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‘I am not retired,’ Serena says

SERENA WILLIAMS — REUTERS

SERENA Williams on Monday said she has not retired from tennis and that the chances of her returning are “very high” after she previously indicated that she would step away from the sport after last month’s US Open.

“I am not retired,” Ms. Williams said at a conference in San Francisco while promoting her investment company, Serena Ventures. “The chances (of a return) are very high. You can come to my house, I have a court.”

Ms. Williams, 41, said she was “evolving away from tennis” in an essay in August and, while she did not confirm the US Open as her farewell event, she was given lavish tributes before each match in New York and waved an emotional goodbye after losing in the third round.

The 23-time Grand Slam champion, who took the tennis world by storm as a teenager and is considered by many the greatest of all time, said not preparing for a tournament after the US Open did not feel natural to her.

“I still haven’t really thought about (retirement),” Ms. Williams said.

“But I did wake up the other day and go on the court and (considered) for the first time in my life that I’m not playing for a competition, and it felt really weird”. — Reuters

Padao-Gilbuena tandem moves to last-16 in men’s double

YOUTHFUL sensation Jude Michael Padao continued to make heads turn as he teamed up with Harvey Gilbuena as they bested Jackey Mirabueno and Vince Serino, 6-2, 6-4, yesterday to advance to the round-of-16 in the men’s doubles of the PCA Open Tennis Championships in Plaza Dilao, Paco.

Mr. Padao, a 16-year-old gem of a find from Digos, Davao del Sur, and Mr. Gilbuena, however, may run into a collision course with the top-ranked Johnny Arcilla and Ronard Joven, who were battling Jules and Alex Lazaro at press time.

The honor student at Corjeso College, who made it to the main draw as a qualifier, has been making a noise in the men’s singles after he eked out a giant-sized 6-2, 2-6, 6-3 win over 11th seed Alberto Villamor the day before to join the big boys in the next round.

It was a win that came a couple of days after Mr. Padao slew Rodolfo Barquin, a two-time UAAP champion when he was still with University of the East, in another three-setter, 6-4, 3-6, 6-3, in the opener last Saturday.

And Mr. Padao isn’t about to slow down. “I will keep going for a win,” said Mr. Padao in this meet bankrolled by Smart/PLDT, official ball Dunlop, Manila councilor Jong Isip, San Jose Salt, W. L. Food Products, Palawan Pawnshop and Pagcor.

Interestlingly, Mr. Padao was the last of the qualifiers and joined an elite group in the next phase headed by former champions Mr. Arcilla, who won nine times here, Jeson Patrombon (2018) and Joseph Victorino (2002).

In men’s doubles, second seed Leander Lazaro and Fritz Verdad dumped Jose Bernardo and Mateo Rivas, 6-2, 6-0, to surge through the round-of-16 in this tilt backed by GAC Motors, GIMACA Convenience Store and Development Corp., Ourzen Chicken, HEAD, Ms. Rina Caniza, Mr. Benito Tan, Primo Dept Fuel Station, Kaizan Steel Trading, Cazneau, Inc. and Knaut Art Glass.

Also making the cut were Kristian Tesorio and Rafael Liangco, who edged John Altiche and John Jeric Accion, 6-4, 5-7, 10-5; Alberto Villamor and Rash Manatad, who downed Andrei Cagamat and Elvin Geluz, 6-4, 6-0; John Tomacruz and Franklin Encarnacion, who waylaid Mathew Crisosto and Maraphael Teng, 6-0, 6-4; Alexis Acabao and Erik Tangub, who ousted Gab Bandoquillo and Feb Deja, 6-3, 7-5; and Jose Antonio Tria and Bryan Saarenas, who slammed Abdulqouhar Allian and Argil Lance Canizares, 6-3, 6-2. — Joey Villar

Olympic qualified athletes will train a full month in France before the Games

FILIPINO athletes who will make the 2024 Paris Olympics cut will earn the privilege of training a full month before the quadrennial games in the French capital.

“The goal is to have our qualified athletes to be in Paris at least one month before the Olympics,” said Philippine Olympic Committee president Abraham Tolentino, who in Paris to make an early reservation.

“It’s not only us [Philippines] who’s making a reservation for a training facility, but several other countries as well. It’s first come, first served so we’re making sure we get the best one for our athletes,” he added.

