Comment & Opinion

The impact of the coronavirus epidemic to China's games industry: A view from Beijing

The impact of the coronavirus epidemic to China's games industry: A view from Beijing

Junxue Li is CEO of Beijing-based 2D art production house Sunny Painter.

This article has been edited with permission from the author. You can find the original piece on LinkedIn.

This season, the Chinese people had an eventful Spring Festival Holiday, due to the outbreak of the new coronavirus epidemic. China's government is working hard to control the epidemic.

Our studio is in Beijing, an affected area, so I want to give you some first hand information regarding how the epidemic impacts the games industry in China - I will try my best to give a full and detailed story.

Background

The new coronavirus is airborne and a bit more dangerous than the common flu virus. It attacks people's lungs, with the symptoms including fever and pneumonia.

Affected patients were first found in the Wuhan city of Hubei province around Dec 2019, possibly transferred to humans from wild animals, the virus' natural hosts. In short time it developed into national epidemic.

(At the time of publication, the BBC has reported that there are 59,864 cases and 1,368 deaths caused by Covid-19, as this coronavirus is now known - Ed.)

The situation in Wuhan is dire, with a large number of people diagnosed. Newly increased cases are beyond the local hospitals' ability to handle, and the nation is summoning all the available resources to construct new hospitals overnight. To prevent further spread of the virus, the city is sealed. In general, life in Wuhan is very rough.

Outside of Hubei province, the number of diagnosed is significantly lower. However, to help keep the virus in check nationwide, people are advised to stay at home as much as possible before the matter is over to reduce contact.

To help improve the situation, our people have been staying at home from the start of the Spring Festival holiday (Jan 24) up to today. Because of the emergency, the holiday has been twice prolonged, first to Feb 10, and now to Feb 17. This creates a type of at-home consumption and makes some impact to businesses.

Beijing's most busy commercial street Wangfujin Avenue on this year's Lantern Festival evening

Game Revenue Boom

It's easy to imagine that while people are unable to go out for entertainment such as movies, parties, etc., a large portion of the amusement budget would be diverged to video games.

In the mobile game sector, most top grossing tiles in China have welcomed a phenomenonal hike in revenue. On Spring Festival Eve, Tencent's flagship MOBA Honor of Kings reached two billion yuan ($300 million) in daily revenue. This figure wass only 1.3 billion on 2019's New Years Eve.

And consoles have also enjoyed a sales mania. "Our consoles and discs have sold out in a week," a Taobao store owner said.

During this period, both PS4 and Switch became highly sought-after items. A typical example is the Switch game Ring Fit Adventure - on the US Amazon store its price is $124. And on Taobao, the price is steadily rising - a few days ago it was around ¥1000 ($140), and now it's around ¥1500 ($215).

Benefits for Gamers

For all developers and service providers across China, the biggest challenge is to resume work in offices.
Junxue Li

For publishers, it would appear to be the best time to harvest revenue. On the contrary, to cheer people up and help them combat long time indoor stress, many are generously offering free-to-play plans.

For example, Nishuihan, a MMO RPG game, regularly operates with an hourly/monthly billing plan. Now it has gone free-to-play during the epidemic period. It also released a free in-game mouth mask, to encourage people to hold on. And Blizzard’s Overwatch has also extended its free trial period to the end of the holiday.

Donations

During this hard time, most local and international publishers/developers are extending arms of help to Wuhan. Each of them has donated millions of yuan to the city through charity, helping them buy desperately needed mouth masks and medical equipment.

Some companies have even gone to great lengths by sending staff abroad to buy mouth masks - they are out of stock everywhere in China - and bring them back in suitcases to send to Wuhan.

And some MMO games sponsor in-game activities to raise donations among players. For example, Jianwang 3 by Kingsoft has raised 1.2 million yuan as of Jan 30.

I'm glad to learn that enterprises/people in our industry are so warm hearted, and stay firm with the nation.

Esport Events

Big gatherings are something we are trying to avoid now, so esports events are affected. All events in China area are rescheduled, including League of Legends, Overwatch League, and PCL 2020. And some esports teams send their regards to the public, encouraging people to keep hope and be strong.

The Overwatch League's official statement on cancelling events in China

Challenges to Developers

For all developers and service providers across China, the biggest challenge is to resume work in offices.

Big companies such as Tencent and Netease will re-open their studios on Feb 17, following the national emergency announcement. However, lots of small companies require employees to remote work from Feb 3. No doubt that by remote working, only limited jobs could be handled.

The impact to different studios would vary according to their working natures. For example, for some 2D/3D art suppliers, where the work is to make some 3D models and 2D graphics, they are not greatly affected. However some developers who need multiple departments working together are not so lucky.

Wuhan city is the concentration zone of GAL game (Girl and Love) developers - these developers are the most heavily impacted.

A famous GAL producer revealed that the big issue of his studio is that employees who went to their hometowns to spend the holiday with families are unable to return to Wuhan. And native Wuhan employees are unable to go to their place of work for the city is heavily infected area - Wuhan people go outdoors even the less than other cities.

Impact to Our Studio and Friends

The whole of the industry represents a positive force battling the plague, and we will help our country win out!
Junxue Li

I have many friends in different cities, such as Shenzhe and Xi'an, who run companies doing 2D/3D artwork for hire, just as our studio. They all tell me that their studios are not reopened, because by announcement it is still holiday now, and people are scared of gathering together.

However, small companies can't stay idle for very long, and their employees do as much work as possible at home. They suffer different degrees of losses, and we all hope the working order could be restored soon.

And it's very lucky for our studio. We're in Beijing, a less affected city - we have freedom to go out, though people aren't willing. Our employees all live within half an hour distance, so work goes on just as normal - we went back to work on Feb 3.

And I tell our clients the situation in China, and we could only go home and go to work. And they support us by sorting out all the outsource works and give us as much as they can. Here I sincerely express my gratitude to these dear friends!

The biggest impact is to our marketing. Now many countries limit Chinese citizens' entry, and flights from and to China are cancelled. In the next few months, we can't expect to do self-promotion at game events, for example GDC and Game Connection in March, or Pocket Gamer Connects Seattle in May. How big the loss is... it's hard to estimate.

The importance of going to events could be understood from two stories. First is that we found a big client we now work for indirectly through the Pocket Gamer Connects Helsinki last October; And for the last few years, whenever we go to San Francisco, we would visit our most important clients there - the visits are essential to maintain our long time collaboration.

Conclusion

To Chinese people, the epidemic is a grievous misfortune and suffering, and all of us hope it could end soon. Some of us in game industry suffers losses too - nonetheless, the whole of the industry represents a positive force battling the plague, and we will help our country win out!

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