Chinese tech giant NetEase launches first game studio in US

NetEase’s US games studio called Jackalope Games highlights the Chinese tech giant’s aggressive international push as the domestic gaming market faces headwinds.

Xing Yun | Cost photo | Edition of the future | Getty Images

Chinese gaming giant NetEase has launched its first wholly-owned game studio in the United States as it ramps up international expansion amid a slowing domestic market.

The development studio, called Jackalope Games, is based in Austin, TX and will be responsible for creating new PC and console games for NetEase. The studio will be led by industry veteran Jack Emmert.

NetEase, which recorded $9.8 billion in gaming revenue in 2021, has pushed aggressively in international markets over the past two years amid tighter regulations in China.

Last year, China introduced rules that cut the time children under 18 can play online games to just three hours a week. Regulators have also frozen the approval of new game titles and games must now get the green light from regulators to be monetized in China. Last month, regulators approved a new batch of games for the first time since July.

While rival Tencent has expanded internationally through acquisitions of other game developers, NetEase has instead opted to take small stakes in companies and open its own first-party studios.

The company, which already has two game studios in Japan, has focused on developing games with global appeal, including titles “Lord of the Rings” and “Harry Potter”.

Hu Zhipeng, vice president of NetEase and a top boss of the tech giant’s video game business, told CNBC last year that he hoped 50% of the company’s gaming revenue would come from from abroad in the future, compared to around 10% at the time of the interview.

NetEase has traditionally focused on PC and mobile games, but has more recently begun to focus on developing titles for consoles such as Microsoft’s Xbox and Sony’s PlayStation. The American studio could help produce console games.

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