The mayor from Tagaytay was impressed with the state-of-the-art facilities in Paris.

“I personally inspected the venues to make sure they’re fitted to the needs of our athletes,” said the PhilCycling chief. “We wanted a 3-in-1 facility, which should be at least 10 minutes to and from the athletes accommodation or should also be equipped with a kitchen.”

Mr. Tolentino said they would ask the Philippine Sports Commission chared by Noli Wala to shoulder the one-month pre-Olympics training camp aside from actual participation.

“We will ask the PSC to cover the expenses as part of the Olympic journey,” he said.

The country is optimistic it could eclipse, if not match, its historic performance in the 2021 Tokyo Games—a breakthrough gold by lifter Hidilyn Diaz-Naranjo and two silvers and a bronze by boxers Nesthy Petecio, Carlo Paalam and Eumir Marcial respectively. — Joey Villar

Losing scoring title to LeBron will be a ‘bitter pill’ for Kareem, says Magic

LOS ANGELES — Lakers’ forward LeBron James is on track to surpass Kareem Abdul-Jabbar as the NBA’s all-time leading scorer this season and when he does it is unlikely to sit well with the Hall of Fame center, Magic Johnson said.

James needs 1,244 points to eclipse Abdul-Jabbar, who has held the record since April 1984.

“I don’t think well,” Johnson said when asked in a podcast how he thinks Abdul-Jabbar will handle losing the title he has held for nearly four decades.

“Let’s be honest. And the fact that it’s a dude playing for the Lakers too. It’s a dude playing in LA. I think it will be a hard pill to swallow.”

Abdul-Jabbar, a six-time champion and six-time MVP whose signature “skyhook” shot was nearly unstoppable, is sometimes unfairly overlooked in conversations over the greatest ever to play the game but his advocates have always been able to point to the scoring title.

Johnson said Abdul-Jabbar probably never believed anyone would surpass his total of 38,387 regular season points.

“I think he thought he was going to have it forever,” Johnson said.

James raised eyebrows earlier this month when he was asked about his thoughts on potentially passing Abdul-Jabbar and his relationship with him and offered a short and frosty reply.

“No thoughts and no relationship,” James said.

Abdul-Jabbar, who like James is a vocal advocate for social justice causes, criticized James when he said that getting the COVID-19 vaccine was a personal choice. He has also called some of James’ on-court celebrations “stupid and childish.”

Johnson said he wishes the pair had a better relationship and believes they will come together down the road.

“I think that one day that’s going to happen, and if I can play a part in that, I would love to,” Johnson said.

“But let him pass him first. Let that soak in for a minute, and then put the two men together because they are going to find out they are similar.” — Reuters

Aaron Judge at crux of Yankees’ offseason of uncertainty

ABRUPTLY swept out of the MLB playoffs by the Houston Astros, an offseason of uncertainty is underway for the New York Yankees.

At the top of the list of questions for team president Brian Cashman: Will Aaron Judge be back?

Projections for Judge’s free-agent contract awaiting are in the $350 million — or higher — range, and the Yankees opted not to meet the slugger’s asking price in the offseason. Judge turned down a deal worth a total of $213 million before spring training.

Judge led baseball in home runs by 16, setting the American League record with 62 homers.

“Incredible. Just an incredible season and someone that I’ve grown close with and just admire and respect and hopefully we’ll see him in pinstripes for a long time,” Yankees manager Aaron Boone said. “I don’t even want to think about the alternative right now.”

Judge, 30, will have alternatives with the New York Mets, San Francisco Giants and Chicago Cubs reportedly on the list of expected bidders.

Ace right-hander Gerrit Cole knows what it feels like to be in Judge’s position. He left the Houston Astros to join the Yankees on a landmark $324 million deal with the Yankees.

Cole said he’s had several conversations with Judge about what to expect and reflections of how to handle the immense gravity of the situation. He said it comes down to patience.

“Take your time,” Cole said of what he told Judge about the weeks ahead.

After Judge went 1-for-16 in the postseason series with Houston, he heard boos at Yankee Stadium. But first baseman Anthony Rizzo, who re-signed with the Yankees in free agency last winter, said Judge earned every penny with the numbers he put up during the 162-game regular season. Judge posted an OPS of 1.111 and drove in 131 runs.

