Ma Xiaoyi: 60% of the time is observing the global market, and game industry mergers and acquisitions are good for players

Recently, Ma Xiaoyi was interviewed by GamesBeat, and the two sides talked about the development cost of high-quality games, the trend of globalization, and their views on new concepts such as metaverse/NFT, etc. "Before, I would only spend 20% of my time looking overseas, but now I will spend 60% of my time observing the global market." Ma Xiaoyi said in an interview.

As a senior vice president of Tencent Group, Ma Xiaoyi has his own views on the development of the global game industry. At a time when large-scale acquisitions of game companies are frequent, tencent, which has invested in well-known manufacturers such as Fist, Ubisoft, Activision Blizzard, Supercell, Dontnod, and Blooder, is not willing to be tolerated, Ma Xiaoyi believes that these mergers and acquisitions are a good thing for players.

(The following is the interview between GamesBeat and Ma Xiaoyi, translated and arranged by the game Gyro, with abridgements.) ）

Compared to what you said in 2019, Tencent has more than 140 games, and 200 million players from more than 200 countries around the world are playing your games, what milestone changes have tencent had now?

Ma Xiaoyi: The pandemic has changed the world, there are a lot of emerging markets, and we now have a lot of new global gamers. For Tencent, we are now more focused on the global market than in 2019, although most of our players and revenue still come from China, but last year, we already had 26% of our revenue from the international market, which is a big milestone for us.

Has anything changed in the content of your own work over the past few years?

Ma Xiaoyi: I will now spend more time focusing on the global market. Whereas I used to spend 20% of my time looking overseas, now I spend 60% of my time looking at global markets. The last time I went to North America was 2 years ago, and I spent a whole month in Europe on a business trip last month, hoping to meet developers around the world face-to-face as soon as I used to.

When people ask you how different the gaming industry is compared to previous years, how do you explain the change to them?

Ma Xiaoyi: From our point of view, the evolution of the game industry is several aspects.

First of all, we at Tencent mainly focus on mobile games, where there is a larger player scale. We've seen a lot of high-quality games on the mobile side, such as Call of Duty Mobile and Original God, and the emergence of AAA mobile games is the first change.

Second, emerging markets are growing very rapidly. Regions like the Middle East, Southeast Asia, and Latin America are all growing rapidly, which is very similar to the Chinese mobile game market in 2012 and 2013. This presents a lot of new opportunities for the entire gaming industry.

Finally, while we're always talking about the gaming category, we haven't seen some of the core gameplay have had much of an impact on the gaming industry lately. We don't see games like PUBG and Fortnite that can drive new gameplay, and we're still looking for the next one because it's important to us, to the industry, to the players.

So you think players are ready for the new gameplay?

Ma Xiaoyi: Of course! Innovation in gameplay and categories is not easy, and maybe we can only experience it once or twice every decade. We can't say we've found the formula that brings this kind of breakthrough, but you can see keywords like roguelike, open-world sandbox, survival and building that have helped some games achieve great success. We think the next popular gameplay might be born in a combination of these keywords.

You've been making some new moves lately, like opening new studios in Los Angeles and Seattle, and buying Turtle Rock and so on. What is your strategy and direction behind this?

Ma Xiaoyi: We think we should develop games for players all over the world. We have a strong number of players in China, as well as a considerable number of players in emerging markets, as well as in mature markets such as the United States and Western Europe. We're seeing players around the world playing the same type of game more and more, with requirements for game quality.

For us, the change in strategy is, first, a commitment to making games for players around the world. We believe that no matter where they are,—— China, Brazil, or North America, the players are the same.

Second, we are open to all platforms. While mobile has the largest number of players, the PC market has the hardest-core player base, and if you want to create new gameplay with the community, this is the right place to go. On the console side, the TV's big screen always provides the best gaming experience. We're trying to make games that take full advantage of different platforms.

At the same time, we have observed some new category trends and we believe that any innovation should be based on high quality. We'll try to blend the quality of AAA PC and console games with new gameplay, which we believe will be key to creating the next breakthrough. To achieve this, we need to deploy a team of professionals in China and the international market.

Like many game companies today, have you had trouble recruiting the right talent? Do you need to invest more in each game because of this?

