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Market Insight

China Joy 2019: Nintendo makes first official appearance and Sony introduces numerous Chinese-developed titles

August 05, 2019

Chenyu Cui Chenyu Cui Senior Research Analyst – Games, IHS Markit

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  • On Aug 1, Sony Interactive Entertainment held a PlayStation press conference during China Joy to show off multiple new games for PS4, including Sangokushi 14 by Koei Tecmo, NBA 2K20 by 2K and Gamepoch
  • Monkey King Hero is Back by Oasis Games, which launched its first trailer in 2018, showed recent progress and promised to be available by the end of 2019
  • MiHoYo revealed that Genshin Impact will be released on PS4 in addition to its original PC and smartphone releases
  • Except NBA 2K20, the other games have no exact release dates, which is disappointing for fans
  • On Aug 2, Nintendo partnered with Tencent to hold a press event to share more details about the upcoming Switch launch - Tencent will offer cloud services and server operation for Switch’s online platform in China.
  • Super Mario Odyssey and The Legend of Zelda: Breath of the Wild are confirmed to be available in China, and Tencent will be responsible for localization
  • Tencent’s WeChat payment system will be implemented for convenience
  • However, no exact launch date for Switch or any Switch games were revealed during the event.

Sony supports Chinese-developed games to avoid policy hurdles

Sony’s press event has not sparked great interest among gamers partly due to the dispute surrounding Genshin Impact. The game looks very familiar to The Legend of Zelda: Breath of the Wild, from the graphic design to the gameplay. As the Switch will come to China in the very near future, and Breath of the Wild will be one of the first games to be released, the criticism was intensified. However, we have also noticed several other interesting games presented during the event that cater to the Chinese market.

Monkey King Hero is Back is a highly-anticipated action-RPG title adapted from a 2015 movie, which broke records as the highest-grossing animated film in China. In the latest trailer, the game boasts high-quality 3D graphics to showcase both characters and scenes. Also, the clashes between major characters and opponents showed off various combat skills and streamlined actions, and this is likely to attract both action game fans and hardcore gamers. Biped via Tencent’s next studio is a casual adventure game focusing on 2-player co-operative play. This game might address a family audience originally, but will also appeal to friends.

Sony also presented its games pipeline which includes different genres, from survival to puzzle to adventure games, with SCP Foundation elements. Although it was unlikely that we would see traditional AAA-level titles by well-known companies revealed during the event, we have realized that Sony is attempting to support Chinese developers who are seeking a different route to attract hardcore console gamers. Instead of competing directly with overseas companies to roll out AAA titles, Chinese developers intend to introduce relatively lightweight games but with innovative storylines and gameplay.

Console gaming remains a niche market in China, so these games will not bring significant financial success for Sony, but the various partnerships enable the company to cultivate new users. Also, these games are more likely to pass censorship hurdles and achieve commercial launches in China.

Switch ignites excitement amongst gamers, but may not be profitable short-term

Nintendo’s press event has not revealed the exact launch date for the console, or how or if Mario Odyssey and Breath of the Wild will be adapted to pass censorship. This indicates that both hardware and software are still under the review process, with no certain timing to acquire ISBNs. What's more, Tencent gave no indication of the distribution and sales channels for Switch during the event. We expect additional, third-party distributors to be engaged as Tencent lacks the experience to operate console hardware shipment and sales. If this is the case, revenue will be shared by multiple parties, reducing the profit margin for Tencent.

However, we believe that the Switch is better positioned than PS4 and Xbox One, and will become more popular. Switch, which can be either connected to a TV or played as a handheld device, is likely to be accepted by a wider audience, particularly the large number of mobile gamers in China. Also, Nintendo IP such as Pokémon and Mario are well known in China: not only among hardcore players, but also casual gamers and even non-gamers, which suggests a potentially very large consumer base for Switch. During the China Joy exhibition, we observed passionate Chinese gamers queueing to play Pokémon Let’s Go Pikachu/Eevee. These games, compared to shooters and RPG titles, are more likely to obtain censorship approval.

Geography
China
Research by Market
Media & Advertising
Category
Games
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