Interview with Ma Xiaoyi: Focusing on the global market 60% of the time, Tencent wants to build games for global players

Ma Xiaoyi, Senior Vice President of Tencent Group

Tencent is the world's largest game company, and considering that global game makers such as Microsoft, Sony, and The Empire Group have acquired so many game companies in an effort to become bigger and more competitive, that says a lot.

Steven Ma, senior vice president of Tencent Group, has a global vision of the gaming industry and can explain why we're seeing so many changes, such as Take-Two's acquisition of Zynga and Microsoft's planned acquisition of Activision Blizzard. Tencent has a global perspective because it owns stakes in companies around the world, such as Riot Games, Ubisoft, Activision Blizzard, Supercell, Dontnod Entertainment, and Bloomberg.

Tencent wants to bring high-quality games, which now cost $100 million to $300 million to develop, smaller game studios need financial support to make such games, and there is a trend in the mobile game market, as many AAA games move toward mobile platforms. This is also the reason for the wave of mergers and acquisitions, because it can provide the necessary funds, technology, resources, etc. for the games that the studio is developing, and Ma Xiaoyi believes that such mergers and acquisitions can bring benefits to players.

Ma Xiaoyi said that since 2019, Tencent has shifted more business to the global market, last year, 26% of Tencent's revenue came from markets outside China, and this proportion of growth will accelerate in the future, which is why Ma Xiaoyi invested 60% of his time focusing on markets outside China. So, what is his focus on? Gameplay innovations, new game categories, and games that excite players and propel the game market forward.

Recently, Tencent acquired Turtle Rock, the developer of Back 4 Blood and Left 4 Dead games, and opened AAA game studios in Montreal, Seattle and Los Angeles. Although the company is expanding rapidly, it must also invest more effort in supporting the team, and in a recent interview with foreign media VB, Ma Xiaoyi talked about many aspects of the problem, including metacosms and NFTs.

Here is the full content of Gamelook's VB interview with Ma Xiaoyi:

Building games for players around the world, we now focus 60% of our time on global markets

Q: The last time we chatted was in March 2019, and a lot of things changed a long time ago.

Ma Xiaoyi: 2019 seems to have been a long time ago, although it has only been 3 years, but the whole world has changed.

Q: Last time you mentioned that Tencent has released 140 games in more than 200 countries and regions overseas, and more than 200 million people are playing them, is there a new milestone now?

Ma Xiaoyi: Of course, the epidemic has changed the world. We're seeing new markets emerge and now have more players around the world, and I can't say the exact numbers at the moment, but it's more than we said last time.

Secondly, for Tencent as a whole, compared with 2019, we are more focused on the global market, although most of our revenue is still from the Chinese market, if you look at 2021, you will find that we have a large number of users outside the Chinese market, and last year, 26% of the revenue came from outside China, which is a very significant milestone for us.

Q: Have your personal concerns changed or grown over the past few years?

Ma Xiaoyi: There has been no substantive change. But one change for me is to focus more time on global markets now. Previously, I spent 20% of my time focusing on overseas markets and most of my time in the Chinese market, and now I spend almost 60% of my time focusing on global markets.

Q: When people ask you how the game has changed over the past few years, is there a simpler way to explain how things are different today?

Ma Xiaoyi: In our opinion, this change revolves around a few things. First of all, we're mainly focused on mobile gaming platforms, where the user base is larger, and we're seeing very high-quality games move towards mobile platforms, like CODM and Protos, and we're seeing AAA-quality games on mobile game platforms, which is a change over the past few years.

Second, emerging markets are growing fast. Markets like the Middle East, Southeast Asia, and Latin America are growing fast, like the Chinese market we saw in 2012 or 2013, when the mobile game market just exploded, and now the same thing is happening in these markets, which brings new opportunities to the entire game industry.

We always talk a lot about the gaming category because we believe that core gameplay is the key to the gaming industry. As I've said before, at the core gameplay level, we haven't seen any blockbusters like THE BATTLE Royale gameplay of PUBG and Fortnite. This gameplay upheaval hasn't happened recently, and we're still looking for new ways to play, which is critical for us, both for the gaming industry and gamers, and that's what we need to look for.

Q: So, you think players are about to see some changes in gameplay?

