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| TOKYO — Genshin Impact, one of the world’s hottest mobile video games, has all the characteristics of a Japanese invention: giant robots; human-size swords; characters with huge eyes and spiky, rainbow-colored hair; and a puzzling fixation on women in maid outfits. |
| There’s just one catch: It’s Chinese. |
| Released in late 2020, the game is the first bona fide international smash hit for China’s video game industry. In its first year on the market, it raked in $2 billion, a record for mobile games, according to Sensor Tower, a firm that monitors mobile apps. And, unlike other popular Chinese games, it is believed to have generated most of its revenue from overseas. |
| The game’s success points to a shifting balance of power in the $200 billion-a-year global video game industry, which has long been dominated by Japan and the United States. |
| Chinese developers, flush with cash from the country’s vast domestic market, are looking abroad for growth. They see Japan — the world’s aging video game superpower — as a ripe target, and Chinese companies have begun buying up Japanese talent and applying lessons learned from years of imitating Japan’s industry leaders. |
| In some respects, China has already started to outpace its Asian neighbor. It has built world-class engineering capabilities over a decade of doing outsourcing work for Japanese video game companies, and Chinese firms like NetEase and Tencent are making the kinds of investments in game development that their Japanese competitors can only dream of. |
| But Genshin Impact is also a reminder that while China’s video game industry may have achieved technical mastery, it still faces significant creative shortcomings. Although it has some Chinese elements, Genshin is a nearly picture-perfect reproduction of one of Japan’s most popular video game genres: fantasy role-playing games. |
| The game’s creators, at the Shanghai-based company miHoYo, proudly refer to themselves as “otaku,” a Japanese term often used to describe people whose lives are consumed by aspects of Japan’s pop culture, like manga and anime. |
| The game’s reliance on Japanese motifs is a potent demonstration of that country’s considerable soft power, and of the limited returns on China’s own efforts to build the same. China’s video game sector, like the rest of its entertainment and culture industry, has struggled to produce distinctive, original content with international appeal — a symptom, in part, of its authoritarian government’s tight controls on business and society. |
| Even as China has grown into an economic goliath, it has had difficulty shaking the image that it is better at imitating other people’s ideas than coming up with its own. |
| Still, copycat or not, Genshin is a sign to many insiders of the challenges the Japanese video game industry faces. Under fierce competition from the United States, Europe and, now, China, it has ceded its once-dominant position over the past two decades. |
| Even many of those who initially dismissed the game as a cheap knockoff have been won over by its quality and attention to detail. From the standpoint of technology, art direction and game play, Genshin represents a huge leap forward for China, said Yukio Futatsugi, chief executive of Grounding Inc., a game developer in Fukuoka, Japan. |
| “Frankly, it’s a great game,” he said, adding that it has made a lot of people in his industry think “we’re in trouble.” |
| Genshin is notable for its fantasy world building and broad appeal across not just countries but also demographics: The game is unusually popular with women. |
| There are a large number of female characters among the dozens that players can use to explore a vast kingdom, delving into dungeons, battling monsters and completing quests to advance the story’s epic narrative about a mysterious traveler entangled in a war between humanity and the gods. |
| In what may be a first for China, Genshin’s mythos has inspired the kind of global response that has long defined success for Japanese games: cosplay, fan art and endless online dissections of the characters and their magical kingdom, Teyvat. (It was the most mentioned game on Twitter in 2021.) |
| Players in Japan have mostly seen Genshin as either a homage to or a knockoff of the newest entry in one of the country’s most beloved fantasy game franchises: The Legend of Zelda. |
| Liberal borrowings from the game’s most recent chapter — called Breath of the Wild — are mixed with a grab bag of references to other Japanese cartoons and video games, like Hayao Miyazaki’s film “Castle in the Sky” and the role-playing game Dragon Quest. |
| MiHoYo overcame initial skepticism among Japanese players by adding a new area to Genshin, called Inazuma, which is based on Tokugawa-era Japan. |
| The portrayal isn’t necessarily positive: The country is a cloistered, xenophobic archipelago clouded in radioactive fog. But for Japanese players, those negative aspects have been far outweighed by the positive portrayals of Japan and its video game culture, said Yusuke Shibata, who runs a YouTube channel where hundreds of thousands of players watch him play the game. |
| Japan accounts for nearly one-third of Genshin’s revenue, even though play time and downloads have — on mobile at least — lagged behind those of top homemade games in the country. |
| Genshin is free to play, but it has generated a dragon’s hoard of revenue through another concept from Japanese games: charging players for the chance to win new characters and powerful equipment. The concept is known as gacha, a Japanese word that describes the country’s beloved capsule toys. |
| Players win rewards through a lottery system, and the odds of getting the best ones — many of which are available only for a limited time — are vanishingly small. This inducement to gamble has drawn complaints from both players and regulators in Japan and China, but miHoYo has allayed those fears by making it entirely possible to play the game without spending a dime. |
| It is one of several Chinese games that have broken through — the others on a smaller scale — in the Japanese market. Only four years ago, Japanese developers held a monopoly on the top games in Japan, said Daniel Ahmad, a senior analyst at Niko Partners, a video game research firm. Now, about one-third of the top 100 mobile games in Japan come from China. |
| For years, China’s video game industry was largely cut off from the world because of government bans on consoles and strict censorship. A watershed came in 2018, when the government temporarily cut off the approval process for releasing games domestically. Many studios once focused only on China turned their eyes overseas, where releases were far easier. A new freeze on domestic game releases has further accelerated the shift. |
| Chinese companies trying to sell games abroad have encountered suspicion of the country’s tech industry and authoritarian tendencies. Genshin has faced questions over its Chinese origin, with the game initially receiving a frosty reception in Japan over rumors that it included Chinese spyware. Inside China, Genshin remains censored, and overseas, players are barred from chatting about politically sensitive topics like Taiwan or Xinjiang. |
| This year, miHoYo made some female characters’ outfits less revealing, a decision that some fans appreciated but others called an example of the threat posed by China’s regulations. More broadly, the authorities in China have warned video game developers about being overly reliant on Japanese themes. |
| MiHoYo declined multiple interview requests, citing its executives’ busy schedules. |
| Mr. Futatsugi, the Japanese game developer, has been among the beneficiaries as Chinese companies look overseas. In 2021, he received a substantial investment from NetEase, giving him more freedom to express himself artistically. |
| “There aren’t any companies in Japan that will give us the money to make the kinds of games we want to make,” he said, adding that “Chinese companies are the ones that most recognize our company’s value.” It doesn’t hurt that he is allowed to keep 100 percent of the intellectual property from the venture. |
| Mr. Futatsugi says the most serious threat to Japan’s video game industry is not from China. Instead, he locates the core of the problem in Japan itself, pointing to its aging population and shrinking market, licensing agreements that keep profits out of creators’ hands, and the reluctance of conservative companies to embrace new ideas. |
| Still, industry analysts warn that the injection of money will funnel talent away from top Japanese companies, accelerating the industry’s decline, said Seiichi Mitsui, who heads the consulting firm Game Age Research Institute. |
| “If Japanese companies don’t defend themselves — not just individually but by banding together as an industry — they may not be able to put on the brakes,” he said. |
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