Sony expands Chinese games incubator into Microsoft head-to-head

HONG KONG, Nov 23 (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 to open up the Chinese games market.

The program will invest more than 1 million yuan ($140,080) in each game it enrolls, funding not only small teams but also large teams with dozens of engineers or more, said Bao Bo, Sony’s director of China game production

The Japanese tech giant’s plans were revealed during an event livestreamed from the southwest Chinese city of Chengdu on Tuesday to resume the China Hero Project program, which stalled due to COVID-19.

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

Sony said it will be the publisher of Lost Soul Aside and Convallaria, two games enrolled in the previous two phases.

The China Hero Project launched its first two game series in 2017 and 2019 and has supported 17 titles, seven of which have reached the market.

Bao told Reuters in an interview on Wednesday that the new batch aims to include 10 titles or more, and games of all genres are welcome.

It’s the latest in Sony’s years-long rapprochement with China, which ultimately led to a lucrative exclusive deal with hit Chinese game Genshin Impact outside of the China Hero Project. Little known before its launch in 2019, it has become one of the most profitable games in the world.

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

To accelerate its expansion, Sony announced that it has formed the “China Game Production” team to oversee Chinese-made games. The Shanghai office of Sony’s gaming-focused subsidiary Sony Interactive Entertainment (SIE) now employs more than 100 people after entering China in 2014.

SIE Shanghai President Tatsuo Eguchi said the success of Genshin Impact has convinced Sony’s management that Chinese games matter, adding that Sony is dedicating more resources there than ever. He also said that Sony’s partnership with Genshin Impact developer miHoYO is progressing strongly.

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

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

Eguchi said Sony’s goal is to sell twice as many PS5 consoles as the PS4 and believed the China Hero Project could help achieve that goal.

“We want gamers around the world to better understand the creativity that comes from China. It’s always been my dream that console games will become an integral part of Chinese people’s daily entertainment,” he said.

($1 = 7.1388 Chinese renminbi yuan)

Reporting by Josh Ye; Edited by Alexander Smith and Louise Heavens

Our standards: The Thomson Reuters Trust Principles.

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