The CEO of publisher Take Two, Strauss Zelnick, is behind games like GTA 5 Online and Red Dead Redemption 2. Take-Two also makes money in China, but there are issues.
Who is speaking? It is the CEO of one of the largest western gaming publishers, Strauss Zelnick, speaking in an interview with GamesIndustry.biz about the Chinese gaming market for western game companies.
Take-Two includes franchises such as:
- Borderlands
- Civilization
- Grand Theft Auto
- Red Dead Redemption
- and XCom
What is Zelnick’s problem? When US companies or other foreign gaming publishers want to distribute their games in China, they need a license from the Chinese government.
It is an open secret that it is necessary to make deals with Chinese companies. For example, Blizzard is linked with NetEase.
Even larger than NetEase is the Chinese IT company “Tencent”, which long has been considered one of the 7 largest companies in the world. Tencent is the partner for many western publishers looking to make money in China. Also for Take-Two.
Take-Two plans to distribute their games NBA 2K Online and Kerbal Space Program through “WeGame”, Tencent’s platform, in China.
This is what Zelnick says about the future in China: At a conference, Goldman Sachs Communacopia, Strauss Zelnick spoke about the current block for the approval of new games in China. He sees it optimistically. His company itself is not affected, they have held the licenses for a long time.
He hopes that in the long term, the barriers will fall, and China will open up to western products. Zelnick believes that the Chinese government will eventually realize that western products are good for the Chinese population. The Chinese customers already want the entertainment products from the USA. They love what Take-Two can offer them.
But while Zelnick sees the future in China as bright, he criticizes the past and present harshly.
Zelnick accuses China of extortion in principle
Unfair market conditions: Zelnick finds the market conditions in China simply unfair as an American:
„We have a totally skewed situation. Chinese companies come to the USA and buy our companies – that’s no problem for them at all. And if they don’t do that, then they can bring their games here and distribute them in the market, all no problem.
But if we want to go to China, then half of our business needs to belong to a Chinese company. The good news is that we get their expertise. We have a good relationship with companies like Tencent. We are happy to do business with them. But to be clear: We have no other choice either.”
Zelnick then continues that one needs the approval of the Chinese government. That is a political decision. One does not understand why the USA thinks it is okay that the second largest export commodity of the USA, after aerospace technology, is treated this way. Global trade relations have changed, and that needs to be reflected in political conditions as well.
Zelnick complemented his speech with:
„Oh yes, by the way, the other background is that China has been stealing our intellectual property for a really long time. These things need to change.”
The topic that hardly anyone talks about
This is what lies behind it: Zelnick is essentially calling for:
- a trade war. The USA would have to impose the same obstacles on the Chinese as the Chinese do in return to create equal conditions
- or the abolition of all barriers in China for US companies
The unfair competitive conditions with China are a topic that has long occupied the western industry – not just in gaming. Even in Germany, these “forced joint ventures” are likely a major internal problem for companies, as reported by economic magazines (via Handelsblatt).
In everyday life, Chinese influence plays a role: Chinese corporations now hold shares or control major western gaming companies like Epic Games (Fortnite) or Riot Games (League of Legends).
Interestingly, this topic is almost never addressed in gaming, even though some news suggests that such practices have a significant influence on everyday life:
- In PUBG it was said that the game could not be released in China because PUBG violates socialist core values
- ARK was supposedly bought by a Chinese company and then a bunch of “ARK games” appeared in China, but it was never spoken about openly
- or one finds a curious language regulation: it is said that they are forming a partnership because they need the “local expertise” to address the “particularities of the Chinese market” as in Diablo 3.
Clearly, western publishers simply have no choice if they want to make money in China – and they do want to.
More on the topic:
