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Gamebake's Michael Hudson and Sandsoft's Lauren Lu on the changing Chinese market

Why China remains a lucrative market despite legislative barriers
Gamebake's Michael Hudson and Sandsoft's Lauren Lu on the changing Chinese market

With the shifting tides of the Chinese gaming market moving to a sunnier outlook, with new licences being granted monthly and pandemic restrictions easing, what's the outlook from industry experts?

We put this question to two major game companies, Sandsoft Games and Gamebake. Both of whom have worked extensively with partners in the Chinese market and elsewhere. We wanted to get their take on how these events have affected their confidence, and what they think of the recent news of licences being granted anew, a major shift from the nearly year-long licensing freeze.

CEO of Gamebake, Michael Hudson had this to say on the Chinese market. "I don't think this means the market is opening up, it's just getting back to how things were. This is a return to pre-pandemic numbers, which weren't exactly game changing. I mean 1,000 (ish) games from goodness knows how many are actually launched globally...

"Overall it's good news, but it mainly helps out the bigger names. There won't be too many smaller studios or games being approved without the right local partnerships within China itself."

Business development lead at Sandsoft Games Lauren Lu, in contrast to Hudson, was slightly more optimistic. "The size and spending power of the Chinese audience makes the Chinese market a considerable prize for developers and publishers. However, the Chinese market is also unique in that it has the capacity to produce and enough gaming content internally to be effectively self-sufficient, and has lots of high-quality games to export to the world, too.

"Periodic policy adjustments mean both domestic and foreign publishers need to be prepared for sudden changes and, in the past five years, ISBN licence approvals have been paused twice. Foreign game developers and publishers therefore typically work closely with a Chinese publisher to better navigate the licensing and operational challenges of the Chinese market."

Looking forward

From these statements we can draw one key conclusion - that while news is good this isn’t the end for trouble in the Chinese market. Chinese regulators can be opaque in their decision-making, and very little consultation takes place with the industries affected. For example, in the Chinese film industry horror movies - prone to falling foul of regulations due to their subject matter - are often rushed out to avoid changing regulations affecting their release.

Overall the sentiment seems to be that, although no-one is thinking of divesting from China, it has shaken confidence and given many investors and partner companies a first-row seat as to how wrong things can go if the regulatory headwinds go the wrong way. With attention shifting towards other regions such as MENA and even Chinese companies investing abroad, only an official government ruling on restrictions being lifted, or at least a far longer state of relative calm could restore industry confidence.