Tales of the Tape #4: How China Flipped the Script on Gaming
Welcome back to Tales of the Tape.
This week, I dove into Mitch Lasky and Blake Robbins' deep dive on China's rise in gaming from their GameCraft podcast. If you've been following the gaming industry for any length of time, you know this conversation was inevitable. Still, the timing feels particularly urgent given the current geopolitical tensions and China's recent breakout successes.
Before we dive in: this hits close to home. I worked for Bigpoint when it was purchased by Chinese publisher Yoozoo, and spent a whole month working from their Shanghai office in 2017. I also worked for Huawei on their Honor brand when they were launching their newest models in Europe and specifically targeting gamers. So I've seen firsthand how Chinese companies approach Western markets and how they think about global expansion.
As someone who's witnessed both sides of this equation - Western publishers scrambling to crack the Chinese market for decades, only to see now Chinese developers dominating Western charts - there's a certain irony to this story.
For context, Mitch Lasky and Blake Robbins host what's probably my favorite podcast when it comes to gaming business. Lasky is a General Partner at Benchmark with an incredibly deep operating background - he was CEO of JAMDAT Mobile (took it public in 2004, sold to EA), Executive VP of Worldwide Studios at Activision, and EVP at EA Mobile. Before venture, he practiced IP law and even worked at Disney. His early investments include Riot Games, Snapchat, and Discord.
Robbins recently left Benchmark to start his fund, Hidden Capital, after spending time as a Principal there and previously at Ludlow Ventures. What makes Blake particularly sharp is his ability to spot gaming trends early and his intuitive understanding of what works with players versus what just sounds good in pitch decks.
The Plot Twist That Changed Everything
The story of China's gaming rise reads like a lesson in turning disadvantages into advantages. While Western publishers were obsessing over protecting their boxed goods from Chinese pirates, Chinese developers were being forced to innovate in ways that would eventually put them years ahead of the competition.
Here's the part that gets me: every supposed "limitation" the Chinese market faced became a competitive advantage. Rampant piracy? It forced them to perfect free-to-play monetisation before anyone else even understood it. Console bans? They skipped straight to PC and mobile, the platforms that would eventually dominate. Government restrictions on foreign games? It pushed their capital abroad and created the investment strategy that would see Tencent own pieces of nearly every major Western gaming success story.
When Lasky talks about China's "squeezed balloon" effect, where domestic restrictions pushed publishers to look globally, you can hear the admiration in his voice for a strategy that seemed almost accidental but turned out to be brilliant.
Tencent's Investment Masterpiece
The conversation reveals something that genuinely impressed me: Tencent's investment strategy wasn't just about acquiring successful companies. They were positioning themselves as gatekeepers to the Chinese market and leveraging that position to get equity stakes in Western companies that needed Chinese distribution.
The pattern is almost clever in its simplicity: "You want access to our 1.4 billion users? Give us equity first." When Riot Games wanted to publish League of Legends in China, Tencent didn't just offer to publish it. They negotiated equity stakes that would eventually lead to full ownership.
Look at their current portfolio: 100% of Riot, 84.3% of Supercell, 40% of Epic Games, meaningful stakes in Discord, Snapchat, and dozens of others. They weren't just building a games business; they were building a portfolio of the future of interactive entertainment.
Personal Note: What's impressive about Tencent is their WeChat distribution advantage. In China, they can circumvent other App Stores (wink wink) dominance through WeChat's mini-games platform, granting them distribution power that no Western publisher possesses. They've built a parallel mobile ecosystem that bypasses traditional gatekeepers entirely.
The HoYoverse Phenomenon
Perhaps one of the most underappreciated story in gaming is HoYoverse's complete demolition of conventional wisdom about what works globally. HoYoverse is on track to exceed $10 billion in global revenue by 2025, with roughly half of the revenue coming from outside China.
Think about that for a moment. A Chinese studio making anime-style games with gacha mechanics is generating $5 billion annually from Western markets. Genshin Impact didn't succeed despite its anime aesthetics and gacha monetisation; it succeeded partly because of them. Western players didn't just tolerate these "foreign" elements; they embraced them completely. Of course, the games are excellent - but that should be obvious by now.
The podcast reminds us of something that should wake up Western publishers: more than half of the top 10 mobile games in the US are now from Chinese studios. HoYoverse represents the emergence of a truly global gaming culture where Eastern and Western sensibilities blend seamlessly.
Black Myth Wukong: The AAA Warning Shot
The discussion of Black Myth Wukong feels like a turning point in the conversation. Here's an almost unknown Chinese studio that made a $60 premium AAA game based entirely on Chinese cultural mythology and not only dominated Chinese charts but became a global phenomenon, selling 25+ million copies and getting Game of the Year nominations everywhere.
The parallel to Hollywood is a stark warning for Western publishers. Ten years ago, over 50% of top Chinese films were Western imports. In 2024, it was zero. If the same thing happens in gaming, Western publishers who've been banking on international growth are going to find themselves locked out of the world's largest gaming market just as local competitors become global threats.
The Strategic Retreat
Personal Note: The timing of this podcast feels particularly relevant given what's happened with NetEase since it was recorded. In April 2025, Simon Zhu, NetEase's President of Global Investments and Partnerships, departed after 12 years with the company. Zhu had built NetEase's $3 billion global investment portfolio, brought Minecraft to China (400M+ registered users), and spearheaded their international expansion strategy.
But here's what makes this departure significant: Zhu is just the latest in a series of senior executives leaving NetEase as CEO William Ding pulls back from overseas investments. The official reason? Ding has lost confidence in expensive overseas teams, especially after seeing the success of Black Myth Wukong, which proves that making AAA games in China can be far less costly than funding Western studios.
This isn't just about one company restructuring. This represents a significant shift in Chinese gaming strategy from global investment and partnership to domestic capability building and selective international publishing. The era of Chinese companies bankrolling Western studios may be coming to an end before it even began.
What This Means
Three principles emerge from China's gaming journey that apply far beyond our industry:
Turn restrictions into competitive advantages. China's government limitations forced innovation and global thinking that wouldn't have happened in an open market. Sometimes constraints create better outcomes than freedom.
Play a different game than your competitors. While Western publishers focused on traditional metrics and quarterly growth, Chinese companies played for long-term positioning and equity accumulation.
Global ambition from day one isn't optional anymore. The new Chinese studios aren't thinking about domestic success first and global expansion later. They're building for worldwide audiences from the beginning.
What struck me most about this conversation is how it reframes China's gaming rise not as a story of copying or undercutting Western companies, but as a lesson in strategic thinking and patient capital deployment. The irony is that many of the "advantages" China had were disadvantages that they turned into strengths through necessity and strategic thinking.
For those of us building in gaming or adjacent industries, there's something both sobering and inspiring about this story. Sometimes the best business strategy isn't just being unwilling to do anything else. Sometimes it's being forced to do something different and discovering you're better at it than anyone expected.
Hope you found this as fascinating as I did.
On my end, I'll be keeping a close eye on which Chinese studios break out next and what Western publishers do in response.
Until next time,
Rachid