Sony Interactive Entertainment Shanghai held a press conference on November 22 where it announced the third phase of its China Hero Project. The China Hero Project is an initiative from Sony launched in 2016 to provide funding and resources to Chinese developers for them to bring games to the PlayStation platform for China and global markets. The first phase included 10 games and the second phase was in 2018 with 7 games. 7 of the 17 games have released since 2016 with more titles scheduled to release in 2023 and 2024. The third phase is now accepting applications with new titles set to be announced at a future event.
Sony will provide greater support for phase 3
Sony plans to include at least 10 titles in the third phase, with greater direct support. “The scale of the third phase will far exceed the previous two,” Bao Bo, Sony’s Director of China Game Production told Reuters, adding that Sony will publish some games and its PlayStation Studios will support enrolled projects. The project will also provide funding of over RMB 1 million (US$140,000) to each title with additional support from third party partners. Sony will not limit applications to certain genres, studio sizes or non-competitive platforms such as PC, with the aim to incubate a diverse group of games that will increase its portfolio size and the appeal of its PlayStation brand both in China and globally.
Phase 3 comes after the mixed success of the previous two phases
The first two phases delivered mixed results with 3 titles cancelled and several titles delayed. There are titles from the first phase, such as Project Boundary and Lost Soul Aside, that have yet to release. A lack of direct publishing support from Sony and development support from PlayStation Studios were two missing factors that are now being integrated into phase 3. Sony confirmed at the event that it will directly publish Lost Soul Aside and Convallaria which are games from phase 1 and 2, respectively. Hardcore Mecha from Rocketpunch Games, F.I.S.T.: Forged in Shadow Torch from TiGames, ANNO: Mutationem from Thinking Stars, and In Nightmare from Magic Fish Technology are titles from the project that have launched and received generally positive feedback from players.
Domestic game developers have benefited from being included in the project
Despite the mixed success of phase 1 and 2, the domestic game developers in the project have seen tangible benefits in the form of increased experience developing console games and direct investment from leading game companies. Most of the developers in the project that have released games have extended their titles to other platforms such as Nintendo Switch and PC and have initiated development on new content for existing titles. TiGames has confirmed that it is building a new IP on Unreal Engine 5. As China’s large game companies have looked to expand to console, PC, and the global games market, they have identified key China Hero Project developers as investment targets. Tencent has invested in Surgical Scalpels Studio (Project Boundary) and TiGames, while Rocketpunch Games has received investment from G-Bits and Bilibili.
Sony is doubling down on China and Chinese game developers
China has become an important market for Sony, which is not a surprise given it is the #1 games market in the world by revenue and number of gamers. Sony’s PlayStation brand has built solid share in China’s console market since 2015, the year following the lifting of a 14-year ban on consoles. Niko Partners data shows that cumulative sales in China of PlayStation 5 will surpass 1 million units in 2022. According to Sony, China has already become the #6 market for PS5 by active users (compared to #11 with PS4). The China Hero Project is one way that Sony is looking to tap into Chinese game development talent to increase the appeal of the PlayStation brand to Chinese gamers, while also offering a higher number of unique experiences to its already established global player base. Sony stands to grow in China on console, and in PC and mobile gaming, as the company goes those directions.
The China Hero Project also fits into Sony’s global gaming strategy to offer a robust portfolio of titles on PlayStation through strategic partnerships and acquisitions. The company plans to increase PlayStation market share, continue its growth in free to play, develop strong live service experiences, and even expand beyond console. Chinese game developers have excelled in the latter 3 areas for nearly two decades and can be a key resource for Sony. The success of Genshin Impact, which demonstrated how Chinese game developers can scale across all 4 areas, has been a key factor in Sony’s growing support for local Chinese developers and its partnership with miHoYo. Tatsuo Eguchi, president of Sony Interactive Entertainment Shanghai, even stated that Genshin Impact helped convince Sony management that Chinese developers are important for their strategy.
Sony has been ramping up support over the past year
Sony has been working towards the launch of phase 3 for some time now. It is continuing to work with key partners such as Epic Games China, CRIware and Digital Hearts to ensure developers in the project can obtain the right resources and training to create higher quality games. Two new Shanghai based audio production teams will also join the list of partners to provide support to games in the project. Sony announced that it had established a China Software Business Department on June 1, 2022, to be led by Sean Kelly who has over 30 years of development and publishing experience. The company announced that Sean Kelly would also lead a China Game Production team to oversee operations in China and bring Chinese games to the global market. Sony Interactive Entertainment Shanghai as a whole has grown to nearly 100 employees since its establishment in 2014.
The game pipeline through 2024 looks strong
Sony Interactive Entertainment confirmed that six previously announced China Hero Project games are still fully on track to release in the future, including Convallaria, Lost Soul Aside, Project Boundary, RAN: Lost Islands, AI-Limit, and Evotinction. Tatsuo Eguchi said that Sony’s goal is to sell twice as many PS5 consoles as it had for the PS4 and believes the China Hero Project could help meet this goal. However, Sony is not the only platform holder to realize the potential of Chinese game developers. Microsoft has also started forming strategic partnerships in the country which has led to titles such as Naraka: Bladepoint from NetEase and Bright Memory: Infinite from FYQD Studio seeing console exclusive launches on its Xbox platform. Niko Partners will continue to track collaborations between platform holders and Chinese game developers, which are becoming more common as local game development quality increases and as local developers look to bring their games to a global audience.
For more on China’s console market, see our 2022 China Console Games Market report.
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