The creator of “Genshin Impact” is aiming for Tencent’s China game crown

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On the eve of last month’s launch of miHoYo’s latest online game, Honkai: Star Rail, employees of the Chinese gaming company worked late into the night.

“Everyone was rushing to launch the product. The company has invested a lot of resources Honkai. It is clear that the intention is to make it at least as big Genshin Impact and to make it the company’s top title,” said one employee enlisted to work by Honkai publication.

An anime game about space travel, Honkai: Star Rail is the second new title from miHoYo since the great success of Genshin Impact. Its performance will determine whether the Shanghai-based studio can establish a lasting role for itself as one of China’s top game developers facing competition from industry giants Tencent and NetEase.

Since launching in September 2020, Genshin Impactwhich is an anime RPG set in an open-world environment, grossed $4.8 billion in mobile revenue, making it one of the top three most profitable mobile titles, according to data analytics group Sensor Tower.

“I like the game’s open-world mode, which allows players to freely traverse the virtual environment. . . and it doesn’t require players to spend a lot of money to get a good experience,” said Changsha player Ma Ka, who is an avid gamer.

The 28-year-old architect also played Honkai: Star Rail since its release, attracted by its “generous free items” and format, which he says is “more suitable for tablets and smartphones” than Genshin.

The Chinese online gaming market is dominated by Tencent and NetEase, which hold 50% and 20% of the market share, respectively, according to research by Goldman Sachs. This is in contrast to most other large game markets, where large publishers typically control less than 10% of the market.

“It’s too early to tell that miHoYo will surpass NetEase or Tencent. But their investment, R&D strategy has been very successful,” said Chenyu Cui, senior games analyst at consulting firm Omdia.

Genshin’s the popularity also underlined the increased competitiveness of Chinese game studios, which have been developing games with international appeal to combat slowing growth, tough censorship restrictions and a domestic regulatory crackdown.

The industry suffered a major blow two years ago when Beijing imposed heavy restrictions on the time minors could spend online gaming, after state media labeled it a form of “spiritual opium.” Tencent reported that the game time of minors it had collapsed by 96% in the first quarter of this year, compared to the same period three years ago.

Regulatory restrictions led to the closure of many of the smaller game studios after authorities halted broadcasting new game licenses for nine months. Even the big incumbents have seen their gaming revenues decline.

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Beijing reopened its doors to gaming licenses late last year, bolstering the share prices of gaming companies. A week ago, regulators released licenses for 86 games, including a battle anime title from NetEase and a “first-person shooter” game from Tencent.

Industry insiders and players say content restrictions have had a less radical effect. Guns, violence, and curvy anime girls are still generally allowed, and the ability of Chinese game developers to create globally successful titles with uncensored releases hasn’t diminished.

A member of Tencent’s gaming team said Beijing’s intense focus on the industry hasn’t “changed the content of games much.”

“We are still very focused on the gaming experience. We’ve tightened restrictions on youth playtime, but there aren’t major differences in the content itself,” they said.

Chinese game developers and publishers have increased their overseas market share from 14% in 2019 to 22% in 2022, according to Sensor Tower.

Part of Genshin Impact The strategy to expand international market share has been to release updates every five to six weeks with new maps, characters and activities to keep users coming back and spending money. In contrast, most other major titles typically release large expansion packs every three months.

At home, game companies must balance creating content that can bypass Beijing’s censorship restrictions to gain a highly regarded gaming license with developing games that still captivate the player with their entertainment and visual appeal. . The trade-off meant studios were producing watered-down versions of the games, says Daniel Ahmad, a senior analyst at gaming consultancy Niko Partners.

He cites the example of the changes for the patriotic battle game Peacekeeper Elitewhere the blood was changed from red to green and the size of the blood splatters reduced, compared to the international version of the game that inspired it, Tencent’s PUBG Mobile. Most of the changes to appease censorship go largely unnoticed, he added, apart from hardcore gamers.

But Ka says the impact of stricter enforcement of censorship rules is clear Honkai: Star Rail. he said Genshin Impact she was trying to appeal to male gamers with “female avatars with big boobs and sculpted legs in black stockings”. In reverse, by Honkai the characters do not “have exaggerated physical features or wear revealing clothing”.

Like many fans of miHoYo titles, that didn’t stop him from playing. “I don’t need erotic or violent content in games,” he says. “I just like the fun of the game.”