Tencent and NetEase are reportedly reconsidering and scaling back investments in Japanese game studios due to the resurgence of the Chinese market



Tencent , one of the world's largest game companies, and NetEase , a Chinese online game company, have long been investing in Japanese game studios, but with few hit titles and the Chinese game market only just reviving, it has become clear that the two companies are reconsidering and scaling back their investments in Japan.

Tencent, NetEase Rethink Japan Approach as Game Strategy Stalls - Bloomberg
https://www.bloomberg.com/news/articles/2024-08-30/tencent-netease-rethink-japan-approach-as-game-strategy-stalls



Tencent and NetEase cut their investments in Japan, with Visions of Mana dev Ouka Studios at risk of closure | Game World Observer
https://gameworldobserver.com/2024/08/30/tencent-netease-cut-investment-in-japan-ouka-studios

Tencent and NetEase rethink Japanese strategy with studio closure imminent | PocketGamer.biz
https://www.pocketgamer.biz/tencent-and-netease-rethink-japanese-strategy-with-studio-closure-imminent/

Visions Of Mana Studio Is Shutting Down Just After Releasing Game - Report - GameSpot
https://www.gamespot.com/articles/visions-of-mana-studio-is-shutting-down-just-after-releasing-game-report/1100-6526204/

Visions Of Mana Releases To High Praise, But NetEase Plans To Close The Dev Studio | HotHardware
https://hothardware.com/news/visions-of-mana-releases-netease-to-close-dev-studio

According to information obtained by Bloomberg from people familiar with the matter, NetEase's Tokyo-based game studio Ouka Studio , which is primarily focused on 'home video game production,' has implemented large-scale staff reductions, leaving only a small number of employees. Ouka Studio was founded in 2020 and has recruited industry veteran developers from major Japanese game companies such as Capcom and Bandai Namco Holdings, but Bloomberg reports that it plans to close its game studio in Shibuya. Some of the remaining employees will oversee the release of the final game before the studio closes.

Sakura Studio is the studio responsible for developing ' Seiken Densetsu VISIONS of MANA, ' a completely new title in the 'Seiken Densetsu' series that was just released at the end of August 2024.




In addition, Tencent, the world's largest game publisher, is also reportedly reconsidering its investments in Japanese game studios, and according to anonymous sources, Tencent has already cut back on some of its funding for new games.

Bloomberg also reported that 'Tencent is unhappy with its involvement with Japanese game studios,' citing testimony from a related party. The main reason for Tencent's dissatisfaction is the 'mismatch in ambition' between its local partners and Japanese game studios. The discrepancy seems to be occurring because Japanese game studios excel at 'small, low-risk projects,' while Tencent is looking for major titles that can be deployed globally. According to the source, since the end of 2023, Tencent has begun to set higher goals when funding Japanese game studios.

Among the contracts between Tencent and Japanese game companies, one that has attracted particular attention is the one between Tencent and Bandai Namco Holdings in 2023 for the right to develop and distribute the mobile version of BLUE PROTOCOL . However, it has just been announced that BLUE PROTOCOL, an online action RPG whose official version was released in June 2023, will end service on January 18, 2025.



One of the reasons for the change in Tencent's market strategy is that Shin Jun-ho, who has served as president of the company's Japanese subsidiary for many years, has become Tencent's global head. Jun-ho is currently in charge of finding promising investment targets in Europe, and was appointed head of the International Venture Lab in August 2024.

'We may be approaching a time when Tencent and NetEase will begin to scrutinize their revenues more closely. The global gaming industry has contracted since COVID - 19, with many major publishers cutting jobs and scaling back investments. Anecdotally, the desire for tighter control over what Japanese developers can do with their intellectual property has sometimes been a source of friction,' said Robin Chu, an analyst at research firm Bernstein. According to Chu, both Tencent and NetEase continue to work closely with major Japanese gaming companies and have no plans to withdraw from Japan altogether.

Tencent told Bloomberg that it will continue to focus on working with its partner studios and expanding its business in Japan. Meanwhile, when asked about the possibility of Sakura Studios being closed, NetEase responded, 'We have nothing to announce.' It added, 'In supporting game studios outside of China, we base our strategy on the goal of providing a better gaming experience for local and global players. Therefore, we are constantly making necessary adjustments to reflect market conditions.'

The Chinese game market had been stagnant for a long time due to regulatory oversight, but in 2024, it showed signs of recovery, with 'Black Myth: Wukong' making a record-breaking start by selling 10 million copies in just 83 hours after its release. 'Black Myth: Wukong' was developed by a small game studio founded by a former Tencent employee, and the success of the game boosted the confidence of Chinese game companies to 'produce hits from within China,' leading to the decision to reduce overseas investment, according to a person familiar with the matter.

'Black Myth: Goku' sold 10 million copies in just 83 hours, the PS5 console was also sold out, and it has already earned an estimated $450 million, surpassing Elden Ring and Hogwarts Legacy - GIGAZINE



Tencent will release a mobile version of Dungeon Fighter in 2024, which is expected to make $270 million on the App Store in the first month after its release. NetEase will also release a mobile version of the battle royale game NARAKA: BLADEPOINT, which is expected to make $880 million in sales in the first year in China alone.

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in Game, Posted by logu_ii