The British Games Companies Seeking Success in China

By Lewis Packwood on at

The Chinese games market is huge. There are around 604 million gamers in China, a number that’s set to grow to 768 million by 2022. And the video game sector in China is worth an astonishing $37.9 billion, which dwarfs the $28.7 billion generated by Europe, the Middle-East and Africa. All in all, China makes up 28% of the global consumer spending on games.

Domestically produced games, particularly homegrown MMORPGs, have traditionally taken the lion’s share of games revenue in China. But recently, western games like Overwatch and PlayerUnknown’s Battlegrounds have made a big splash in the country — and the potential rewards for games that make it big in China are enormous. I spoke to three British developers and publishers — Coatsink, Curve Digital and Freejam — about their efforts to tap into the Chinese market. Each has had very different experiences.

The unique Chinese market

The games market in China is nothing like that of Europe. For a start, consoles were banned in the country between 2000 and 2014. Since then Sony and Microsoft have both launched their machines in the region, but the console sector still only makes up about 1% of the Chinese games market. And that doesn’t look set to change any time soon, with estimates that neither company is breaking 20,000 hardware units sold per month in the country — compare that with the nearly 70,000 PS4s sold on average each month in the UK in 2017.

Mobile games dominate, making up 61% of games revenue in China but, again, the market is very different from Europe. Android phones have around a 70% share yet, because Google Play was banned in 2010, there are instead dozens of app stores to buy games from, a real headache for developers trying to launch on as stores many as possible simultaneously. But the really interesting sector — and the focus of this article — is the premium PC games market, which has ballooned in recent years, helped by a government crackdown on piracy, the country’s financial growth and the proliferation of digital stores.

Noodle Man

In China, digital PC game stores are operated by the huge corporations Tencent, NetEase and Perfect World, but Steam is the dominant platform. It’s used by more than half of premium PC gamers in China, and around 30% of Steam users worldwide have their default language set as Simplified Chinese.

Human: Fall Flat has found big success in China.

But Steam operates in a very grey area in China. Curve Digital, the London-based publisher of Human: Fall Flat, saw a huge spike in sales of their game in China after Zhan Lan Fei, a massively popular Chinese PUBG streamer, took a break from the battle royale game last December and played Human: Fall Flat for three days instead. The game has now sold more than four million copies in total — yet, weirdly, it hasn’t been officially ‘published’ in China. Stuart Dinsey, the chairman of Curve Digital Entertainment, explained the situation to me:

“We’re selling in China through Steam, so if you’re selling on Steam, you’re effectively launching in China at the same time as everywhere else. It’s Chinese consumers using Steam as a way to access games, which is different to publishing in China. To publish in China, you need to either have an office there, or you need a partner, and we will be publishing Human: Fall Flat through Perfect World soon as an officially released Chinese game. And indeed it will be called Noodle Man in China, because that’s what Chinese consumers who have fallen in love with the game call it in that territory.”

Robocraft from Freejam Games in Portsmouth is another UK title that has seen huge sales in China, despite not being officially published. Freejam CEO Mark Simmons told me that around 30% of their roughly 2,500 new installs every day come from China, but he’s just as confused as everyone else about the publishing situation: “This is the thing that’s odd and unusual to us, because the game is not approved for publication in China through the government, but it is available through Steam. How those users get the game through Steam isn’t clear to us.”

Nearly a third of Robocraft’s new users are in China.

Like Curve Digital, Freejam is working on getting their game officially published in China — even though it’s already available there through Steam. It’s a weird situation, with games available on Steam seemingly not subject to otherwise-strict Chinese laws.

The long road to publication in China

Lily Gavin-Allen is head of games business development for Asia at Testronic, a game testing and localisation company that prepares games for foreign markets. She says that it’s almost impossible for foreign companies to go it alone when publishing their games in China: “One of the biggest mistakes western companies make is trying to release a game into China without any assistance from a Chinese partner or publisher. With regards to compliance, you need to strictly adhere to Chinese laws and censorship rules. For example, you must send your game to the Chinese government for approval. This process can take up to 3 months, and there’s no guarantee it will get approved. If it doesn’t get approved, you have to re-apply. Once approved, you then have the hurdle of competing with Chinese developers who know Chinese players’ mindset, how best to monetise, and so on.”

Most of the developers I spoke to said that they’d already added Chinese language options to their game as a matter of course when it was launched on Steam, before they thought about officially publishing in China. But finding a Chinese partner to handle the government approval process and release of the game has been easier for some than others.

The Chinese logo for Coatsink’s Esper 2.

The Sunderland-based developer Coatsink was lucky in that it had a ready-made partner in the form of Xiaomi, the Chinese consumer electronics giant and world’s fourth largest smartphone manufacturer. “A lot of the work we do is with Oculus Studios,” Eddie Beardsmore, Senior Project Manager at Coatsink, told me. “Basically they fund our titles. We got this opportunity last year when they announced the Oculus Go, which is actually manufactured in China by Xiaomi. Oculus formed a partnership where Xiaomi could release a version of the Oculus Go in China, and it’s called the Mi VR.”