Ma Xiaoyi: You're right, it's getting more and more expensive to make a high-quality game now, and I don't think the trend will stop. People always strive for higher quality, but this can also slow down the pace of development and innovation. For innovative careers, people need to work together face to face, and in my opinion, the pandemic may lead to a reduction in the efficiency of many game developments by at least 30%.

How did you successfully communicate with developers and express the idea that you want them to work for Tencent?

Ma Xiaoyi: The best way is always for us to encourage developers and support their studios. We have a lot of resources, but I believe the way to communicate with the studio is to balance the view of game development. Teams need to have a belief in building a successful game, and if they believe in their direction, gameplay, ideas, concepts, that's the starting point for a successful game. We're looking for studios that believe in their ideas.

At the same time, we try to use our resources to help them achieve their goals. Sometimes your goals and your abilities are not always on the same level, and we can help a lot in that regard, we have a middle office technical team, a collaborative network and a studio with a global deployment that can help each other. As a game company, Tencent believes in the power of community drive, and we listen to the needs of our players and help our studios and development teams better understand what they should do.

For the team, a more balanced approach to development is to be clear about what they want to do, what they can do, what they should do, which is what we try to communicate with developers. At the same time, we encourage all of our studios and developers to look for the next big trend in the game category, because we believe in the importance of core gameplay, just as League of Legends vs. MOBA and PUBG vs. "Eat Chicken" is.

As we talked about earlier, players want bigger games, which makes the investment cost higher. We think service-oriented games are a better answer for the market. We're still in the early stages, and there are some problems with the model of some games, but we believe this will be the future of the market. We want our developers to be able to talk to players, listen to players, and interact well with the community.

Finally, while emerging markets are still evolving, their tastes are very similar to those of mature markets. We believe that high-quality games are also important for the mass market.

What's the most interesting industry trend for you right now?

Ma Xiaoyi: Regarding emerging markets, if you look back at 2000, the number of players in the world was about 100 million, in 2019, this number was 1.8 billion, and today I think this number has come to about 2.5 billion. This is a huge leap forward for the industry as a whole, and it's good news, which means big changes are going to happen.

And all platforms are accelerating convergence, in 2016, 2017, 2018, mobile phones and consoles are two completely different worlds, but now we are seeing the two markets more and more closely integrated.

Square Enix sold their game studios in the West and said it would focus on blockchain games and NFTs. From an investment strategy perspective, how do you see the areas of NFT and blockchain?

Ma Xiaoyi: This is a big problem. We see technology as a very important thing. I often say internally that for the gaming industry, the most important thing is gameplay, then narrative, then technology. Gameplay is at the heart of a game's fun, narrative is the context you create to immerse players, and technology is the key to changing the industry. Big technological change is likely to happen every decade, every twenty years. The most recent one was when smartphones drove the development of mobile terminals, and before that, it may have been the application of 3D graphics. But things like NFTs are still very early on, and I can't see how they're going to change the rules of the game.

For the gaming industry, it is the technologies that have an impact on gameplay, such as 3D graphics that gave birth to FPS. For NFTs at this stage, I haven't seen the impact it can have on the core gameplay of the gaming experience.

At the same time, I have a lot of confidence in the VR and AR space, and we've invested some resources in fostering innovation. VR can already track player movements, VR headsets will become lighter and lighter, and we've seen 4K OLED displays have a big impact on the experience. These new technologies are going to be here in the next 3 to 5 years, and I think we should be prepared for that.

Metaverse is another oft-cited buzzword that has the potential to change game content, gameplay, and platforms. What are your observations on this?

Ma Xiaoyi: That's why I love the game industry. If you look at the history of technology, games are often the industry that pushes technology to the extreme, while also bringing technology to the mass market and billions of players. For the metaverse, for the next generation of Internet users, games will become an important part of this.

Do you feel that players are changing too? Would they be more interested in making their own games? The popularity of games like Roblox and Minecraft seems to be heralding this trend.

