Sony to expand Chinese game incubator in Microsoft head-to-head

HONG KONG (Reuters) – Sony Group Corp (6758.T) said it plans to expand a program to identify and incubate Chinese-made games, in a race with Microsoft Corp (MSFT.O) to tap into China’s gaming market.

Bao Pu, Sony’s director of game production in China, said the program will invest more than 1 million yuan ($140,080) in each game it enrolls, financing not only small teams but also large teams with a dozen or more engineers.

The Japanese tech giant’s plans were announced during an event broadcast live on Tuesday from the southwestern Chinese city of Chengdu to restart the China Hero Project, which was halted due to COVID-19.

“The scale of the third phase will far exceed the previous two,” Bao said, adding that Sony will publish some games and its PlayStation Studios will support registered projects.

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Sony has said it will be the publisher for Lost Soul Aside and Convallaria, two games that were signed in the previous two phases.

The China Hero project unveiled its first two batches of games in 2017 and 2019 and has supported 17 games, seven of which have hit the market.

Bao told Reuters in an interview on Wednesday that the new batch aims to include 10 or more titles and that it welcomes games of all kinds.

It marks Sony’s latest approach in years to China, which eventually led to a lucrative exclusive deal with the hit Chinese game “Genshin Impact” out of the China Hero Project. It was little known before its launch in 2019, and it has become one of the most profitable games in the world.

Reuters reported last month that Sony’s success with “Genshin Impact” prompted Microsoft to aggressively court Chinese game developers with major licensing deals.

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To accelerate its expansion, Sony announced that it had formed a “China Game Production” team to oversee Chinese-made games. The Shanghai subsidiary of game-focused Sony Interactive Entertainment (SIE) employs just under 100 people after entering China in 2014.

The success of Genshin Impact has convinced Sony management that Chinese games are important, said Tatsuo Eguchi, president of SIE Shanghai, adding that Sony is putting more resources there than ever before. He also said that Sony’s partnership with Genshin Impact developer, miHoYO, is going strong.

Sony sells PlayStation (PS) consoles in China, where people traditionally prefer to play games based on mobile devices.

It has sold more than 3.5 million PS4 consoles in China, and Jim Ryan, CEO of SIE, said it has sold about 670,000 PS5 units there since its launch in China in May 2021.

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Eguchi said Sony’s goal is to sell twice as many PS5 consoles as it had for the PS4 and he believes the China Hero project can help achieve that goal.

“We want gamers around the world to better understand the creativity that comes from China,” he said. “I have always had a dream that gaming consoles will become a regular part of the daily entertainment of the Chinese people.”

(This story has been corrected to say just under (no more than) 100 people, in paragraph 10)

($1 = 7.1388 CNY)

Reporting by Josh Yee; Editing by Alexander Smith and Louise Heavens

Our Standards: The Thomson Reuters Trust Principles.

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