“The money he’s brought to this organization, this franchise, to the game of baseball — I’m sure just the money alone in September and him chasing 62 was enough to easily pay him,’’ Rizzo said.

At the moment, Judge said he wasn’t in position to look forward. He was too busy kicking himself Sunday night.

“For not bringing home that championship,” he said.

Judge, closer Aroldis Chapman, Rizzo and starter Luis Severino are among the players who can reach free agency next month. Outfielder Andrew Benintendi and starter Jameson Taillon can also hit the open market, as can reliever Zack Britton. — Reuters

New York Yankees

The Yankees didn’t even have one last, great dramatic moment to turn to in the end. With two outs in the bottom of the ninth inning, presumptive American League Most Valuable Player awardee Aaron Judge had a chance to extend the Championship Series with a home run blast akin to his whopping 62 in the regular season. If nothing else, his spectacular run in a contract year showed that he was built for dramatic moments such as that which faced him. And so he calmly stood against noted Astros closer Ryan Pressly. Last June, he got the better of the right-handed pitcher by driving the go-ahead winner via a walk-off single. This time around, his best option was to go yard.

As things turned out, Judge — and, by extension, the Yankees — didn’t have one more superb shot in him. Four pitches later, he was gone; the groundout that sent them all packing for yet another early exit, by their perennially lofty standards, proved more telling than any of his hits that came before it. Once again, they were upended by their hated rivals. And once again, they wound up being irrelevant. Their savior cooled down considerably in the postseason, and it was an arguably predictable offshoot of his night-in, night-out stints under the klieg lights.

To be sure, fans will, no doubt, consider the Yankees’ 2022 campaign for what it was — an avenue for Judge’s brush with immortality. Even as titles are admittedly significant, they take a back seat to individual accomplishments that stand the test of time. That said, the Bombers cannot but be disappointed with the outcome. Never mind that their difficulties in the Division Series against the lowly Guardians telegraphed their plight. And forget that their litany of excuses includes those deemed reasonable even by their most vociferous critics.

The Yankees should have an interesting offseason, and not simply because they’re, well, the Yankees. Needless to say, their first order of the day is to sign Judge to a new contract, preferably for the long term. So what if he’s 30? If there’s anything the year they had showed, it’s that he moves the needle for them — for better or worse. He may have had a forgettable playoff stint, but he underscored his professionalism and work ethic from Day One. They would do well to ensure that he stays in pinstripes. Else, they risk being mired in mediocrity, blinded by the birds in the bush to see with clarity the one in the hand.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

From a failing UK economy to party rifts: Sunak’s uphill battle

British Prime Minister Rishi Sunak — REUTERS

RISHI SUNAK became the UK’s third Conservative prime minister (PM)within just four months, and the role is increasingly looking like a poisoned chalice.

His victory on Monday puts him in charge of an unenviable cocktail of problems including a struggling economy, a long-running energy squeeze and a divided party that’s slumped in the polls.

Gilts rallied on Monday on the news, pushing the 10-year yield to the lowest in almost three weeks, a sign that market confidence could be rebuilt under Mr. Sunak’s premiership. But any policy action will be closely watched by a market that has lost faith in the government and is highly sensitive to fiscal change.

In his first public comments as leader, Mr. Sunak called on his party to unite to deal with a “profound economic challenge.” Here’s a list of the many tests that face the newest occupier of No. 10 Downing Street:

ECONOMY
Mr. Sunak takes the reins against a recessionary backdrop and inflation running at a double-digit pace. Surveys on Monday showed private-sector activity shrank in October, another round of bad numbers after weak retail sales last week.

Meanwhile, households are struggling amid a worsening cost-of-living crisis. As prices for goods and services surge more quickly than wages, workers and families are left with less money to spend. Real earnings are down almost 3% in the past year.

Mr. Sunak also needs to tread carefully with fiscal measures to avoid detonating another dramatic reaction in the gilt market. The recent market turmoil in the wake of his predecessor’s tax giveaway sent bond yields jumping, with implications for borrowing costs not just for the government, but households and businesses too.

ENERGY CRISIS
Persistently high energy prices spurred by Russia’s invasion of Ukraine will present a problem to both businesses and households when government support runs out in April 2023.

