This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-37850092
The article has changed 2 times. There is an RSS feed of changes available.
Previous version
1
Next version
| Version 0 | Version 1 |
|---|---|
| Should games firms welcome or fear Chinese conquest? | Should games firms welcome or fear Chinese conquest? |
| (about 11 hours later) | |
| The Chinese are coming and they're hungry for games companies. | The Chinese are coming and they're hungry for games companies. |
| They need new content to feed their 560 million avid gamers, who contribute to the biggest gaming market in the world - worth an estimated $24.4bn (£19.8bn) in 2016, according to Newzoo. | They need new content to feed their 560 million avid gamers, who contribute to the biggest gaming market in the world - worth an estimated $24.4bn (£19.8bn) in 2016, according to Newzoo. |
| And this market is growing at around 15% a year. | And this market is growing at around 15% a year. |
| Chinese firms have already spent more than $111bn on foreign acquisitions this year, according to Dealogic, with some of the biggest deals involving gaming companies. | Chinese firms have already spent more than $111bn on foreign acquisitions this year, according to Dealogic, with some of the biggest deals involving gaming companies. |
| Internet giant Tencent - which owns the WeChat and QQ Games platforms - bought Finnish Clash of Clans mobile games maker Supercell for $8.6bn earlier this year. | Internet giant Tencent - which owns the WeChat and QQ Games platforms - bought Finnish Clash of Clans mobile games maker Supercell for $8.6bn earlier this year. |
| Tencent already owns League of Legends maker Riot Games, and has minority stakes in Epic Games and Activision Blizzard, the World of Warcraft maker. Activision itself bought Candy Crush Saga maker King Digital Entertainment for nearly $6bn last year. | Tencent already owns League of Legends maker Riot Games, and has minority stakes in Epic Games and Activision Blizzard, the World of Warcraft maker. Activision itself bought Candy Crush Saga maker King Digital Entertainment for nearly $6bn last year. |
| Chinese online games publisher Youzu Interactive snapped up German free-to-play games maker Bigpoint for €80m (£71.5m; $88.7m) early in 2016. | Chinese online games publisher Youzu Interactive snapped up German free-to-play games maker Bigpoint for €80m (£71.5m; $88.7m) early in 2016. |
| And this summer, Zhongji Holding bought venerable UK games maker Jagex, famous for its 15-year-old RuneScape fantasy role-playing game, for about $400m. | And this summer, Zhongji Holding bought venerable UK games maker Jagex, famous for its 15-year-old RuneScape fantasy role-playing game, for about $400m. |
| Analysts believe there are several more acquisitions to come. | Analysts believe there are several more acquisitions to come. |
| Beyond borders | Beyond borders |
| Lisa Pan, director of Shanghai Zhongji Enterprise Group, Zhongji Holding's parent company, tells the BBC: "Chinese investors are attracted to the creative sector in the UK. We're also looking at Europe and the US for good gaming assets. | |
| "The games sector is a fast-growing industry and we're interested in building a portfolio of gaming companies." | "The games sector is a fast-growing industry and we're interested in building a portfolio of gaming companies." |
| The firm expects to make further acquisitions this year, she says. | The firm expects to make further acquisitions this year, she says. |
| One reason why successful Western games companies are attractive to Chinese investors is that they generate cash but are relatively cheap compared to the valuations of domestic companies listed on China's stock market, says Affan Butt, partner at Code Advisors, a technology and media investment banking specialist. | One reason why successful Western games companies are attractive to Chinese investors is that they generate cash but are relatively cheap compared to the valuations of domestic companies listed on China's stock market, says Affan Butt, partner at Code Advisors, a technology and media investment banking specialist. |
| But what's in it for the games companies - apart from a big payday? | But what's in it for the games companies - apart from a big payday? |
| Rob Moffat, partner at investment firm Balderton Capital, says medium-sized developers realise that to access the fast-growing Asian market they need to form strategic partnerships with Chinese firms. | Rob Moffat, partner at investment firm Balderton Capital, says medium-sized developers realise that to access the fast-growing Asian market they need to form strategic partnerships with Chinese firms. |
| "If you're a developer dependent on just a few games, you're vulnerable, so you need to scale up to about 10 games a year in the hope that one of them is a big hit. That means getting bought essentially," he says. | "If you're a developer dependent on just a few games, you're vulnerable, so you need to scale up to about 10 games a year in the hope that one of them is a big hit. That means getting bought essentially," he says. |
| Developing a new game from scratch can cost anything from $5m to $100m, says Jagex chief executive Rod Cousens - a games industry veteran who previously ran Codemasters, maker of the popular F1 motorsport game. | Developing a new game from scratch can cost anything from $5m to $100m, says Jagex chief executive Rod Cousens - a games industry veteran who previously ran Codemasters, maker of the popular F1 motorsport game. |
| "This is why all eyes are turning East right now - it's the biggest market in the world - and Chinese companies are looking beyond their borders." | "This is why all eyes are turning East right now - it's the biggest market in the world - and Chinese companies are looking beyond their borders." |
