Tencent and NetEase may reduce their investment in Japan due to the fact that despite making significant investments in Japan since 2020 to avoid the increasingly strict regulations in the Chinese market, the results have not been as fruitful as expected.
According to Bloomberg, NetEase has laid off almost all employees at the Ouka studio, while Tencent has started to slow down investments in new games.
One of the main challenges of the collaboration between Chinese gaming companies and partners from Japan is the differing goals. Tencent expects franchise-level games, while Japanese partners excel in small-scale, low-risk projects.
However, Tencent and NetEase will continue to collaborate with leading Japanese gaming companies such as Capcom and Bandai Namco, with no plans for complete withdrawal from Japan. Both companies have confirmed their commitment to developing business in Japan, albeit with strategic adjustments in response to market conditions.
Meanwhile, the gaming market in China is recovering, with games like Black Myth: Wukong developed by a Chinese studio becoming a recurring hit of the year, setting a record of 10 million copies sold in the first 3 days with 3 million concurrent players. This success boosts confidence for Chinese companies to invest more in their home market.
Reference: Bloomberg
TLDR: Tencent and NetEase may reduce investments in Japan due to underwhelming results, while continuing to collaborate with Japanese partners. The Chinese gaming market is seeing a resurgence, with successful games like Black Myth: Wukong boosting investor confidence.
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