In 2005, when American McGee told his friends that he was moving to China, the reaction was mixed between bewilderment and disbelief. McGee was among the best known game developers of the day, one of his games had been optioned as a Hollywood movie with McGee attached as a producer, and the Chinese market was lagging far, far behind that of Japan and the West. Eight years later as the Chinese gaming market is on the cusp of a global boom, that decision is beginning to look more and more like a stroke of genius.
The Chinese gaming market is one of the fastest growing hi-tech markets in the world. In 2011 it was reported to be worth $7.1 billion, a 34-percent increase over the previous year, and more than 120 million users in China were involved in online gaming. That number is expected to increase significantly this year.
This expansion is in keeping with the overall growth of the People’s Republic of China, but it does also denote a shift in the culture itself. Like all forms of media and entertainment in the PRC, gaming is censored and regulated by the government. Gaming advertising is not allowed on state run television or radio, and all games must conform to the standards laid down by the Ministry of Information Industry.
Along with the censorship that gaming faces in China, video game consoles were banned in 2000, as the PRC declared that gaming could warp the minds of children. There were loopholes to this, and Sony eventually released the PS2 in 2004, but it was instantly deemed a massive failure thanks to a lack of advertising and a staggering level of piracy. But while consoles languished, the Chinese online community flourished.
As the number of internet users in China grew, so too did the number of online gamers. That in turn expanded the general gaming population in the PRC, and the gaming industry in China is only expected to increase. The ban on consoles also may be a thing of the past, as the PS3 was just granted a certification, which would allow Sony to sell its console in China. This certification is no guarantee that Sony will introduce the PS3 to the Chinese market, but with the ban seemingly rescinded, it will certainly make China an attractive market for the next generation of consoles. It may also present an opportunity for Chinese manufacturers to introduce their own device and further expand the potential of the gaming industry.
McGee, whose first name is not a nickname but the result of a creative mother, began his career 20 years ago. After dropping out of high school and working as a mechanic, he got to know a neighbor that was also a passionate gamer. The two struck up a friendship over a shared love of Nintendo. That neighbor was John Carmack, who at the time was working on a game that would become Doom.
“We began playing Nintendo together,” McGee recalled. “He eventually invited me to his office to help test their new game, which happened to be Doom… It was a just sort of right place at the right time in a very small world kind of experience.”
McGee was the ninth employee at id, and operating out of offices in Mesquite, TX, he spent the next five years working as a level designer, on music production, sound effects development, and programming for the games Doom II, Quake, and Quake II. In 1998 McGee and id parted ways.
McGee soon landed at Electronic Arts. In 2000 McGee and EA released American McGee’s Alice, a major success for the time, and an instant cult classic that thrust McGee into the spotlight thanks to the strange and imaginative arts design and clever reinterpretation of the classic Lewis Carroll books involving Alice in Wonderland.
The game was even optioned as a movie by Wes Craven that same year. That deal fell through, but the property refuses to die and rumors of a film adaptation continue to circle, with McGee attached as a producer.
McGee left EA soon after and formed his own company, Mauretania Import Export Company. He then followed up Alice with American McGee’s Scrapland, which was lauded for its originality and was deemed a modest hit. Then the 2004 Presidential election changed everything.
“I left the US partly because Bush was elected a second time,” McGee said, only partly joking. “I told all my friends that if he was re-elected I was going to leave. His re-election fortunately coincided with an offer to move to Hong Kong, which gave me an opportunity to make good on my promise.”
While the election itself wasn’t the main cause of McGee’s exodus, it was one more reason out of many to follow the example of many ex-pats and seek his fortune in the burgeoning Chinese market.
“I’d always wanted to move to Asia, I’d always had an affinity for the region ever since the first time I travelled to Japan, when EA would send me out to work on their projects in Tokyo,” McGee said. “So when the opportunity came up, I really was interested in the region and China specifically, really more so than the project. The project as it turned out was kind of a stinker, but it was a way for me to make the move.”
The project, American McGee presents Bad Day L.A., went on to be a flop, but it did allow McGee to remain in China – or more specifically, to remain in Hong Kong.
Despite the fact that Hong Kong is now under the jurisdiction of the PRC, the city has managed to retain its sense of individuality following the 1997 change from British authority to Chinese control. When the transition took place there was a palpable sense of fear and uncertainty as to what would happen to Hong Kong. The city was built on a free market philosophy, which at the time didn’t seem like it would mesh with the communist mentality of the PRC.
Fifteen years later, Hong Kong still retains its unique sense of individuality. Many have even made the argument that China didn’t change Hong Kong, but rather Hong Kong changed China.
“A lot of people wouldn’t count Hong Kong as China, they don’t consider it to be real China,” McGee noted. “If you’ve ever been out there, then you’ll understand that they really are two different worlds. But my move to China, my move to Shanghai happened as a result of being in Hong Kong.”
During his time in Hong Kong, McGee easily networked with other developers in the emergent Chinese gaming scene. Following work on the project that brought him to Hong Kong, McGee agreed to help a friend begin an art outsourcing company in Shanghai that existed to supply additional art for Western and Japanese publishers. It was during this time that McGee was approached by the French online video game service that was founded by Turner Broadcasting System, GameTap.
McGee had his own plans of opening his own development studio, and GameTap was more than happy to help out. It offered him the opportunity, and financial backing, to develop a new game, which he leapt at.
McGee saw an opportunity in the Chinese market. The local Chinese developers were talented, but limited in options: They could work for one of the few giant corporations, or work for an outsource studio. In either instance, the developer, whether they be artists, programmers, sound engineers, or any of the other numerous roles needed to develop a video game, had little to no control of the product they were working on, and no creative freedom to express themselves.