Ma Xiaoyi: Of course! That kind of innovation, new gameplay, and new genre of games isn't that easy, and you may only see it once or twice a decade. But as we look at what's going on in the market, a lot of games have that potential, and we can't say we've found a formula to bring that change, but if you look at roguelike, open-world sandbox, survival, and building, these keywords make a lot of games very successful. We think the next strong gaming category should be some combination of this set of keywords, and it hasn't happened yet, but I believe people are looking for it.

Q: You recently announced some things, like new studios in Los Angeles and Seattle, and the acquisition of Turtle Rock, what kind of strategy can we see from such actions?

Ma Xiaoyi: We think we should build games for global players, we have a very large number of players in the Chinese market, we have a very large number of players in emerging markets, and we have a large number of players in developed markets like the United States and Western Europe. We are increasingly seeing players around the world demanding the same type of game and demanding the same quality. One of the changes in our strategy, starting with our efforts to build games for players around the world, we think players are the same, whether it's in China, Brazil or North America.

Second, we are open-minded to all platforms. Sure, the biggest player base comes from mobile platforms, but the PC market has a community of hardcore players who are keyboard and mouse players, and if you want to create good gameplay with the community, this is the best place to bring innovation. At the same time, if you look at the console platform, the TV big screen can always bring the best experience to the player, and we are trying to create games that take full advantage of the advantages of different platforms.

At the same time, we also see some trends in the new game category, as well as some keywords with potential. We believe this innovation should be combined with very high quality, and we will strive to integrate AAA PC and console game quality with the new gameplay, which we believe is the key to creating the next big event. If we want to do that, we need to have teams focused on China and western markets, and that's how our strategy changes.

Q: Like many other game companies, do you find it difficult to find the right people to make games like this? Do you need to invest more in each game?

Ma Xiaoyi: That's right. Nowadays, if you want to make high-quality games, the cost is getting higher and higher, and I don't think this trend will stop. People are always demanding higher quality, but at the same time, it slows down game development and innovation. For creative work, people need to work together face to face, and in my opinion, the pandemic could cause a lot of game development to lose 30% of its efficiency, which is a problem.

The core gameplay is the key to the game industry, and the trend of game platform integration is obvious

Q: How do you find developers who want to work with or for Tencent? It seems like you may need to make a louder volume than ever before.

Ma Xiaoyi: The best way is always, we encourage the people who build games, we support studios that make good games, and we have a lot of resources. But the way to communicate with the studio, I think, is a more balanced perspective on game development, these teams need to have a belief in building a successful game, if they believe in their own direction, the gameplay, the ideas, the concept, this is the beginning of a successful game, we want to look for teams and studios that believe in their ideas.

At the same time, we will strive to use our resources to help them do their own thing. Sometimes, your ideas and visions don't match your abilities, and that's where we can help a lot. We have a technical middle office team, we have a lot of resources, we have a network of studios all over the world where they can help each other. We also keep a close eye on the market and maintain close ties with the player community.

Tencent as a game company, we are very strong believers in community driven, we listen to the players, we can help the studio and R&D team to learn more about what they should do.

The most balanced way to develop a game is to let the team know what they want to do, what they can do, and what they should do. They need a balanced plan to make a great game, and that's what we're trying to communicate with the developers. At the same time, we are also pushing our studios to develop games in this way.

First, as I've often said, core gameplay is key to the game market, and we encourage all of our studios, all developers, to look for the next blockbuster in new genres, like League of Legends in the MOBA space and PUBG and Fortnite in the Battle Royale space.

As we've talked about before, players want to make bigger and bigger games, which makes it more expensive to develop. We think the game-as-a-service (GaaS) model is a very good answer to the market, and we're still in the early stages, and some games are problematic about the way they use this model, but we think that's the future of the market.

Part of that reason for that is because we believe so much in community driven, and we want all developers to be able to communicate with their players, listen to their players, and have good interactions with the player community, which is the key to success.

Ultimately, as new markets continue to grow, they will become more and more like mature markets, and we believe that high-quality games for the mass market are key, and we always strive to use our resources to support developers in creating high-quality games for the mass market.

Q: What's the most interesting game trend for you right now?

Ma Xiaoyi: I talked about emerging markets before, if you look at the numbers in 2000, when there were probably only 100 million gamers in the world, by the time we last talked in 2019, the number of people playing games in the world had reached 1.8 billion, and today, I can say that this number is close to 2.5 billion people, which is a huge improvement for the entire industry, and it is also very good news, which means that great changes are coming.

