With E3 2017 wrapped, we thought we’d share some thoughts on this year’s event based on our perspective and experience in China.
First, a bit of history for our readers who may not be familiar with this event. E3, formally the “Electronic Entertainment Expo”, began in 1995 as a way for game developers and hardware manufacturers to showcase their wares to retailers and game media. In the era prior to digital game distribution and online media, these two audiences were critical to the success of games. Retail partners controlled the all-important “shelf space” game publishers needed to capture market share, and game media – while often separate from the general-interest press – was the primary vehicle for game discovery for players in that era. E3 quickly evolved into the hottest ticket in the gaming industry, replete with spectacular launch announcements and lavish parties, all to woo the critically-important attendees.
Meanwhile in China, while gaming consoles and high-end PCs were available to consumers, they were prohibitively expensive to most players as were the games intended for those devices. As a result, consoles never reached the level of popularity in China that they enjoyed in the West and Japan; and software piracy became the dominant means by which PC games were distributed, thus reducing incentives for Western developers to create content for the Chinese market. In 2000, the government of China banned the importation and sale of game consoles entirely, and this proved to be the final push ensuring that gaming in China evolved largely independent of gaming in the West, with a much larger share of gaming revenues generated from PC, online, and, ultimately, mobile.
So, perhaps it’s not surprising that while E3 still looms very, very large on the annual game calendar in the West, it’s a bit more of a niche in China. And that might be an understatement. Compare more than 2 million views on YouTube for Microsoft’s official E3 presentation video, versus just over 25,000 views for the most popular Chinese-language coverage of the entire event that we can find on Youku Todou (China’s own version of YouTube).
But, viewing this year’s E3 from a Chinese perspective, there are still a few things that stand out. Here are our observations from this year’s show.
- Games are increasingly marketed in the West much like they are in China – commenting on the changing nature of E3 in a retrospective on this year’s conference, GamesIndustry.biz writer James Brightman noted: “I suppose I shouldn’t be surprised at the evolution of these “press” conferences, as they aren’t really for the press anymore.” What Brightman is observing is the trend at E3 away from a narrow focus on retailers and traditional gaming press and towards influencers, streamers, shoutcasters, and the other internet personalities that increasingly drive mindshare for Western games and gamers. And for the first time ever this year, E3 threw open its doors to the general public, reflecting the increasing importance of fan events and fan interactions to the overall marketing – and even development – of games. But here’s what’s interesting: games have been marketed this way in China for many years now. The annual China Joy event in Shanghai caters to professionals and fans alike, and might be best described as a mashup of E3, Casual Connect, PAX, and GDC. This year, around 300,000 people are expected to attend China Joy, compared to the 50,000 at E3. In marketing, at least, Western games companies are starting to evolve in a parallel direction to what’s already been happening in China for some time. Whether that’s a conscious choice or merely a similar response to more-and-more similar business conditions is difficult to say, but it at least implies that Western publishers might look to the more mature marketing tactics in China for inspiration as they increasingly adopt their methods.
- PC gaming is resurgent, perhaps with an eye on the Chinese market – even while PC gaming remained dominant in China and other parts of Asia, not so long ago some in the West were keen to write its obituary. But not so fast. Microsoft, in particular, redoubled its commitment to cross-platform compatibility at this year’s E3, with new games playable both on Xbox One (and Xbox One X) and Windows 10. It’s possible that Microsoft is doing this at least in part as a reflection of the opportunities in China, now the world’s largest gaming market. Why this speculation? Microsoft has aggressively pursued deeper ties in China across its business lines. In 2015, Microsoft’s Xbox One became the first Western console legally available to Chinese consumers. Earlier this year, at a press event in Shanghai at which Microsoft announced a new “Windows 10 Chinese Government Edition”, they also let it be known that Project Scorpio (aka Xbox One X) would be available in China by the end of 2017. So it’s clear that on a corporate level, Microsoft takes both PC gaming and gaming in China seriously, and it’s not hard to see at least some linkage between those strategies.
- The AAA gaming industry still ignores mobile – Despite the fact that mobile games contributed the plurality of industry revenues last year – more than 40% – and that mobile is the clear leader in China with more than 50% of total game revenues, mobile is still the red-headed step child of the gaming industry, with almost no representation at E3. Long derided within the AAA industry as “casual” gaming for less-engaged players, this attitude doesn’t reflect the increasing sophistication of games designed for mobile devices. While limitations with graphics, processing power, and inputs will always bound the possibilities of mobile gaming, clever developers and eager consumers are pushing the envelopes of mobile gaming. Again, China might be instructive here. Mobile titles like Vainglory, along with a host of domestically developed games, have developed avid fanbases, active online communities, and highly competitive esports scenes. While there are certainly parallels in the West, the ubiquity of smartphones in China has made mobile the platform of choice for ambitious developers and publishers. While the relative access of high-end PCs and gaming consoles in the West means that they will likely remain the primary platform for “hard-core” gamers in the near future, there’s certainly a great opportunity for mobile developers creating more and more sophisticated content for Western consumers, and likewise for Western mobile game developers looking to crack into the ever-growing market in China.
We’ll be attending this year’s China Joy, and it’ll be interesting to see what, if anything, carries over from E3 into the premiere electronic entertainment expo in China.