“My theory was if you opened up an independent studio in Shanghai, you would be able to attract the best and brightest from the local market, and give them the opportunity to work on unique and original properties,” McGee recalled. “And in fact, that was the case. The moment that we started the studio we were immediately able to hire the best animators and programmers and artists from Shanghai and China.”
In 2007 McGee officially opened his Spicy Horse in the Zhabei District of Shanghai. The studio’s first game was 2008’s American McGee’s Grimm, a 28 part episodic retelling of the Grimm fairy tales for the PC. The games met with mixed reviews, but decent success. In 2009, the studio opened an offshoot studio, Spicy Pony, a group specifically tailored to create iOS games. Spicy Pony has released three titles so far, with more on the way.
The biggest release coming out of Spicy Horse reteamed McGee with EA for a sequel to the 2000 game based on Alice in Wonderland. Released in 2011, Alice: Madness Returns, is the first AAA title developed entirely in China and exported to the West. The game received mostly positive reviews and has generated talk of a third game tentatively titled Alice in Otherland, which may be released episodically, although EA has yet to commit.
Spicy Horse has also been active in other platforms, including Facebook and browser-based gaming. Earlier this year the company released the free-to-play online multiplayer title Akaneiro: Demon Hunters, a new take on Little Red Riding Hood, with a feudal Japanese twist.
By most measures, Spicy Horse is a success story. McGee’s company is currently the biggest independent developer in China, employing more than 70 people. Even as the PRC watches on.
“Whenever you are in Europe, you’re going to read that a lot of places outside of Europe are scary and terrible. When you are in the US you are going to read that everywhere outside of the US is scary and terrible,” McGee opined. “When I talk to people in the US about life and work in China, a lot of them are surprised that we’re not in slave labor camps breaking rocks and having the government interfere all the time.
“If there is anything about being here [in China] and talking to people in the West [that I like], it’s being able to communicate to them that this is a very happy and vibrant, and optimistic place, and especially at this time. It’s an interesting time to be here, in the middle of multiple, concurrent booms across financing and culture, across creativity and industry.”
The PRC is always watching the emerging industries, and censorship is simply part of the context doing business in the country. That is the price you pay to live and work in China. But for most it is a concession many are willing to make to be part of the largest economic boom in a generation, and what may prove to be one of the most significant cultural revolutions in history.
“The government, for their part, plays a fairly active and aware role in all that, and for us in particular, in the district that we are, they’re aware of our being here,” McGee said. “They bring the mayor by from time to time to show off the fact that there’s a creative and interesting sort of digital industry that’s going on in their neighborhood. In general they are very kind to us and willing to listen to our questions and problems.”
The Zhabei District where Spicy Horse is located is an area that has seen a great deal of change recently. The once industrial neighborhood has transformed to encourage more hi-tech development, both nationally and internationally. Like any American city trying to lure new business to it through things like tax incentives, China is actively looking for new ways to bring in foreign investors and companies.
“Here we actually get a bit of special treatment, we don’t have any complaints,” McGee said before adding with a laugh, “Of course they are forcing me to say that.”
As China continues to grow, it is aware of the necessity to encourage hi-tech growth, and that includes gaming. In years past, the majority of gaming in China was financed by Western and Japanese companies, but that is changing. Chinese companies now make up for more than 60% of the gaming products played by Chinese gamers, and those companies are expanding globally.
Tencent, one of China’s largest holding companies, controls 30 percent of the Chinese online gaming market share thanks to its wildly popular QQ brand that has produced several successful MMOs in China. Forget about EA and Activision, Tencent is the world’s largest game publisher, and it is expanding into the West.
In 2011 Tencent purchased Riot Games, makers of League of Legends – one of the world’s most popular games – for $400 million dollars. Then in June of 2012 Tencent acquired a minority stake in Epic Games, makers of the iOS Infinity Blade series, as well as the Gears of War franchise.
American gamers should get used to seeing Chinese names in the gaming world in the years to come. Companies like The9, Kongzhong, Shanda, and many more that are household names in China all have their sights set on expanding their gaming presence globally. Some may try the direct approach and release games in the US, perhaps as mobile titles or even via services like Facebook, while others may quietly begin to purchase stakes in existing gaming companies. It will be a slow process, but an inevitable one.
“That’s the thing history will show us about China and the Chinese people,” McGee said, “there is an inevitability to what they do, and they work and operate on very different time scales than we’re used to on a Western scale. What we see as wasting time, they see as part of their strategy… it throws off the opposition.”
As for McGee, like many others he is encouraged by the growth in China, but also wary that it is unsustainable. He (and many others) predicts that eventually there is going to come a point where the expansion stops and the bubble bursts.
“I think China is potentially putting themselves in the same position that all major economies around the world have recently done – and that’s what we’ve seen unravel from the US to Europe and Japan,” he said. “Economies built on never ending growth eventually run into a brick wall. I think China is going to get there, and it is going to do it faster than any nation in the history of the world because it grew so fast.”
While the recent recession was felt around the world, in China it was primarily a secondary affect. The Chinese economy – although it wasn’t imune the impact – made it through without much of an issue. Companies that were tied to global industries felt it far more than local businesses. There may change though, and soon.
“We, as entrepreneurs here in China think that we have a good five years left before the shit hits the fan.” McGee said. “Most people I know are making plans to stabilize their business to withstand what’s coming, or to get their business to a place where they can get out before this thing happens. The next five years will be very interesting.”