If prices don’t decline by then, or an alternative energy support package is not put in place, inflation could reach 15% or higher, according to some forecasts. Household energy bills could increase twofold, putting further pressure on incomes at a time the economy is stuck in a recession.

HOUSING MARKET
The relentless rise in mortgage costs is one of the headaches that Mr. Sunak will inherit upon taking office. It’s already having an effect on the property market, where demand is slowing sharply and price growth has cooled, particularly in London.

Higher mortgage rates will also squeeze those looking to refinance in the coming year, and Mr. Sunak will be under pressure to ease the burden given many households are already under strain from rising energy costs and soaring inflation.

PUBLIC SERVICES
Chronic underfunding and a growing malaise among civil servants and public-sector workers make spending cuts controversial, limiting Mr. Sunak’s political headroom.

The UK already saw a wave of strikes throughout the summer — adding to a picture of “broken Britain” — as workers pushed back against below-inflation wage rises.

Recent signals the government will have to push through an austerity program and cut spending has already led to calls from trade unions to protest against any such measures. Mr. Sunak will need to balance the need for budget cuts against the risk of sparking more industrial action over the winter, as well as giving the opposition Labor Party another stick to use against the government.

HEALTHCARE
Overflowing hospitals and long ambulance waits have become the norm in the UK, and the expected winter surge in hospital admissions threatens to overwhelm health services already stricken with underfunding and staff shortages.

The removal of the Health and Social Care levy cuts £13 billion of additional funding for the National Health Service (NHS) that might have gone toward improving social care to free up hospital beds. That’s money, or savings, that will have to be found elsewhere in the budget.

On top of all that, NHS staff are seeing their wages eroded by rising inflation, and are threatening strike action over pay.

PENSIONS AND BENEFITS
With inflation above 10% and still yet to peak, the government is under pressure to raise benefit payments in line with inflation and uphold the so-called triple lock formula on pensions. It dictates that payments rise in line with inflation, earnings growth, or 2.5%, whichever is the highest.

If uprated in line with inflation, welfare spending could reach £277 billion, around half of which being pensions, hitting the budget hard at a time when fiscal headroom is already scarce.

BREXIT
Brexit remains a thorn in the side of the Conservative Party, with the new premier under pressure to deliver on new trade deals and growth.

The Northern Ireland protocol — which removes the need for a hard border with the Republic of Ireland by keeping the region in the European single market for goods — is a particular sticking point, with businesses pushing back against the increased red tape and costs associated with the new arrangement.

BANKING TAX
Uncertainty rankles banks around whether a planned cut in the banking surcharge from 8% to 3% will still take place under Mr. Sunak’s leadership. Amid a squeeze on spending, the government can little afford to lose more income to the Treasury coffers.

Banks claim the cut is needed to keep London competitive against other financial centers, with analysis from PwC stating that alongside corporation and other employment taxes, UK banks may pay a higher rate than any financial center that competes with London. Chancellor Jeremy Hunt, who is likely to keep his position, hasn’t quelled speculation about the tax, saying he’ll wait to address the issue during his fiscal statement on Oct. 31.

PARTY DIVISIONS
And finally, though importantly, Mr. Sunak will be tasked with uniting a Conservative Party that is now bitterly divided by infighting, failed leaderships and deep ideological differences. Any hope of competing against Labour at the next general election in 2024 will depend on rebuilding bridges within the party.

He also risks political impotency if he doesn’t succeed in uniting the Tories behind his political agenda. The specter of former Prime Minister Boris Johnson still lingers on, with some Johnson loyalists still blaming Mr. Sunak for his downfall. Mr. Sunak said Monday in his short address that “stability and unity” were needed to get through the current difficulties. — Bloomberg

World is in its ‘first truly global energy crisis’ — IEA’s Birol

SINGAPORE — Tightening markets for liquefied natural gas (LNG) worldwide and major oil producers cutting supply have put the world in the middle of “the first truly global energy crisis,” the head of the International Energy Agency (IEA) said on Tuesday.

Rising imports of LNG to Europe amid the Ukraine crisis and a potential rebound in Chinese appetite for the fuel will tighten the market as only 20 billion cubic meters of new LNG capacity will come to market next year, IEA Executive Director Fatih Birol said during the Singapore International Energy Week.

