Chinese video game giant NetEase has been aggressively expanding abroad as the domestic market slows amid tighter regulation. It now has wholly owned game studios in the US, Europe, and Japan as it focuses on games beyond mobile and PC.
Arjun Jarpal | CNBC
NetEase announced on Wednesday that it has acquired a French game developer as the Chinese tech giant continues its aggressive international expansion campaign.
The Hangzhou, China-based company purchased Quantic Dream, marking the establishment of its first wholly owned game studio in Europe.
NetEase and rival Tencent have been ramping up their efforts abroad as China’s domestic gaming market slows amid tighter regulation.
Over the years, Tencent has been prolific in acquisitions and investments in overseas gaming companies. NetEase is now catching up.
This year alone, NetEase has established game studios in Japan and the US.
NetEase has generally focused on PC and mobile games, extremely popular formats in China. Mobile gaming accounts for more than half of its global gaming revenue. But more recently, the tech giant has expanded into console gaming.
Quantic Dream, a 25-year-old studio, will focus “on creating and publishing its video games across all platforms, as well as supporting and publishing third-party developed titles,” according to a press release.
That highlights NetEase’s intention to grow across mobile, PC, and console.
The acquisition of Quantic Dream is in line with NetEase’s strategy of acquiring well-known international characters and franchises. Quantic Dream is currently developing a game called Star Wars Eclipse, based on Disney’s space adventure movies. NetEase has already released mobile games based on The Lord of the Rings and Harry Potter.
NetEase’s international push comes as regulators in China continue to scrutinize the gaming market, although there are signs of some relaxation. Last year, authorities restricted the amount of time that those under 18 could play games online and froze the approval of new titles. In China, games need a green light from regulators to be released and monetized. Those approvals restarted in April.
In an interview with CNBC last year, Hu Zhipeng, a vice president at NetEase and a top head of the tech giant’s video game business, said his goal is for 50% of the company’s game revenue to come from overseas. versus about 10% now.
Competition in the global gaming market is heating up.
Sony, a leader in console games and a producer of PlayStation, announced on Tuesday that it is creating a dedicated mobile division, which will put it in competition with Chinese giants Tencent and NetEase.