Bridging the Divide Western Development and Chinese Culture

Bridging the Divide: Western Development and Chinese Culture Richard Tsao – Managing Director Jean-Francois Vallee – Technical Production Manager Ubisoft Chengdu March 2010 www. creatorsofemotion. com

…a future leader in the online game industry? Why How Challenges www. creatorsofemotion. com

CHINESE GAME INDUSTRY Consoles, PC Games and Piracy www. creatorsofemotion. com

A 10 -YEAR OLD INDUSTRY Tencent, The 9 & Shanda went public Perfect World & Shanda become No. 1 Giant went public FANTASY WESTWARD JOURNEY ZT ONLINE 2004 2007 2010 2005 2009 KING OF KING WORLD OF WARCRAFT DUNGEON FIGHTER ONLINE 1 st MMORPG was born Shanda started F 2 P Tencent became new No. 1 Net. Ease took over Wo. W www. creatorsofemotion. com

CHINESE GAME INDUSTRY PC Online Games www. creatorsofemotion. com

CHINA, A BOOMING MARKET Source: China’s Ministry of Culture Official number of Online game player population? 69 million (through 2009) www. creatorsofemotion. com

CHINA, A BOOMING MARKET Source: China’s Ministry of Culture Online Game Market Size In China 4 0. 7 0. 66 0. 63 3. 5 0. 6 3 0. 5 2. 5 0. 39 0. 43 0. 4 2 0. 3 1. 5 0. 2 1 0. 5 US$3. 8 B 0. 1 US$0. 7 B 0 0 2005 2006 2007 Market Size (US$ in billions) 2008 2009 Annual Grwoth www. creatorsofemotion. com

CHINA, A BOOMING MARKET Source: China’s Ministry of Culture Ø 361 existing online games (Open Beta) Ø MMORPG vs. MMO others = 79% vs. 21% Ø Top 3 players combined take up 52. 9% market shares DUNGEON FIGHTER ONLINE AION, LEGEND OF MIR 2 WOW, FANTASY WESTWARD JOURNEY www. creatorsofemotion. com

TOP 10 GAMES OF CHINA FOR 2009 Title Genre Busines s Model Developer Publisher 2009 PCU (* estimation) Fantasy Westward Journey MMORPG Hourly Net. Ease 2, 560, 000 2 Dungeon Fighter Online MMO Action F 2 P Neople (owned by Nexon, Korea) Tencent 2, 100, 000 3 Cross Fire MMOFPS F 2 P Smile. Gate (Korea) Tencent 1, 600, 000 4 World of Warcraft MMORPG Hourly Blizzard (US) Net. Ease 1, 300, 000 5 Westward Journey 2 MMORPG Hourly Net. Ease 1, 100, 000 6 ZT Online MMORPG F 2 P Giant 1, 000 7 Ask. Tao MMORPG F 2 P G-Bits Guangyu Huaxia 1, 000 8 QQ Dance MMO Music F 2 P Tencent 1, 000 9 Dragon Oath MMORPG F 2 P Changyou 900, 000 QQ Speed MMO Racing F 2 P Tencent 800, 000 No. 1 10 www. creatorsofemotion. com

China’s past: A sign of the future www. creatorsofemotion. com

CHINA’S PAST: A SIGN OF THE FUTURE Release Date: Nov. 2008 Release Date: June 2009 www. creatorsofemotion. com

CHINA’S PAST: A SIGN OF THE FUTURE Release Date: Nov. 2008 § § § Release Date: June 2009 Developer: Five Minutes (Shanghai) Number of players: 23 million DAU through 2009 Not on Facebook: Chinese version at Renren. com, later got a port on Tencent’s Q-zone www. creatorsofemotion. com

WHAT IS CHINA’S CASUAL MMO Micro transaction s Double Dragon www. creatorsofemotion. com

WHAT IS CHINA’S CASUAL MMO Micro transaction s NBA Street www. creatorsofemotion. com

WHAT IS CHINA’S CASUAL MMO Micro transaction s Mario Kart www. creatorsofemotion. com

DEVELOPERS IN CHINA More Than 160 Developers Nationwide 50+ Developers (Perfect World & Changyou) 40+ Developers (Shanda, The 9, EA, Ubisoft & THQ) 30+ Developers 20+ Developers (Tencent, Net. Ease & Kingsoft) (Branches of major developers) www. creatorsofemotion. com

DEVELOPERS IN CHINA A few foreign developers Focused on Western Market www. creatorsofemotion. com

HOW TO LEARN FROM CHINESE GAME INDUSTRY? Local Presence Local Developers Learn here first, and export best practices. www. creatorsofemotion. com Local Games

China’s Culture www. creatorsofemotion. com

CONFUCIANISM Humanity Rectification of names Ritual Perfect gentleman Loyalty Relationships Filial Piety www. creatorsofemotion. com