At the same time the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut 2 million barrels per day (bpd) of output is a “risky” decision as the IEA sees global oil demand growth of close to 2 million bpd this year, Mr. Birol said.

“(It is) especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession…I found this decision really unfortunate,” he said.

But Mr. Birol also said the current energy crisis could be a turning point in the history of energy for accelerating clean energy sources and for forming a sustainable and secured energy system.

“Energy security is the number one driver (of the energy transition),” said Mr. Birol, as countries see energy technologies and renewables as a solution. — Reuters

Emissions from China-invested coal plants equal to whole of Spain

PIXABAY

SHANGHAI — Carbon dioxide emissions from China-invested power plants overseas now stand at an estimated 245 million tons per year, about the same as the annual energy-related CO2 emissions from Spain or Thailand, new research showed on Tuesday.

Chinese companies and government-run investment banks have now financed a total of 171.6 GW of overseas power generation capacity, representing a total of 648 plants in 92 countries, with 113.5 GW already operational, research from Boston University’s Global Development Policy Center (GDPC) showed.

About half of that total capacity is fossil-fuel related, and the pipeline of projects could add another 100 million tons of annual CO2 emissions if they are all completed, said Cecilia Springer, a researcher at the center.

“China’s overseas power portfolio is still dominated by coal and large-scale hydropower, indicating that China can do more to implement its pledge to step up support for green and low-carbon energy in developing countries — especially wind and solar power,” she said.

The majority of the China-financed generation capacity in the planning stages now will employ low-carbon energy sources, the Boston University research said, indicating that a recent pledge to end overseas coal-financing is having an effect.

President Xi Jinping told the United Nations General Assembly last year that China would stop investing in overseas coal-fired power plants as part of its commitment to combat climate change, a move estimated to involve about $50 billion in investment.

It led to the immediate cancelation of several overseas projects, though some remained in a “grey area” and could still go ahead, experts said.

China is the world’s biggest greenhouse gas emitter as well as its largest coal consumer. — Reuters

Decade of central bank largesse haunts taxpayers as losses loom

REUTERS

FRANKFURT — For more than a decade since the global financial crisis, central bankers pumped trillions of dollars of cheap money into the financial system to keep the economy afloat. Now that largesse is coming back to haunt them – and taxpayers.

Having raised interest rates to fight runaway inflation, the Federal Reserve and its Europeanpeers must make huge interest payments to commercial banks on deposits the institutions themselves created via massive bond purchases and cheap loans.

The optics of this are dire enough at a time when millions of citizens struggle with a cost-of-living crisis. Worse, it means they will have little or no money to pay into the governments’ coffers and some central banks in Europe might even need taxpayer help.

“The central bank continues to send money to the banks, while we have to cut back on our expenditure,” Lex Hoogduin, an economics professor at the University of Groningen and a former board member at the Dutch central bank, said. “So, it’s mostly a political issue.”

Indeed, calls are growing to curb interest payments to banks, much to the dismay of a sector which sees itself as already having borne the brunt of a decade of low rates.

Among those who want lenders to take the hit is Michiel Hoogeveen, a Dutch lawmaker on the European Parliament’s economic committee, which oversees the ECB.

“If the taxpayer ends up paying the bill, that will be very unfair,” he told Reuters.

The Bank of England’s (BoE) former deputy governor Paul Tucker also urged the BoE to cut the interest on part of those reserves and save 30-45 billion pounds ($84.93 billion) in each of the next two financial years.

Morgan Stanley estimates that every percentage point increase in the BoE’s rate lowers remittances to the Treasury by 10 billion pounds per year.

The British government, which received 120 billion pounds in profits from the BoE since 2009, has already earmarked a transfer of 11 billion pounds for the central bank.

The US Treasury will not need to worry about bailing out the Fed, which can simply defer any loss. But it will be missing the $50-100 billion or so that it has been receiving from the central bank every year since the financial crisis.

This meant Fed chair Jerome Powell was likely to face heat from lawmakers because funds will instead flow to banks, many of which are foreign.

“The Fed won’t be bankrupt financially but it could be politically,” said Derek Tang, an economist at LH Meyer, a research firm.

