. There’s no better and more effective way to gather all the industry movers and shakers than to have a conference. Like many conferences in China, conferences are opportunities for industry and government to schmooze and educate one another.
But we should also take notice of how more high-level government officials are gracing these events with their presence and they preach about how games must be a vehicle to export Chinese values and “adequately tell the stories of China”. The uptick in government involvement over the past few years is unmistakable.
From where I see it, I think many government officials still don’t quite understand the strength or the plight of many games companies. Or else they may want to go easy with all the propaganda mandates.
Speaking of the visible hand, the Chinese government has revoked another 15 game licenses this week. I wrote about this two weeks ago as the retraction of the first two licenses was already unprecedented. So it seems like more clean-up moves can be expected.
📖 My reading list
Microsoft won't try to buy industry dominance
Amazon announces new cloud gaming service called Luna
Krafton merging with PUBG Corp
With $100M in funding, Playco is already a mobile gaming unicorn
Corsair sinks in IPO, but stay-at-home could be good for the do-it-yourself gaming company
Among Us, a murder mystery set in space, is the latest multimillion dollar craze in video games
U.S. Mobile RPG Spending Rises by 33% Y/Y to $2 Billion in First Eight Months of 2020
专访Ohayoo总经理:9款游戏月流水过亿,但我们反思了不少问题
伽马数据发布《2020中国游戏创新与发展趋势报告》:产业创新指数同比增12% 仍面临四大挑战
Video:
Can You Actually Game in 8K? (RTX 3090 Gameplay!)
Great coverage as usual. It seems like Beijing's view is that it is the capital of "gaming" and Shanghai is the capital of "esports" ... whether or not that's objectively true, it provides a path for Beijing to move in on Shanghai without explicitly challenging it.