GUANXI - NETWORK Connections Balance Favors www. creatorsofemotion. com

MIANZI - FACE Lose Face Give Face Save Face www. creatorsofemotion. com

NEW INFLUENCES One Child Catch up to West New Influences Property Bubble Consumerism www. creatorsofemotion. com

Guidelines www. creatorsofemotion. com

LEARN THE CULTURE Mianzi CONFUCIANISM Guanxi www. creatorsofemotion. com

SELECT YOUR EXPATS China Experience Chinese Language Optimistic Open. Minded Patient Expa t Core Values www. creatorsofemotion. com

HIRING IS KEY ! Technica l Skills Core Values Soft Skills Training is a must www. creatorsofemotion. com

STRATEGY vs. TACTICS Clear Goals SCRU M Course Correction Short Cycles Breaking Large Strategic Goals in small tasks no longer than 1 month www. creatorsofemotion. com

MASTER COMMUNICATION WITH CHINESE Culture Reference s English is Foreign Ambiguity Cultural Influences www. creatorsofemotion. com

Wrapping Up. . . www. creatorsofemotion. com

ADVANTAGES The future leader in online games! Chinese Market Online business model Scalability www. creatorsofemotion. com

CASE STUDY – CHENGDU CITY Good pool of raw talent of artists and programmers Technology infrastructure for IT company was really available Government support and subsidies No other major global game developer/publisher at the time Physical separation from the Tier 1 cities • Didn’t compete with ourselves for recruitment • Escaped the rat race effect www. creatorsofemotion. com

CASE STUDY – UBISOFT CHENGDU Rookies Expat Managers Expat MD Grooming Leadership Ubisoft Chengdu (Est. 2007) Experienced Support Staff Work In Progress www. creatorsofemotion. com

THANK YOU 谢谢 Q & A richard. tsao@ubisoft. com jean-francois. vallee@ubisoft. com www. creatorsofemotion. com

Appendix www. creatorsofemotion. com

KEY SOURCES § § Internet and magazine articles Books Li Min “Hattie” – min. li 2@ubisoft. com Omar Bouali – omar. bouali@ubisoft. com www. creatorsofemotion. com

HISTORY – ANCIENT 2100 BC – 221 BC Source: Wikipedia 2100 BC § § First dynasty: Xia Mostly warlords waging wars www. creatorsofemotion. com 2010

HISTORY – IMPERIAL 221 BC – 1911 Source: Wikipedia 2100 BC § § 2010 Qin Dynasty – Unified China Han Dynasty – Unified language Three Kingdoms Imperial rule ended by 1912 www. creatorsofemotion. com

HISTORY – MODERN 1912 – Today Source: Wikipedia 2100 BC § § § 2010 1912 – Republic of China 1949 – People’s Republic of China under Mao – Ctrl-Alt-Del 1978 – Deng Xiao Ping in power www. creatorsofemotion. com

“I don't care if it's a white cat or a black cat. It's a good cat so long as it catches mice. ” Source: Wikipedia Deng Xiao Ping (1904 -1997) § Opening Up § Socialism with Chinese characteristics www. creatorsofemotion. com § One Country, Two Systems

COUNTRY AND POPULATION www. creatorsofemotion. com

COUNTRY AND POPULATION Source: Population. Data. net, 2010 Ranked by size Rank Population Size (km 2) Density (per km 2) Year 141 927 199 17 075 400 8. 31 2010 1 500 14 000 0 2007 Canada 33 993 106 9 970 610 3. 41 2010 USA 308 470 703 9 629 047 32. 04 2010 1 338 612 968 9 574 479 139. 81 2009 Russia Antarctica China www. creatorsofemotion. com

COUNTRY AND POPULATION Source: Population. Data. net, 2010 Ranked by population Rank Population Size (km 2) Density (per km 2) Year China 1 338 612 968 9 574 479 139. 81 2009 India 1 166 079 217 3 287 240 354. 73 2009 USA 308 470 703 9 629 047 32. 04 2010 Indonesia 237 512 355 1 904 443 124. 71 2008 Brazil 192 298 177 8 547 877 22. 50 2010 www. creatorsofemotion. com

ECONOMY Source: World Development Indicators database, September 2009 GDP growth (% annual) 14 12 10 % 8 6 4 2 0 -2 China Euro Japan US Year 2000 8. 4 3. 9 2. 9 3. 7 Year 2005 10. 4 1. 6 1. 9 3. 1 Year 2007 13 2. 7 2. 1 2 Year 2008 9 0. 700000001 -0. 700000001 1. 1 www. creatorsofemotion. com

ECONOMY Source: World Development Indicators database, September 2009 Income (per capita) 2000 1800 1600 1400 USD 1200 1000 800 600 400 200 0 Net income of rural households Disposable income of urban households 2002 2003 2004 2005 2006 2007 299 317 355 403 459 544 931 1, 024 1, 138 1, 300 1, 506 1, 808 www. creatorsofemotion. com

ECONOMY Source: http: //en. wikipedia. org/wiki/List_of_countries_by_GDP_(nominal) List of countries by GDP (nominal) www. creatorsofemotion. com