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NetEase launches its first console-dedicated gaming studio in Tokyo as it steps up global expansion

Sakura Studio is NetEase’s second, high-profile overseas studio after opening a centre in Montreal last November.

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NetEase has established a Tokyo-based studio called Sakura Studio as the Chinese gaming giant looks to develop next-generation console games.

Sakura Studio is NetEase’s second, high-profile overseas studio after opening a centre in Montreal last November. NetEase, which expects to hire local Japanese game makers as members of its core development team, said last week that the studio will integrate “the Japanese way of developing games” with its experience in producing PC and mobile games.

The creation of Sakura Studio comes as Chinese gaming companies continue to expand overseas amid increased regulation at home. However, with mobile gaming still dominant in China, developing high-quality console games has been a challenge–hence the move towards acquisitions and hiring overseas talent.

“As our first studio dedicated to ‘the development of console games’, Sakura Studio has invited a gaming producer with rich experience in creating console games to helm the studio,” said a NetEase spokesperson, without disclosing further details.

Tencent Holdings has also targeted the console market, especially in Japan. The world’s biggest games publisher by revenue recently became the biggest external shareholder in Japanese console game developer Marvelous via a USD 65 million deal. It also invested an undisclosed amount in PlatinumGames, another iconic Japanese console game maker.

Before the establishment of the Montreal studio, NetEase invested in Quantic Dream in France, Behaviour Interactive in Montreal, and Improbable in the UK, all of which are known to possess console game expertise.

“Japan is the key market for NetEase in terms of overseas revenue–it needs to have a localised operation there,” said Zheng Jintiao, co-founder of online media outlet GamerBoom. “As far as console games go, I think NetEase will first launch free-to-play games. It is unlikely that it will compete in the premium games market just yet.”

Meanwhile, NetEase has already proven itself to be a smart operator in Japan’s mobile gaming market, with its battle royale title Knives Out consistently ranking in the top five highest-grossing games on Apple’s App store for the past year, according to data firm App Annie.

NetEase reported an 18 percent increase in first quarter revenue last month–80 percent of which comes from gaming.

This article was originally published in the South China Morning Post.