| Amongst mobile gamers, average revenue per user is now higher in China than in the US, UK, and South Korea, according to a recent report by AppAnnie, proving that this really is a market that cannot be ignored. | Amongst mobile gamers, average revenue per user is now higher in China than in the US, UK, and South Korea, according to a recent report by AppAnnie, proving that this really is a market that cannot be ignored. |
| Mobile challenge | Mobile challenge |
| But what are the technical challenges facing a British games company like Jagex - primarily known for a visually rich desktop-based game - as it tries to expand into China where the emphasis is increasingly on mobile gaming? | But what are the technical challenges facing a British games company like Jagex - primarily known for a visually rich desktop-based game - as it tries to expand into China where the emphasis is increasingly on mobile gaming? |
| "Although the processing power of the smartphone is increasing every year, we still need to redesign the game and repurpose the existing assets for mobile," says Mr Cousens. "The experience can't be exactly the same on a smartphone as on a PC." | "Although the processing power of the smartphone is increasing every year, we still need to redesign the game and repurpose the existing assets for mobile," says Mr Cousens. "The experience can't be exactly the same on a smartphone as on a PC." |
| The firm is developing a number of short-form games for mobile, one of which is called Idle Adventures and is due out later this year. | |
| These games are designed to be "a short-term fix of your RuneScape experience", he says. | |
| This move to mobile is giving Jagex, which has about 600,000 monthly paying subscribers, an opportunity to "reconnect and re-engage" with the original RuneScape players, says Mr Cousens, many of whom are probably in their thirties, married with kids, and now lapsed gamers. | This move to mobile is giving Jagex, which has about 600,000 monthly paying subscribers, an opportunity to "reconnect and re-engage" with the original RuneScape players, says Mr Cousens, many of whom are probably in their thirties, married with kids, and now lapsed gamers. |
| "It's like you wake them up again. Then they introduce the game to their children," he says. "Mobile is also giving us access to new demographics." | "It's like you wake them up again. Then they introduce the game to their children," he says. "Mobile is also giving us access to new demographics." |
| But the technical challenge faced by Jagex and other predominantly PC-based game companies looking to repurpose their offerings for mobile is "not trivial at all", says Mr Butt. | But the technical challenge faced by Jagex and other predominantly PC-based game companies looking to repurpose their offerings for mobile is "not trivial at all", says Mr Butt. |
| "There aren't many success stories," he warns. | "There aren't many success stories," he warns. |
| This is probably why Jagex and its Chinese owner are on the hunt for developer talent in the mobile games area - there are skills gaps to plug. | This is probably why Jagex and its Chinese owner are on the hunt for developer talent in the mobile games area - there are skills gaps to plug. |
| That said, mobile isn't the only game in town - the Chinese PC games market is still huge, just not growing as fast as mobile, says Mr Butt. | That said, mobile isn't the only game in town - the Chinese PC games market is still huge, just not growing as fast as mobile, says Mr Butt. |
| 'Left behind?' | 'Left behind?' |
| Traditionally, the Asian gaming markets of Japan, Korea and China were quite distinct from each other separated by language and cultural differences, says Balderton Capital's Rob Moffat. | Traditionally, the Asian gaming markets of Japan, Korea and China were quite distinct from each other separated by language and cultural differences, says Balderton Capital's Rob Moffat. |
| "But now there's a lot more cross-pollination going on," he says. | "But now there's a lot more cross-pollination going on," he says. |
| For example, two years ago Tencent licensed a $1bn-a-year revenue game called CrossFire, developed by Korean firm Smilegate, in a bid to provide more content for its Chinese mobile gamers. | For example, two years ago Tencent licensed a $1bn-a-year revenue game called CrossFire, developed by Korean firm Smilegate, in a bid to provide more content for its Chinese mobile gamers. |
| And now the Chinese are clearly foraging further afield in their quest for new talent and content. | And now the Chinese are clearly foraging further afield in their quest for new talent and content. |
| But Nicholas Lovell, director at Gamesbrief, a video games consultancy, believes the burgeoning power of Chinese companies and the explosion in the popularity of gaming in a country of 1.36 billion people, poses a potential threat to Western dominance of creative gaming content. | But Nicholas Lovell, director at Gamesbrief, a video games consultancy, believes the burgeoning power of Chinese companies and the explosion in the popularity of gaming in a country of 1.36 billion people, poses a potential threat to Western dominance of creative gaming content. |
| "Now that the demand for content is coming from China as well, we're seeing growth in their own creative intellectual property," he says. | "Now that the demand for content is coming from China as well, we're seeing growth in their own creative intellectual property," he says. |
| "Are we going to be left behind?" | "Are we going to be left behind?" |
| Follow Matthew on Twitter here | Follow Matthew on Twitter here |
| Click here for more Technology of Business features | Click here for more Technology of Business features |
Previous version
1
Next version