The Mi VR has proved popular so far, with the initial batch of 50,000 units selling out within hours. “Oculus was then allowing their studios, like Coatsink, to release their titles in China on this headset,” continues Beardsmore. “We’ve been chatting to Xiaomi, and we’ve launched all five of our Go titles in China. We haven’t launched any of our traditional games in China as of yet, but it’s something that we’re certainly going to be exploring, as that market is incredibly large.”

Coatsink handled the translation of their five games — Esper, Esper 2, They Suspect Nothing, Augmented Empire and A Night Sky — while Xiaomi took care of compliance and government approval, telling Coatsink that they didn’t need to change anything in the games to meet the country’s laws. All five games launched with the Mi VR at the start of June to what Eddie describes as “OK sales.” But seeing as the company barely had to do anything to get their games officially launched in China, he’s pleased with the result: “We haven’t seen a huge number of units gone that way, but it was certainly worth our time because it was such an easy job to do that.”

The Chinese logo for A Night Sky

But whereas Coatsink had a smooth ride, Freejam has been trying to get Robocraft published in China for years — and it still isn’t there yet. Mark Simmons from Freejam says one big hurdle was trying to find a partner that didn’t charge hefty fees for advertising upfront: “On Steam, the risk of spending money up front on advertising and not getting the money back in sales goes away, because you don’t pay the money until the end, i.e. when players have already purchased the game. Most operators in China operate a more traditional model where you’re paying for customers upfront, and then there’s a risk that you don’t make the money back.”

Upfront fees are a big risk for free-to-play titles like Robocraft because there’s a chance that very few people will pay for them, Simmons explains. “Imagine if your game on average took one dollar per person over their lifetime, but on average it costs five dollars to advertise and acquire one player – so for every player you acquired you would lose four dollars.”

Eventually Freejam decided that Tencent was the best partner to go with in terms of what they could offer. But they found the process of negotiating glacially slow. “It took us something like three-and-a-half years from discussion with them to actually signing a deal,” says Simmons. “One of the big things we noticed from working with Chinese companies is the speed of progressing towards an actual deal is quite slow. It wasn’t that we were negotiating a deal all the time, it was more that we were having meetings, developing a relationship, updating them on our progress, sharing things we’d discovered, having meals together – it was a long relationship-building process that eventually culminated in a deal.”

It took Freejam over three years to agree a deal with Tencent

But even after signing a deal, Freejam is still waiting for the Chinese government to approve Robocraft for release. “We’re still in approval,” says Simmons. “There are two stages to the approval: the first stage we passed through in around three months. We should be passing the next stage very shortly. The whole process would have taken about six months.”

For comparison, he says, the certification process for getting a game released on a console in the west takes “a matter of weeks.” Simmons also notes a disparity between domestically produced games and those made outside China. “It seems developers and publishers that are Chinese, within mainland China, are able to get titles approved by the government really quite fast, and western titles seem to take much longer to get approval.”

Censorship and red tape

Simmons says Tencent asked for a number of modifications to Robocraft before it could be submitted to the government.

“This involves some interesting things. For example, you have to integrate the Chinese government’s chat text filtering system, which filters a number of words that the government prohibits from being used in-game, and that system must be in place before you submit it to the Chinese government. We have to link our game to a common API that allows them to update that [word] database freely.”

The Chinese version of Robocraft has several changes.

“There’s another thing which is an anti-addiction system,” Simmons continues. “In China they have a piece of technology which you have to link to your game. After the player’s played more than a certain amount of time in a day, the game starts to remove rewards. Not remove them, but stop giving them out. So this is designed to discourage children from playing games for too long. For example, in our end-of-battle results screen, there’s an extra line item that shows the player how their rewards are being modified because they’ve exceeded the day’s limit, and it gives them a message suggesting they take a break.”

As well as adding in these systems, Simmons says Freejam had to make a number of changes to the game itself: “We had to change the red [effect at the edge of the screen] that shows you’re low on health to a different colour because that was deemed an issue. We had to change it to more of a blue special effect so it was not deemed to be kind of bloody. There was another thing: we had a skull and crossbones pirate flag which was cosmetic, you could put it on your robot. Because that featured a skull, we had to change that, because you’re not allowed that skull image or any representations of dead bodies.”

Chinese Robocraft: no skulls allowed.

There’s also the fact that since 2017, loot box odds have to be visible by law in China. Simmons says Freejam was already ahead of the curve on this one anyway: “The very first time we heard anything like this was coming, we immediately moved to just put the item drops up on our website anyway, because for us it’s not something we’re really necessarily trying to hide. We were pretty confident that our item drop rates were pretty fair, and there was no gain in trying to do behind-the-scenes attempts to monetise people. So we decided just to be open with it the first we heard any rumblings of it in the industry. So for us it wasn’t a problem.”

