'Genshin Impact' revenues soar as China gaming goes global

TOKYO/HONG KONG (Reuters) - Free-to-play fantasy game “Genshin Impact” from Shanghai-based developer Mihoyo is proving a hit beyond its home market, raking in money with a controversial payment system and creating a potential breakout moment for China’s gaming industry.

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The game, available for mobile devices, PlayStation 4 and PC, has generated sales of $140 million on mobile alone since its launch at the end of September, data from analytics firm Sensor Tower shows, with Japan its biggest market after China.

The success of “Genshin Impact” reflects China’s growing infiltration of Japan’s mobile market, where titles from gaming giants Tencent Holdings and NetEase Inc jostle in the rankings of top-grossing titles.

The game has found a foothold by adopting the tropes of Japanese games, bearing a resemblance to Nintendo Co Ltd’s “The Legend of Zelda: Breath of the Wild” and featuring stock anime characters and dialogue.

“Genshin Impact” sales are driven by its “gacha” system, where real-world currency is used to obtain randomised rewards that can help players advance faster.

The system is central to Japan’s top mobile games, and similar to the “loot boxes” in many Western titles, but often offers only a small chance of winning good rewards. As a result, players pour money into gacha, and getting rare items turns into a game of its own.

“Genshin Impact” is also gaining traction in the United States, with more than $20 million in sales, suggesting greater acceptance of gacha, which has been criticised for how it encourages spending.

“The Chinese gaming industry is very young. ‘Genshin Impact’ is just the beginning,” said Serkan Toto, founder of game industry consultancy Kantan Games.

The game is the second-most played in China, just behind Tencent’s megahit “Honour of Kings”, according to gaming review platform Taptap.

Its popularity comes even after Mihoyo, unhappy with Huawei’s commission structure for sales on its app store, decided not to place its game there, a source said.

“Genshin Impact” also landed as developers grappled with the impact of the COVID-19 pandemic, affecting release dates, and as gamers await the November launch of consoles from Sony Corp and Microsoft Corp.

Reporting by Sam Nussey in Tokyo and Pei Li in Hong Kong; Editing by Gerry Doyle