It appears that Chinese games firms Tencent and NetEase are thinking twice about the money they have been investing in Japanese companies.
Bloomberg reports that the duo is unhappy with the return on investment they have had in the country. In part, there appears to be a mismatch of ambitions; the Chinese games firms went to Japan hoping for flagship blockbuster titles but the developers it has backed are more tuned to making smaller games.
Chinese companies such as Tencent and NetEase started to invest more money outside their home country due to the threat of more stringent regulation that would risk the profitability of their business.
The environment back home appears to be changing, plus there has been the small matter of Chinese-made Black Myth: Wukong being a mega hit providing that the industry still has huge potential.
“We may be approaching a point where Tencent and NetEase begin to scrutinise their returns more closely,” said Bernstein analyst Robin Zhu.
“Globally, the video gaming industry has retrenched post-Covid, and many large publishers have reduced headcount or scaled back investments. Anecdotally, the Japanese developers’ desire to tightly control what can be done with their IP has sometimes been a source of friction.”
