Genshin Impact, Smash Hit From China, Beats Japan At Their Own Game

TOKYO — Genshin Impact, one of the world’s most popular mobile video games, has all the hallmarks of a Japanese invention: giant robots; human-sized swords; characters with huge eyes and spiky rainbow-colored hair; and a confusing fixation on women in maid attire.

There’s only one catch: it’s Chinese.

Released in late 2020, the game is the first bonafide international hit for the Chinese gaming industry. In its first year on the market, it raked in $2 billion, a record for mobile games, according to Sensor Tower, a company that monitors mobile apps. And, unlike other popular Chinese games, it is believed to have generated most of its revenue overseas.

The game’s success signals a shift in the balance of power in the $200 billion-a-year global video game industry, which has long been dominated by Japan and the United States.

Chinese developers, who have cash from the country’s vast domestic market, are looking overseas to expand. They see Japan – the aging global video game superpower – as a ripe target, and Chinese companies have begun buying Japanese talent and applying lessons learned from years of emulation of Japanese industry leaders.

In some respects, China has already begun to overtake its Asian neighbor. It’s built world-class engineering capabilities over a decade of outsourcing work for Japanese video game companies, and Chinese companies like NetEase and Tencent are making the kind of investments in game development that their Japanese competitors can only dream of.

But Genshin Impact also reminds that while the Chinese video game industry has achieved technical mastery, it still faces significant creative gaps. Although it has some Chinese elements, Genshin is an almost perfect reproduction of one of the most popular video game genres in Japan: fantasy role-playing games.

The game’s creators, from Shanghai-based miHoYo, proudly refer to themselves as ‘otaku’, a Japanese term often used to describe people whose lives are eaten away by aspects of Japanese pop culture, such as manga and anime. .

The game’s reliance on Japanese motifs is a powerful display of that country’s considerable soft power and limited feedback on China’s own efforts to build it. China’s video game sector, like the rest of its entertainment and culture industry, is struggling to produce distinctive and original content with international appeal – a symptom, in part, of its authoritarian government’s tight controls on games. businesses and society.

Even as China has become an economic goliath, it has struggled to shake off the image that it is better at emulating others’ ideas than offering its own.

Still, imitator or not, Genshin is a sign for many insiders of the challenges facing the Japanese video game industry. Under fierce competition from the United States, Europe and, now, China, it has ceded its once-dominant position over the past two decades.

Even many who initially dismissed the game as a cheap knockoff were won over by its quality and attention to detail. From a technology, art direction and gameplay perspective, Genshin represents a huge leap forward for China, said Yukio Futatsugi, general manager of Grounding Inc., a game developer in Fukuoka, Japan.

“Honestly, it’s a great game,” he said, adding that it made a lot of people in his industry think “we’re in trouble.”

Genshin is notable for its fantasy world-building and wide appeal not only across countries but also demographics: the game is exceptionally popular with women.

There are plenty of female characters among the dozens that players can use to explore a vast kingdom, dive into dungeons, fight monsters, and complete quests to advance the epic tale of a mysterious entangled traveler. in a war between humanity and the gods.

In what may be a first for China, the Genshin mythos has inspired the kind of global response that has long defined the success of Japanese games: cosplay, fan art, and endless online dissections of the characters and their magical realm, Teyvat. (It was the most mentioned game on Twitter in 2021.)

Gamers in Japan have mostly seen Genshin as an homage or knockoff of the latest entry in one of the country’s most beloved fantasy game franchises: The Legend of Zelda.

Liberal borrowings from the game’s most recent chapter – called Breath of the Wild – are mixed with a bag of references to other Japanese anime and video games, like Hayao Miyazaki’s “Castle in the Sky” movie and the game of Dragon Quest role.

MiHoYo overcame initial skepticism from Japanese players by adding a new area to Genshin called Inazuma, based on Tokugawa-era Japan.

The portrait is not necessarily positive: the country is a cloistered and xenophobic archipelago obscured by a radioactive fog. But for Japanese gamers, those negatives were more than offset by positive portrayals of Japan and its gaming culture, said Yusuke Shibata, who runs a YouTube channel where hundreds of thousands of players watch him play.

Japan accounts for almost a third of Genshin’s revenue, although playtime and downloads, at least on mobile, lag behind those of the country’s top home games.

Genshin is a free-to-play game, but it generated a treasure trove of revenue through another concept of Japanese games: charging players for the chance to earn new characters and powerful gear. The concept is known as gacha, a Japanese word that describes the country’s beloved capsule toys.

Players win rewards through a lottery system, and the odds of getting the best ones – many of which are only available for a limited time – are extremely low. This inducement to play has drawn complaints from gamers and regulators in Japan and China, but miHoYo has allayed those fears by making it entirely possible to play the game without spending a dime.

It’s one of the many Chinese games that have broken through – the others on a smaller scale – into the Japanese market. Just four years ago, Japanese developers held a monopoly on the best games in Japan, said Daniel Ahmad, principal analyst at Niko Partners, a video game research firm. Today, about a third of the top 100 mobile games in Japan come from China.

For years, the Chinese video game industry has been largely cut off from the world due to government bans on consoles and strict censorship. A turning point came in 2018, when the government temporarily halted the approval process for releasing games domestically. Many studios that once focused only on China have turned their eyes overseas, where releases were much easier. A new freeze on domestic game releases has further accelerated the change.

Chinese companies trying to sell games overseas have come under suspicion for the country’s tech industry and authoritarian tendencies. Genshin has faced questions about its Chinese origin, with the game initially receiving a chilly reception in Japan following rumors that it included Chinese spyware. In China, Genshin remains censored and overseas players are not allowed to discuss politically sensitive topics like Taiwan or Xinjiang.

This year, miHoYo made the outfits of some female characters less revealing, a move some fans appreciated but others called an example of the threat posed by Chinese regulations. More broadly, Chinese authorities have warned video game developers against their overreliance on Japanese themes.

MiHoYo declined multiple interview requests, citing his executives’ busy schedules.

Mr. Futatsugi, the Japanese game developer, has been among the beneficiaries as Chinese companies look overseas. In 2021, he received a substantial investment from NetEase, giving him more freedom to express himself artistically.

“No company in Japan will give us the money to make the kinds of games we want,” he said, adding that “Chinese companies are the ones who recognize the value of our company the most.” It doesn’t hurt that he’s allowed to retain 100% of the company’s intellectual property.

Mr. Futatsugi says the most serious threat to the Japanese video game industry does not come from China. Instead, he locates the crux of the problem in Japan itself, pointing to its aging population and shrinking market, licensing deals that prevent creators from making a profit, and the reluctance of conservative companies to embrace new ideas. .

Still, industry analysts warn the cash injection will divert talent from big Japanese companies, accelerating the industry’s decline, said Seiichi Mitsui, who heads the Game Age Research Institute consultancy.

“If Japanese companies don’t fight back – not just individually but by banding together as an industry – they may not be able to put the brakes on,” he said.

Ben Dooley reported from Tokyo and Paul Mozur from Seoul. John Liu contributed reporting from Taipei, Taiwan, and Hisako Ueno from Tokyo.

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