How a Chinese Developer at Tencent Is Shaping the Future of Gaming

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Colin Yao, head of Tencent’s largest in-house game developer TiMi Studios, exudes a warm and reserved confidence, yet he is clearly antsy as he prepares to give his first-ever interview with foreign media to Fortune.

We meet in his studio’s colorful offices strewn about with gaming consoles, posters from the company’s newest titles, and inspirational tech slogans that feel out of place in a nondescript Shenzhen hi-rise.

As we sit down, he reviews the extensive notes he’s prepared, and a sizable public relations team—including one member on a video feed from Beijing—makes final preparations. Yet all of the fuss makes sense: Yao is arguably the most influential game developer in the world’s largest gaming company, just as Chinese gaming is hoping to bring its innovations to a global market.

Since the early 2000’s, Yao and Timi Studios have been responsible for building some of the most played games in China, a market that vies with the U.S. for the title of the world’s largest gaming market. Indeed, even though China’s technology giant Tencent is better known for their messaging service WeChat, games are the company’s biggest revenue driver.

Now, however, after years of success, the Chinese gaming industry sits at a crossroads. Tencent has been expanding into companies and markets around the world, yet is facing increased international criticism for censoring political content. And domestically, once rapid growth has slowed to a halt due to a government backlash over the impact of gaming on Chinese society.

China’s game companies will need to chart a delicate path, producing more patriotic and controlled games for the home market, while using their early focus on mobile gaming to their advantage as global gaming gravitates towards smartphones.

And as China embarks on its quest to lead the future of mass gaming, Yao just might be the person leading the way.

Yao’s first game

Yao, the son of power plant employees, grew up in Nanchang,
China, the capital of Jiangxi Province and was drawn to computers from an early
age.

As a middle school student, Yao used to take his older
brother’s computer science textbooks and read them cover to cover. He was eventually
able to convince his parents to buy him a basic computer, and this is where he
fell in love with games.

“I realized that software can be more than just words,” Yao
said. “I saw that gaming software could be interactive and really cool.”

The first game Yao played was Diablo, and he was floored that a complex computer game script could actually work on his wonky Windows 95 operating system. “Diablo still ran smoothly on my computer and it was very impressive to me.”

This inspiration is telling, in that much of Yao’s career since has been devoted to creating highly functioning games for restrictive technological systems. In China, gaming consoles like X-Boxs and Playstations were banned from 2000-2015, meaning that game developers like Yao started out creating PC games.

Sebastian Francois, who has worked in the Chinese gaming industry for the last decade, said that because China didn’t have gaming consoles, consumers gravitated to a more casual experience. “Their taste has been cultivated by these companies… In China, people also don’t want a difficult experience, they don’t want the game to be too stressful.”

After “basically starting from scratch,” Yao achieved his first success in the gaming industry after being hired at Tencent, where he and his team built a wildly popular and accessible racing game called QQ Speed for the PC in 2004; it remains one of China’s top games.  

With widespread smartphone ownership rising in the early 2010’s, this tendency for casual games in the Chinese market made the transition to mobile gaming a logical next step, and Yao’s focus shifted completely to smartphones.

In 2015, Yao and TiMi Studios released Honor of Kings, a battle game pitting teams of live users against one another, as a smartphone app. He and his team had unique insights into Chinese consumers. Namely, they understood that simplicity and short games were the key to mass appeal.

“Our players are looking for more casual gameplay and want
more social and interactive elements in their games.” Yao said. “With the
shorter attention spans, this means shorter games.”

The game’s integration with Wechat also provided nearly
unlimited marketing and distribution channels to Chinese consumers.

“Tencent’s social products are inextricably tied to TiMi’s
games,” said Li Bin, general manager of business development and producer at Changyou
Games. “Social relationships are the glue that keeps them playing and highly
engaged.”

Domestic challenges, global opportunities

Like many in newly powerful tech hubs from Shenzhen to Silicon Valley, Yao is an engineer at heart, excited to discuss the technologies and various quirks going into his games, yet slightly more reticent in discussing the implications of reaching hundreds of millions of consumers on a daily basis.

And Yao’s games have had a massive impact in China.

An avatar is displayed in the Honour of Kings mobile game. The game became a smash hit in China
An avatar is displayed in the Honour of Kings mobile game. The game became a smash hit in China. Credit: Justin Chin—Bloomberg via Getty Images
Justin Chin—Bloomberg via Getty Images

At its peak in 2017, Honor of Kings had 200 million monthly active users, and in 2018 it pulled in nearly $ 2 billion in profits. Yet the game almost became too popular, and it caught the attention of the People’s Daily, the Communist Party of China’s official newspaper, in 2017. An editorial blasted the gaming industry as “poison” to Chinese society, and argued that games were distorting Chinese history and values and becoming far too addictive for younger consumers.

In 2018, the Chinese government ushered in sweeping reforms aimed
at the Chinese mobile gaming industry, which included a nine-month moratorium
on licensing games coming into the market and a crackdown on violence
in the games.  

In response, Yao now says that his studio has been taking steps to integrate gaming with the country’s health system and broader societal goals. He cited time restrictions Tencent imposed on younger Chinese gamers, an educational project for gamers and their parents called Digital Native Action (D.NA), and a new game aimed at helping players understand the lives of visually-impaired people.

The regulations have also driven a renewed focus on creating games with patriotic undertones. Even in the case of Honor of Kings, a game not ostensibly created to educate the pubic in Chinese history, Yao stresses its nationalistic undertones.

Citing the game’s historical Chinese figures, and inspiration
from ancient Chinese war paintings Yao said, “This is how we want to pass on
our cultural heritage to the younger generation, and make them love the ancient
culture.”

Domestically, the regulations hit the industry hard—it grew a meager 5% in the first half of 2018—yet signs are already pointing towards a rebound, and some insiders believe that they may prove beneficial to the industry in the long term.

“China’s game industry entered a state of rapid and brutal
growth, but with uneven product quality and varying operating modes. This was
not good for the industry or for society as a whole,” said Li Bin. “But now everyone
can truly focus on developing quality products.”

In fact, the recent crackdown may actually prove beneficial for Yao and Timi Studios. While licensing of foreign games has resumed, the new regulations impose far stricter requirements on foreign titles entering the Chinese market. As a result, investment and opportunities for innovation may shift towards domestic game developers like Yao.

“In-house studios will play a more important role than before because overseas licensed games, in comparison to domestic games, will be more challenged to receive approval,” said Cui Chenyu, a games analyst with IHS Markit. “[Tencent will] co-develop more games with overseas companies, so Tencent will have [a larger] development role in the future.”

Tencent and Timi Studios maintain investments and partnerships with many of the world’s top gaming companies, and more focus on producing more original games will also mean creating more content for non-Chinese consumers. Yao now believes that extending outside China is the logical next step—albeit a tiring one.

“We’ve been running the whole time. There’s never been a
chance to stop and take a breath,” Yao said. “We’ve experienced so many
transformations, from the PC gaming era, to the mobile gaming era, to 4G, with
high-quality battle games, to today’s globalization era.”

Going global, however, remains an uphill battle. China’s global facing version of Honor of Kings, called Arena of Valor, was released in 2017 but largely flopped. Overseas, the game does not enjoy the built-in advantages it holds in China, such as its integration with WeChat and widespread mobile gaming.

Additionally, in recent weeks Tencent gaming has become a bit player in a scandal that has shaken the gaming world. Activision Blizzard, of which Tencent owns a 5% stake, recently reprimanded an esports player after he spoke out in support of Hong Kong protests, but decided to reduce his punishment in the wake of widespread backlash. Many overseas gamers attributed Blizzard’s harsh reaction to Tencent’s influence in the company, and have criticized censorship in games like Riot League’s League of Legends, which is owned by Tencent.

Still, China may be ahead of the curve in terms of the trends in global gaming.

In the west, the explosive success of Fortnite and Pokemon Go in the last few years indicate that smartphone-based games may indeed be the future of mass gaming.

And whereas casual, mobile games such as these have only recently started to boom around the world, Yao and other Chinese game developers have been focused on developing mobile-specific games for years.

“Can Timi succeed overseas? Of course they can,” said Li Bin.
“I believe Timi will quickly adjust to the most appropriate global strategy.”

Yao says that he cannot disclose the specifics of new projects, but offered a few hints about what they might look like.

“[In the future] games will have more and more stories and emotional experiences, and we will gradually improve their artistic value,” Yao said. “One of the most anticipated products that we think will take the world by storm is the new mobile game with [augmented reality], like in Pokemon, which we believe will bring a different experience to players.”

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