Microsoft's Xbox One at ChinaJoy.

Above: Microsoft’s Xbox One at ChinaJoy.

Image Credit: Dean Takahashi

GamesBeat: You’re well known in the industry, but maybe you could explain what it is you do. You’re an agent. What are some examples of how you do business, especially in the Chinese market?

Hilbert: The biggest thing we do in China right now as an agent is help publishers and developers navigate the waters. Certain publishers in China are much stronger in casual games. Others are stronger in mid-core games. That’s the first thing we look at. What’s your genre, your type of game? Very few publishers will provide a development advance, but some will. If you need a development advance, you can go to a select group of publishers. If you don’t, if you just need distribution, we know the status of games people want to see before they’ll seriously consider them. Then it’s helping the Western companies the way the channels work in China, what a royalty really means.

GamesBeat: That’s the primary mission, then, to make deals happen?

Hilbert: Part of it, too, is that it takes years to develop relationships before the people in China start taking you seriously. They need to know you first. They need to understand your motivation, how you think, what you feel about the game industry before they’ll start working with you closely.

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GamesBeat: What are some good things you’ve seen in this interaction, or bad things as well?

Hilbert: The good things are the relationships. Once you start to develop strong relationships, decisions happen very quickly. Whether it’s a yes or a no, they make the decision quickly. That’s a positive. Some of the negative things we ran into were when we underappreciated the importance of personal relationships in doing deals. The other side is this very complicated distribution system and the multiple layers of payment that need to go out before our clients get paid.

GamesBeat: One thing I heard last year when I visited China was that a game developer wanted to bring a game there, and the answer from the Chinese publisher was, “We’ll take your game, reskin it, use your basic engine and mechanics, and add a Chinese celebrity brand.” To me, that seemed like making a completely different game than what the Western developer was bringing to them. I wondered how common that might be as far as requests coming from Chinese publishers – “you need to completely change this game for our market.”

Hilbert: Two and a half years to a year ago, we were getting lots of requests for that. I haven’t seen a lot of that in the last year.

Mobile games on display at the ChinaJoy 2014 event.

Above: Mobile games on display at the ChinaJoy 2014 event.

Image Credit: Dean Takahashi

GamesBeat: This was about a year and a half ago, yeah.

Hilbert: I never really thought about that change, but you’re right. It was a big thing. They would see engines and gameplay over here, but they wouldn’t want the Western developer to reskin it. They wanted a code dump from the Western developer and then they’d do the reskin. They take care of it in China now. A lot of the stuff in China, though, was a sprint for market share. They would see an engine in the West and say, “Wow, they really built that thing out well.” Their internal teams would say, “We could build that too, but it’ll take this amount of time to build that engine and reskin it.” So they thought that if they could just take the technology, that would be a quicker route to the market. Some of this stuff is pretty hard to build.

GamesBeat: I wonder, as Chinese gaming tastes change, whether they’ll embrace more global content as it is or if we’ll still have to see content tailored to Chinese tastes.

Hilbert: That’s a multifaceted question. What’s starting to happen, because Hollywood—Western brands are starting to take hold. Dreamworks has Kung Fu Panda, which is a huge IP in China. If you have a Western-branded game, they’re more often taking the game as-is, but there are still fundamentally different play patterns in free-to-play.

Free-to-play is way more aggressive in China. If you bring Chinese games to the West as-is, with the way the payment walls work, people will hit a wall right away and just drop the game. If you bring Western games to China, by the time they get to a point where the game asks for money, they think, “I’ve already played this game enough. I don’t need to pay.” Even if we address the art issue, that’s not the only issue. It’s the way we pay. In China they consume content way faster than we do in the West.

GamesBeat: Your 100 levels need to be 200 or something like that.

Hilbert: We’ve had games where we’ve brought them over and they say, “What’s your content rollout plan?” We say, “Well, this is our content rollout plan in the West. This is when we released the game and this is all the content we released over the next year.” The published said, “That’s great. That should be enough content for our first month. What about after that? You need way more content and way more stuff to buy.”

ChinaJoy

Above: ChinaJoy

Image Credit: ChinaJoy

GamesBeat: As far as comparing last year to this year, there’s been a stock market drop in China. We’ve also seen a lot of game companies wanting to go private because of that. How does that affect what’s going to happen with deals? Is game investment expected to go down? 

Hilbert: Even though the stock market dropped, it hasn’t filtered through the channel to us yet. I don’t know what’s happening with mergers and acquisitions or studio investments. But as far as game publishing and licensing, we haven’t seen a big hit. Remember, most of the licensing that goes into China is for games that are finished or almost finished. When they pick up a game from the West for China, they’re expecting to recognize revenue in the next three months. Whenever revenues have been down with Western publishers in the past, be they console or PC or mobile, traditionally Western publishers get more aggressive at trying to do pickups and fill revenue gaps. We’re seeing that for high quality games. The biggest thing we’re starting to see, though, is that before the stock market dropped, Chinese companies stopped focusing on everything and started narrowing in on higher and higher quality games. The advances and guarantees have been increasing.

Before, you could show up with a casual game and they’d just put it up on their network and promote it – work on it, culturalize it, put in all the SDKs. Now they look at it and say, “It’s not worth our time. We don’t want to burn off users.” Rather than release three games that are okay, they’ll save their resources for one game that’s really good.

I haven’t had one publisher mention, “Well, our stock is down. We’re getting a little nervous.” It hasn’t even come up. Maybe in a little bit?

GamesBeat: Do you think Westerners are going to grab a bigger share of the Chinese market?

Hilbert: I don’t know if Westerners exactly will have a greater share, but Western games might. A lot of times the Western games that are succeeding have Chinese partners. But it appears that way. The resources the Chinese publishers are starting to allocate to Western games, to really integrate them and work with them, are definitely increasing.

A lot of it is part of the learning curve, where Westerners are getting used to working with the Chinese and the Chinese are getting used to working with Westerners. We know what each other needs. The Chinese companies are getting better and better. It’s just like when American companies got better at working with third parties versus developing their own games. It’s a learning curve. We seem to be coming out of that learning curve in China. They’re taking Western games in through a pretty efficient process. They’re getting better at integrating and culturalizing these games. They’re asking more of the right questions.

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