China’s video game soft power

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From Nezha 2 to Labubu, it’s been quite a year for Chinese cultural exports. Now, one of the latest titles to hit the $189 billion global gaming market is also from China.

More than 2 million people played the martial arts video game “Where Winds Meet” within 24 hours of its overseas release this past weekend on PlayStation and PC, according to the game’s Chinese publisher NetEase. The free-to-play game puts a player in the shoes of a “young sword master” living in 10th-century China, whose backstory is developed through the journey of play.

“Players can feel like they are a special character in history, finding their own life in the past, and striving for the future,” Beralt Lyu, lead producer of “Where Winds Meet,” said in Mandarin, translated by CNBC. He said the team aimed to create a global game from the start, at least five years ago.

The game was released in China late last year, boosting NetEase’s second-quarter earnings. The company will report its third-quarter results on Thursday. That game release came just months after Tencent-backed Game Science launched China’s first global top-tier video game, “Black Myth: Wukong,” which sold more than 10 million units in three days.

“In the last two years, the biggest trend has been Chinese [companies] starting to slowly gain market share for PC, console games,” Will Wang, partner at Beijing-based BAI Capital, said in Mandarin translated by CNBC. “They must go global because the hardcore [console] gamers are all overseas.”

While many venture capital firms are focused on AI and semiconductors, about 10% of BAI’s portfolio is related to gaming because the firm “believes a lot of business models and new innovations are all related to gaming,” Wang said, pointing to investments in augmented reality glass maker Viture and generative AI 3D animation creator Meshy.

Even Nvidia, now known as the AI juggernaut, got its start as a graphics hardware producer that only gamers were interested in. And companies from The New York Times to Duolingo apply gamification to drive subscriptions.