Assessing China’s game development capabilities

This seems to be a re-occurring discussion I have on this blog, but with the release (and early positive reception) of Call of Duty Mobile (developed by Tencent Timi – J3 studio; published worldwide by Activision and Garena in respective markets), it’s worth refreshing this conversation.

Similar to PUBG Mobile, Call of Duty Mobile seemed to immediately receive praise for its technical performance. Players are wow’ed that “this is playable on mobile”, “it runs so smooth!” Etc. It is indeed an impressive feat, with no doubt lots of hard labor and ingenious solutions to hard problems. In its sum it’s Chinese developers reaping the rewards of their half-decade investment in mobile development at AAA scale.

Framework sketch

If we take a step back and snapshot Chinese developers’ capabilities in the global games industry value chain, we might get something like this (excuse my crude hand-drawn graphic):

China’s capabilities in the global games industry value chain

Here, the value chain component labels are intentionally generic (I’ll come back to this later). And the artificial separation of “Design” and “Manufacturing” are divergent from reality, but you get the rough idea.

The main observations I tried to capture are:

  • In the console platform, China has traditionally only had a minimal / partial “manufacturing” role, in insourcing or outsourcing (e.g. western developers’ China studios that help their western teams finish their games; or large outsourcers like Virtuos). A lot of this is due to the lack of a home-grown market
  • In PC, Chinese developers made lots of games, but they were generally non-AAA and in the lower end of the market (for example browser games). There were various attempts at shipping these games to a global audience, but nothing that became a cultural phenomenon
  • In mobile, Chinese developers are leading the charge on almost all fronts (with exception of “design” which I will break down in a bit), pushing the technical boundaries as well as going deeply to emerging markets that have historically been neglected by most publishers. Their capabilities in manufacturing and distribution are industry-leading

Now coming back to why I generically labeled it “manufacturing” and such: this is thanks to a quick chat I had with a co-worker this week. My colleague has an education background in industrial management. When I started discussing with him what I thought were the strengths / weaknesses of Chinese developers, he instinctively mapped it to industrial manufacturing – “it sounds like they are very good at running the factory – operating manufacturing processes, solving the production line issues, ensuring output quality etc. But these production line engineers tend to be terrible at new product development because they are focused on totally different sets of things.”

I thought this was a great insight. And yes, game developers tend to know whether they enjoy and are good at making new games or working on live titles (very few developers are great and passionate about working on all stages of a product’s lifecycle). But mapping it back to an almost archaic manufacturing-line metaphor really helps distill the point.

(One other benefit about the generalized industrial labeling is we are reminded to explicitly reference what has happened in other industries – for example appliances and consumer electronics.)

A side-bar about Design

So, to the part about “design” and China’s capabilities here. First off, here I’m using “design” in the more general sense (and it’s probably a poor word choice on my part) – it refers to loosely everything to do with new product development. I think this is by far Chinese developers’ weakest area. Thinking out loud here, there’s a few factors why:

  • China has a relatively shorter history of game development, and the industry has always been skewed in narrow areas (online f2p)
  • Much of China’s recent growth has been in perfecting the production line – working around harsh memory constraints to realize a feature, designing a networking model that supports twitchy real-time multiplayer gameplay in unreliable mobile network conditions, making the game run on 5-year old phones, efficiently integrating with a long list of social networks / app stores… When most teams have focused on being the best production line team, they lose the mindset for new product development
  • China’s shorter-term planning and rampant clone culture results in less value placed on original design, and thus less exercised muscles
  • And to some extent, China’s education system and societal values are detrimental to fostering type of talent that excels at creativity and independent thinking (this is obviously a huge topic in itself, and it’s easy to overstate this factor’s impact; but I think it does exist and should be listed)

Known unknowns vs unknown unknowns

So, coming back to Call of Duty Mobile. In many aspects it’s a great product and the team should be proud of what they’ve accomplished. It’s a great showcase for the Manufacturing prowess of Chinese developers.

From the extremely few anecdotes I’ve heard about this project (casual conversations with folks from both Activision and Tencent), the Activision team was fairly hands-off with the game’s development. (In Activision’s IR comms, the game is also described as “Published by Activision, and developed by Tencent Games’ award-winning TiMi Studios”.)

I think in this specific case, this IP-licensing model works, because there was likely little doubt what the desired gameplay experience is (bookended by PUBG Mobile on mobile, and the decade-plus refined Call of Duty experience on console).1 That is to say, the challenges in this project are mostly known unknowns – “how do we solve the input challenges?”; “how do we recreate these iconic CoD maps to fit the memory budget?”; “how do we ingest Activision’s raw assets into our assets pipeline?” etc. Or really, mostly known knowns, as Timi has already overcome most of these challenges in their previous (now canceled) PUBG game.

For this type of known unknown work, as it relates to mobile games, I doubt you can find more capable developers than Tencent and Netease. And I expect them to find further success with other IP licenses, for example, the rumored Apex Legends mobile game, or even the negatively primed Diablo Immortal (which I still cautiously hope will defy expectations). And I could imagine them tackle something like Destiny or World of Warcraft2.

Basically, anything where there’s a beloved IP on top of proven gameplay (that can be adapted to f2p)- call Tencent / Netease and get it on mobile. Forget your own biases about what should / shouldn’t be on mobile. The Chinese teams will solve all the seemingly impossible challenges, and the game will reach an otherwise unreachable audience (the billion plus players in emerging markets, the older / younger gamers for whom mobile is a much better lifestyle fit than console / PC).

But for exploring unknown unknowns, or in our industry, creating games that doesn’t have a clear reference or have so many new ideas ingested that it has become something evolutionary, I still think the heavy-weight teams in China generally lack the DNA, culture and org structure to effectively pursue. Games like Zelda: Breath of the Wild, Portal and Clash Royale, to name a few random examples.

Thus as a closing thought, the marriage of global Design capabilities to Chinese Manufacturing seems like a literal $10B opportunity (if not more). It is clearly incredibly hard to do, starting from a lack of talent – people who are passionate / knowledgeable about game dev, speak the languages, and are adroit at bridging the cultures. But I’m quite optimistic that this will improve over time. Perhaps Apple’s “Designed in California. Assembled in China.” Is one gold standard we could look at.

  1. Before PUBG Mobile there were perhaps lots of questions of “why would players want to play that on mobile?” But now that’s been answered loud and clear by literally hundreds of millions of players.
  2. Netease already made a thinly veiled WoW clone…

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