NetEase accelerates overseas expansion of games with the first U.S. based gaming studio

NetEase, China’s second largest gaming company after Tencent, is accelerating efforts to expand broad with the first U.S. based studio.

NetEase Games, the online games unit of Nasdaq-listed NetEase, said the new studio Jackalope Games, based in Austin, Texas, will be focused on making new and exciting PC and console games.

Veteran American game designer Jack Emmert, who has worked on City of Heroes, Neverwinter, Star Trek Online, and DC Universe Online, will become the head of Jackalope Games.

“NetEase Games is the best possible place for me and my team to thrive,” said Jack Emmert. “We share the same passion– to create engaging online universes for gamers worldwide. NetEase Games is providing the support and resources needed to build a great studio and great games.”

NetEase did not specified the investment of setting up the studio. It said the studio will operate independently in terms of game development and publishing, and the first title produced by Jackalope Games will be fully funded by NetEase.

The opening of the U.S based studio reflect a trend of Chinese gaming developers shifting its focus to the overseas market for the next chapter of growth, as game companies struggle with the more challenging Chinese market amid increasing scrutiny of online games in China.

William Ding, founder and chief executive of NetEase, said in a February earning call that the company is “hiring global gaming talent and will accelerate overseas expansion”.

The billionaire CEO highlighted that overseas market would contribute 50% of the company’s gaming revenue in the future.

Before the establishment of the Texas based studio, NetEase has opened a new game studio in Montreal where is NetEase’s premier video game production center in Canada. In addition, NetEase has invested in Quantic Dream in France, “Dead by Daylight” game creator Behaviour Interactive in Montreal, and Improbable in the United Kingdom, all of which give special attention to console game development.

NetEase began its overseas venture in 2015 and made its first critical shot after launching turn-based fantasy strategy game Onmyoji in Japan. Much like Tencent, NetEase made heavy investment in esports business and host gaming championship events for additional growth. Call of the Abyss, the annual championship event for its horror game “Identity V” went viral in Japan and become one of the major e-sport events in the country with one of highest number of online viewers.