And, as I said before, all the platforms are converging. In 2016, 2017, 2018, mobile platforms and hosting platforms are two completely different platforms, practitioners, users, everything is different, but now, we are seeing more and more convergence of these two markets.

NFTs have not brought about a change in gameplay, and the metaverse is not new

Q: Square Enix has sold their European and American studios and intends to focus on blockchain games, NFTs and other things that are being done, strategically, how do you see the investment in the NFT and blockchain space?

Ma Xiaoyi: This is a big problem. We're thinking about technology for a very important thing, and I've always lost my mind internally, and for the game industry, the most important thing is the gameplay, then the plot, then the technology. Gameplay is the key to having fun in the game, plot and story is a way for you to create the background of the game and make people believe in the game, technology is also a change-maker in the industry, but we will see such a technological change every ten or twenty years.

The last time we saw the arrival of mobile platforms, smartphones, and before that, perhaps 3D graphics. We're about to find new game-changing technologies, but NFTs like this are still in the very early stages. Today, I don't think what it can do can bring real change to the gaming industry.

For new technologies, if you want to make a big impact on the gaming industry, the end result is usually a whole new way of playing. 3D graphics have had a big impact on the gaming industry because they bring new categories and new ways of playing like FPS, and for today's NFTs, I don't see its impact on gameplay and gaming experience, at least not today.

At the same time, I believe in things like VR and AR, and this kind of technology could be an interesting area, and we're pouring resources into it, hoping to help innovate in those areas. I mentioned that 3D graphics and mobile platforms are huge advances that have brought new experiences to players, and now we have very exciting technologies in the VR space as well.

We can track player movements, including their hands and eyes, perspective solutions can also allow people to interact with their environment while playing the game, and VR headsets will get smaller and lighter.

We're seeing a real difference in the experience of 4K OLED displays, and this new technology can emerge in the next three to five years, and I think we should be ready for it, but around the platform and the content side, which is a very interesting and exciting area for the gaming industry.

Q: For me, the metaverse may bring about a bigger change than the NFT, not only to change the game, the way we play the game, but also to change the potential of the platform, to change the way the game reaches the gameplay, what are your observations on the metaverse?

Ma Xiaoyi: That's what I love about the game industry. If you look at the history of technology, games are usually the field that pushes technology to the extreme, but also to the mass market, bringing millions, or hundreds of millions of players, which accelerates the development of technology. For the metaverse, for the next generation of internet experiences, games will be a very important part of driving this industry.

Q: One of the difficulties of global popularity is that geopolitics often has a global impact, and different regions have different problems, such as the current war in Ukraine, what do you think of the impact of geopolitics on the game industry?

Ma Xiaoyi: Tencent is a global company, we have teams all over the world, the way we manage our business is more bottom-up, and the decisions are made by our local studios. Because we value emerging markets very much, we strive to build strong teams in these regions that play an active role in all of our businesses. With local people making their own decisions, this way of managing the business makes it easier to deal with the contingencies we see.

At the same time, all games are made for global players, and if you look at PUBG MOBILE, you can't say that it's a game made for China, because it's itself developed for users around the world.

Q: Do you think players are changing, like they want to create a lot of their own games? It seems that games like Roblox and Minecraft have become a global trend.

Ma Xiaoyi: This is an interesting trend, and we also think that this is an area with a lot of potential in the game industry. For NFTs, people always say that they decentralize everything, decentralize control and manage, but I'm more convinced of handing over the decentralization to the player, if we look at what's happening in the game engine space, tools like Unreal Engine used to be available only to professionals, but now we see that these technologies are already available to indie developers. Nowadays, if you have three or five people, you can make a complete game of very high quality and gameplay, which was almost unimaginable before.

What's more, this type of technology, coupled with new platforms, will open up capabilities and tools to players, and if they have those capabilities, they'll do their own thing, and people want to do more, which is why building is an important part of the game category.

I recently met with Tim Sweeney about things like the metaverse and mentioned what is the difference between games and metaverses? Admittedly, we play games and watch movies, but the metaverse is more like living in it, and we will invest more time in the metaverse doing different things, which is very different from today's online games.

The first online game I played in 1997 or 1998 was Genesis OL, which already had a enduring world, and in this way it was almost like a metaverse, but the technology was not yet complete. Today, this technology may be coming soon, which is why we can talk about the metacosm today.