Ma Xiaoyi: This is an interesting trend, and we believe that this is also an area of the game industry with great potential. For NFTs, people always say it's going to be decentralized, but I'm more of a believer in empowering players. Just like in the engine industry, such as Unreal, many tools used to be skilled only by people who were very professional and had many years of experience, but now many independent developers can easily get started. Now a team of 3-5 people can develop a complete game with beautiful graphics, which was unimaginable before.

These technologies and platforms combine to give players the technical capabilities and development tools, and when they master these technologies, they can create their own games.

I spoke to Tim Sweeney recently, and we talked about metaversities and other topics. The real question is, what is the difference between it and what it is now? I would say that we will play games and watch movies, but we will live in the metaverse. We're going to spend more time in the metaverse trying different things, which is very different from the current online game scenario.

Really, the concept of the metaverse is not entirely new, as early as 1997, the first online game I played, Ultima Online, had an open virtual world, and now it seems that it is very close to the concept of the metacosm. But the technology reserves were not perfect at the time, and today, the technology to bring about change may soon arrive.

Another technology in the spotlight is that players can quickly enter different game worlds without having to download, do you think this experience will come soon?

Ma Xiaoyi: It is very likely that cloud gaming can achieve this. Of course, there are still some problems to be solved in cloud gaming, and the cost of ensuring that players have a high-quality experience is still very high, and we do not have a suitable business model to maintain this experience.

Second, the new technology should have native gameplay built around this technology to stimulate all the advantages of this technology, but now we are talking about cloud games that are usually just cross-terminal experiences for PC, console and mobile games, which is something that can be achieved, but not the best way to achieve it. We need to explore and implement native gameplay for cloud gaming.

Ask a macro question, how important do you think games are to the world?

Ma Xiaoyi: Internally we often talk about how to define games, and now games are things we play on PC, console, mobile phones, you may be fighting or solving puzzles, but that's not the whole thing that makes up games. Games use information technology to create cultural entertainment, since electronic products entered the public eye 100 years ago, this creation has always been happening, we already have movies, television, radio... We believe that new technologies will continue to bring new innovations.

As I said, games are often the first mass applications hatched by cutting-edge technology. When I ask people in the VR industry what stage of our technology we are in now, they compare the Atari 2600 to the early game market. Today, whether it's metaverses, cloud games, or VR, they all first appear in the gaming industry, and when the cost goes down, people learn how to build new applications and then push it to other industries. Games are the main enablers of technology.

You can look at Nvidia, Nvidia is very important for the artificial intelligence industry, and artificial intelligence is very important for everything, but Nvidia's starting point is from the game, making graphics cards for the game, which is a good example.

Many of the world's biggest companies are moving into the game industry, such as Netflix, Las Vegas Sands, Blackstone, etc., do you think this will change the industry?

Ma Xiaoyi: All the Internet and technology giants know that what matters is the platform, the application, the content, and if you look at it as a whole, the game is very important to all of them.

Many players have a lot of concerns about the recent big acquisitions in the industry, such as Microsoft's acquisition of Activision Blizzard, Sony's acquisition of Bungie, what can you do to ensure that this is beneficial to them?

Ma Xiaoyi: One of the things that players should understand is that the reason why these big acquisitions happen is because the cost of game development is getting higher and higher. Activision may be one of the exceptions, but many studio mergers and acquisitions are because they want to make good games, innovative games, high-quality games, but the development cost may go to $100 million, $200 million, $300 million, small studios can't afford this risk, they need to have the support of large companies, big platforms. I think the result is clear, we're going to have more high-quality games, which is good for players.

Games are still an innovative industry, and for Tencent, we were fortunate to have seized some big opportunities, winning League of Legends in the MOBA field and PUBG in the "Eat Chicken" field, but these games are from very small teams. The developers of PUBG come from DayZ and H1Z1, and they are all small projects made by small teams, and some are even individual works. As I said, technology will become more decentralized, reaching small teams and more independent producers, which is the future we will see in the industry.

Of course, the actions of large enterprises will continue to affect the market, but at the same time, due to the development of platforms such as YouTube, Twitch and Discord, we have seen players connect more directly with developers, developers can communicate directly with their players, and the game community has never been stronger than it is today. One of the things I've been telling our development team is listening to the community's feedback and communicating with them through all channels. Today's players have a strong influence on the industry and developers, which is very beneficial for players.