Issue 04 - 2024MAGAZINETechnology
GBO_ China leverages gaming

China leverages gaming to boost soft power

December 2023 marked the return of China's gaming industry to double-digit growth after two years of harsh regulatory crackdowns that had brought the industry to its knees

The Chinese video game “Black Myth: Wukong” became an overnight success, selling over 10 million copies within a few days of its release in August 2024. This achievement has been heralded as a soft-power victory for the Asian superpower.

But “the intention of the drunkard lies not on the wine, but on other purposes,” according to a Chinese proverb.

China’s entry into the gaming sector also serves a “harder” kind of power: the need to support domestic chip manufacturing in the wake of the United States semiconductor export restrictions, which were meant to impede Chinese AI research.

Blockbuster gaming with Chinese characteristics

Players take control of Wukong, the Monkey King, in “Black Myth: Wukong,” an adventure game with fights and mysteries drawn from old Chinese mythology and set in the world of the Ming dynasty novel Journey to the West.

The big-budget game is the first of its kind from China to be this widely successful internationally. “Black Myth: Wukong” demonstrates how popular culture can comply with the propaganda directive to “tell China’s story well.”

It was created and released by Game Science, a studio supported by tech behemoth Tencent. The game is a successful cultural export and a tool of Chinese cultural soft power, as previously pointed out, even in the face of criticism from Western media.

Chinese gamers who are sick of playing games with foreign settings take great pride in this, as demonstrated by this widely shared post on Chinese social media platforms: “You once rode a horse in Damascus, duelled with guns in a small town in the American West, also served as an assassin in Egypt. Now you can finally return home and be your own hero.”

Chinese industry levels up

Beijing has long supported gaming. For example, in 2019, the municipal government of the Chinese capital city released guidelines with the goal of making the territory the “international capital of online games” and using games to promote engaging Chinese narratives.

Broader policies enacted in 2021, 2022, and 2023 have reinforced the “go global” strategy for gaming by fostering the creation and global release of top-notch games consistent with Chinese culture and values.

“Black Myth: Wukong” is intended for the more affluent and prestigious console and PC gaming markets, which also demand more sophisticated software and hardware, despite the industry’s prior successes with mobile gaming. Due to the game’s success, China’s gaming industry is receiving more funding for the development of significant projects.

China is the biggest gaming market in the world, but local laws like censorship, time limits for kids to play video games, and prohibitions on gambling and in-game purchases have reduced earnings for Chinese game companies. In response, now these companies are turning to international markets.

The development of blockbuster games can be a winner-take-all endeavour, with resources usually concentrated among the top companies due to the high development costs. Therefore, it might take some time for China to become a clear leader in the world gaming industry.

Hardware is a major obstacle, especially the availability of sophisticated chips and the technological know-how needed to create and manufacture them. This is the keystone of China’s global domination in the digital sphere.

Heavy-duty gaming hardware

The hardware bottlenecks brought on by the Washington-Beijing tech war are well known to Chinese policymakers, tech companies, members of the gaming industry, and gamers. For the last two years, the United States has restricted China’s access to advanced chips.

The limitations target AI-capable chips, but “Black Myth: Wukong” and other high-end games also require the same hardware.

NVIDIA, a leading American chip company known for its graphics processing units (GPUs) that are essential for advanced graphics and machine learning, is actively promoting gaming. The company claims to have significantly contributed to the graphics and technological advancements in the game “Black Myth: Wukong”.

To fully experience the game’s stunning graphics, players will need an NVIDIA GPU, such as the RTX 4090, which can cost up to $3,000.

The AI-powered “upscaling” technologies that gamers need to equip their PCs with, like NVIDIA’s DLSS or substitutes from rival chip manufacturers AMD and Intel, are also required.

Chinese game developers and players have no domestic options because American companies produce the best GPUs and upscaling technologies.

China has significantly increased its internal chip manufacturing capacity. The sophisticated chips required for cutting-edge gaming are still beyond its current competitiveness.

Serious games

Supporting the gaming sector will increase consumer demand for cutting-edge chips and open new markets for larger producers. Alongside state-led, top-down investments, there will be industry-driven, bottom-up initiatives.

It is understandable why social media influencers who are connected to the Chinese state media have been pushing the game. It goes beyond simply increasing the gaming industry’s growth or effectively narrating Chinese stories (which in turn inspires both Chinese and Western players to be more proud of their own culture).

This game is part of China’s strategic plan to encircle the cities from the countryside, as taught by Mao, to win the chip war. The short-term objective of occupying the “countryside” of video games is to prepare for the long-term takeover of the “cities” of sophisticated chip manufacturing.

December 2023 marked the return of China’s gaming industry to double-digit growth after two years of harsh regulatory crackdowns that had brought the industry to its knees.

A semi-official gaming industry association in China reports that video game sales rose 14% year over year to reach 303 billion RMB ($42.07 billion) in 2022. This represents a significant victory following a 10% decline in sales in 2022.

Over the course of the year, the percentage of license approvals granted to developers steadily increased, reaching levels seen before the crackdown. This trend led observers to feel cautiously optimistic. The growth, marked by double-digit increases, clearly indicated that a turnaround was beginning.

Moreover, Tencent Games, the largest developer in China, currently only receives around 30% of its revenue from outside sources; in the coming years, it hopes to increase this percentage to 50%.

In an attempt to capture a larger market share of international gaming markets, especially the United States, Tencent is now concentrating more on console games that are marketed to a wider audience. Its upcoming release, The Sentinel, created by Lightspeed, a studio based in Los Angeles, is a promising beginning.

Ultimately, developers must determine how to meet regulatory standards for instructional materials that emphasise China’s cultural heritage while creating a work of entertainment that is accessible worldwide.

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