Q: One of the technologies I'd like to see is that you can jump from one game world to another in real time, and you don't need to wait, you don't need to download another game, do you think that experience is still far away, or is it coming?

Ma Xiaoyi: This experience may come very quickly, cloud gaming can do such a thing, if you put everything in the cloud, users can get the experience of quickly jumping from one game to another, and everything still looks incredible. However, there are still some problems with cloud gaming at the moment. If you want to guarantee a high-quality experience for players, the cost is very high, and we don't have the right business model to sustain that experience today.

Secondly, a new technology should have a new way of playing around this technology, taking full advantage of this technology, but at present, the cloud games we are talking about are only streaming existing PCs, consoles or mobile games. It's one thing you can do with it, but it's not the best, and we need to have the native gameplay that cloud gaming brings.

Games are the first testing ground for technology, supporting game developers around the world with investment

Q: There is a more general question, how important do you think games are to the world?

Ma Xiaoyi: Internally, we discussed how to define a game. Today a game is a product that can be played on a PC, console, or mobile platform, you have a gamepad, you fight, shoot or solve puzzles. But none of that is the key to making up a game, which uses information technology to create cultural entertainment, which has been happening since 100 years ago when electronics entered the mass market, we have movies, television, radio, etc., and we think new technologies will lead to continuous innovation.

As I've said before, games are often the first experimental field for the democratization of new technologies, and when I talk to people in the VR industry and ask them what they think of the stage of development of games, they compare it to the Atari 2600, when games first appeared in the 1970s. It was the first product to reach the masses with computing devices, and it was four or five years before the IBM PC hit the market, and even today, if we look at all the new technologies, whether it's meta-universes, cloud gaming, or VR, it's the first thing that happened in the gaming industry. Costs are reduced, people know how to build new capabilities and then pass them on to other industries, and games are the primary driver of technology.

You can also look at specific companies, such as Nvidia, Nvidia is very important for today's AI industry, AI is very important for everything, but Nvidia started from the game industry, they originally made graphics cards for games, which is a good case.

Q: Interestingly, some of the big companies around the world are coming into the game space, like Tencent, Netflix is also coming in, Las Vegas Sands is also providing funding for some studios, including Blackstone, and a lot of different big companies have taken notice of the game industry. What do you think might change due to the attention the gaming industry has attracted?

Ma Xiaoyi: In the Internet, all the giants in the technology industry, they know that what matters is the platform, the application and the content, and if you look at all these things together, games are very important to all of this.

Q: When I see how players react to big deals in the gaming industry, like Microsoft's acquisition of Activision Blizzard, or Sony's acquisition of Bungie, they usually worry about the changes that come with those deals. Is there any way you can tell them that all this change is good for the player?

Ma Xiaoyi: One of the reasons that players should understand is that these types of transactions happen because the cost of research and development is getting higher and higher. Activision may be a special case, but a lot of studio mergers and acquisitions happen because if you want to build great games, innovative games, high-quality games, the cost of development may be $100 million, $200 million or $300 million, small studios can't take that risk, they need the support of big companies, big platforms, that's why M&A deals happen. I think the results are clear and we're going to get more high-quality games, which is good for gamers.

Games are still an innovative industry, a creative industry. For Tencent, we were fortunate to have seized some of the bigger opportunities, we chose League of Legends in the MOBA field, and "PUBG" in the Battle Royale field, but these things started with a very small team, or even created by a single person.

We're going to see more and more of these opportunities, as I said, technology becoming more decentralized, reaching smaller teams and more people, and in the future, indie game developers will be more active in this industry.

Of course, we're seeing the trend of big companies taking more action in the market, but at the same time, thanks to platforms like YouTube, Twitch, and Discord, we're also seeing players communicating more and more directly with developers, developers communicating directly with players, and the gaming community has never been stronger than it is today.

One of the things I always say to R&D teams is to listen to their community and use every opportunity possible to talk to them. Players are now having more influence on the gaming industry and developers than ever before, and this is a great opportunity for players.

Q: It feels like Tencent's right strategy is always to be ambitious in the game industry, but at the same time to encourage creativity as much as possible.

Ma Xiaoyi: Of course, creativity is something we should always focus on, we are always looking for the next big event in terms of gameplay, game categories, and we always strive to create new experiences, which is the only way to make the game business successful.

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