Netease establishes new game studio in Seattle

July 19, 2022 0 Comments

NetEase Games, the gaming arm of China’s internet technology giant Netease, announced on July 18 the establishment of Seattle-based “Jar of Sparks”, a new first party studio led by Jerry Hook. Hook is the former Head of Design on Halo Infinite, and a founder member of Xbox Live who assisted with the introduction of the first Xbox.

According to NetEase, the goal of Jar of Spark is to develop a “world-class studio” and a new breed of “narrative-driven action games with rich environments full of moments that players will want to share with one another.”

Netease is taking another step towards global expansion by establishing Jar of Sparks. Just like other game companies in China such as Tencent, miHoYo, Perfect World and 37GAMES, Netease sees overseas market as a new growth opportunity.

The gaming industry in China has been declining in recent years while the global gaming market is growing steadily. According to CNG Data, the actual sales revenue of China’s game market shrank 9.05% year-on-year in March and 3.40% year-on-year in April 2022. Meanwhile, the global game market is expected to reach $218.7 billion in 2024, with a CAGR (compound annual growth rate) of 7.55% from 2021 to 2024, and the number of global players will exceed 3.3 billion in 2024, per market research firm Newzoo.

Amid hardships, overseas revenue is keep many Chinese game companies afloat.

In June, a total of 38 Chinese game studios made it onto in the TOP 100 global mobile game publishers revenue list, according to Sensor Tower. Tencent, Netease and miHoYo were the forerunners of the 38. When combined, these 38 companies accounted for more than US$2 billion revenue and nearly 40% of the global TOP 100 mobile game publishers’ revenue.

In the first quarter of 2022, NetEase’s online game service net revenue reached 17.3 billion yuan, up 15.3% year-over-year, and contributed to 73% of its total revenue. NetEase’s growth largely depended on overseas markets.

The development of overseas markets and games are of great importance to Netease, according to Ding Lei, CEO of NetEase in the earnings call. The company plans to grow the proportion of overseas revenue to overall revenue to 40%-50% in the future.

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