Indeed, since then, Robocraft has moved away from loot-based progression in favour of cosmetic purchases.

Copycats

The many hurdles that western games have to leap over to get released in China mean that there’s often a substantial gap between the game’s western release and its Chinese debut — ample time for Chinese developers to make a copycat version and sweep up the game’s potential customers. Stuart Dinsey of Curve Digital laments that “there were a number of Human: Fall Flat-style mobile games which popped up at the same time as the initial surge for Human: Fall Flat as a PC game in the territory — but that’s not something we can control.”

Human: Fall Flat has been relentlessly copied in the Chinese market

Mark Simmons at Freejam advises other developers to “take into consideration that the Chinese market is ultra-competitive, especially with the copycat game nature of the market, so launching in the West first may preclude you from ever being able to be successful in China. For example, I think the company NetEase were very quick to release something uncannily similar to Fortnite very quickly in China. If you release in the West first, there’s an opportunity [and] you’re going to be copied and launched in China before you get to be there, because of the publishing approval process. Whereas if you simultaneously launch in China and the west or launch first in China, then you don’t suffer that risk. That’s a really important consideration for any publisher or developer trying to reach into the Chinese market.”

What makes a game successful in China?

It’s not just the strict laws that make selling a game in China tricky — Chinese consumers also have their own tastes. Eddie Beardsmore at Coatsink thinks that the British humour in the company’s games may have put Chinese gamers off. “Interestingly, the biggest issue we’ve had is obviously Esper, Esper 2 and They Suspect Nothing, they have a lot of western humour in them. They’ve been our worst-performing games over there, and Xiaomi puts it down to the humour that’s in there, because there’s that disparity between Western humour and Chinese humour. That’s the biggest thing we’ve learned from this: that our British sarcasm doesn’t necessarily work when translated into Chinese!”

The British humour in They Suspect Nothing didn’t click for Chinese consumers.

Conversely, Stuart Dinsey of Curve thinks that the humour in Human: Fall Flat is part of the reason why it has seen such success in China: “As with any art form, if you manage to genuinely capture humour, then you tend to be onto a winner. The developer, Tomas Sakalauskas, is Lithuanian, so I think it’s an international humour, it doesn’t seem to have any boundaries in terms of the different types of consumer or territories where it has appeal.” He also says that multiplayer has been a key selling point, and that sales “really exploded when we added online multiplayer to the PC version towards the end of last year”.

The future

None of the developers and publishers I interviewed is specifically designing any forthcoming games to appeal to Chinese consumers over all others. Dinsey notes that, as a publisher, Curve Digital signs “games that genuinely have appeal, as opposed to thinking that this game would appeal to this territory, or this game would appeal to this certain group.” Dinsey adds they're aware of the significance of the Chinese market, though “it’s not something the company is dependent on and it’s not something that the company will be totally guided by. But are we going to try to make the most of a fantastic growing territory? Of course we are. In that case, we’re no different to any other company in the games market. We want to sell games to everybody everywhere.”

It seems that British developers and publishers in general are toe-dipping in the Chinese market, rather than conquering it. That said, all are now seriously considering which games might appeal to the territory: Eddie Beardsmore at Coatsink told me that the company’s forthcoming game Phogs might work well over there: “[It’s] not very story-orientated, it’s more like cutesy characters, which I guess is more internationally appealing. If I was going to pick one of our titles, that would certainly be the one I’d use to test the waters over there.”

Eddie reckons that Phogs might work well in China.

And the market for British-made games in China looks set to grow. Lily at Testronic reckons China is gradually becoming more receptive to western games — and, conversely, Chinese developers are increasingly targeting the West: “Recently I have attended events in China where the theme is about educating developers about launching their games into the western market. With Chinese developers becoming more accustomed to western styles, they will then incorporate this into the games they launch into China, which might make it easier for western companies to be successful in this part of the world. So, I would say, the culture is becoming more westernised and developers are more open to the west, as well as seeing the benefit of letting the west in.”

One major factor could undermine the reality this article represents, and have an enormous impact on the ability of British developers to find success in the Chinese market — the precarious status of Steam in China. The Chinese government blocked access to the Steam Community last December, although currently the Store remains accessible. And in June, Valve announced the forthcoming launch of Steam China in partnership with Chinese company Perfect World, featuring what is likely to be a “carefully curated line-up of games” — in other words, the polar opposite of the gaming wild west that vanilla Steam has become. Will the launch of Steam China finally see the Chinese government ban the ‘original’ Steam for good? If so, Steam will no longer be an easy shortcut for Western publishers to reach the Chinese market — instead they’ll have to run China’s arduous publishing gamut and play by rules that, politely speaking, will not be to their taste or benefit.


Lewis Packwood is a freelance writer and chief editor of A Most Agreeable Pastime.