ROD FOR OWN BACK
For none is the problem more acute than for the ECB, which this week will discuss options to cut its interest bill amid a web of political, legal and financial complications.

The central bank of the 19 countries that share the euro has made a rod for its own back by lending money at negative rates to banks.

These are now set to make a guaranteed profit by simply parking that cash back at their national central bank, earning a 0.75% annual interest rate that is likely to double this week and is seen rising to 3% next year.

This arbitrage will net banks 31-34.9 billion euros if the rate on deposits peaks between 2.5% and 4.5%, according to Eric Dor, the director of economic studies at IESEG School of Management in Paris.

It will contribute to losses of around 40 billion euros for euro zone central banks next year, according to Morgan Stanley.

Ironically, the central banks of the most fiscally prudent countries — the Netherlands, Germany and, to a lesser extent, Belgium — will be the hardest-hit because they warehouse a larger share of bank deposits and the bonds they bought on the ECB’s behalf yield zero or less.

They have all warned of upcoming losses and the Dutch central bank openly said it risked needing a bailout, although finance minister Sigrid Kaag later cautioned this was “not yet on the table”.

By contrast, central banks with less cash and higher-yielding bonds in Italy, Spain and Greece were likely to fare better.

“It is clear that the Dutch and German citizens have never voted for such redistribution through the backdoor,” said ISEG’s Dor.

Johan Van Overtveldt, the Belgian chair of the EU Parliament’s budget committee, said this may even make future decisions more difficult by fueling the resentment of taxpayers in the north of the bloc towards their southern counterparts.

On the other hand, the notion of cutting banks’ remuneration was already drawing the ire of the industry.

German banking lobby Deutsche Kreditwirtschaft said any “change of the contractual conditions could impair the trust” in central banks and Spanish lender Bankinter said it was not a “good idea”.

Citi estimates that Italian and Spanish banks were benefiting the most from this so called “carry trade” and would therefore be the biggest losers if it was removed.

But the status quo may just be too economically and politically painful.

An increase in the deposit rate to 3% will worsen the euro zone’s fiscal balance by 1% of GDP in the first year, according to French insurer AXA.

“If taxpayers have to pay the bill this may result in political instability and changes of government in Europe,” Dorien Rookmaker, a Dutch member of the European Parliament’s economic committee, said. “It is a dangerous path.” — Reuters

Adidas planning to end its partnership with Kanye West over rash of ‘offensive behavior’

REUTERS

GERMAN SPORTING goods maker Adidas AG plans to end its partnership with Kanye West, following a rash of offensive behavior from the American rapper and designer, Bloomberg News said on Tuesday, citing people familiar with the matter.

Adidas may announce the move as early as Tuesday, the report added.

The company did not immediately respond to a Reuters’ request for comment, while a lawyer representing Kanye West, who now goes by Ye, did not immediately respond to a request for comment.

Adidas put the partnership under review earlier in October “after repeated efforts to privately resolve the situation.”

Ye has courted controversy in recent months by publicly ending major corporate tie-ups and for outbursts on social media against other celebrities. His Twitter and Instagram accounts were restricted, with the social media platforms saying they removed his posts that online users condemned as anti-Semitic.

In now-deleted Instagram posts from earlier this year, the multiple Grammy award-winning artist accused Adidas and US apparel retailer Gap, Inc. of failing to build contractually promised permanent stores for products from his Yeezy fashion line.

He also accused Adidas of stealing his designs for its own products.

Gap and Ye ended their partnership in September. European fashion house Balenciaga has also cut ties with Ye, according to media reports.

Adidas poached Ye from rival Nike, Inc. in 2013 and agreed to a new long-term partnership in 2016 in what the company then called “the most significant partnership created between a non-athlete and a sports brand.”

The tie-up has produced several hot-selling “Yeezy” branded Adidas sneakers that could cost anywhere between $200 and $700. The partnership also helped the German brand close the gap with Nike in the US market.

Yeezy generates about 1.5 billion euros ($1.47 billion) in annual sales for Adidas, making up a little over 7% of the company’s total revenue, according to estimates from Telsey Advisory Group.

Shares of the company, which cut its full-year forecast last week, were down about 3% on the report. — Reuters

Microsoft powers up search for Chinese gaming hits in race against Sony

PIXABAY

HONG KONG — Microsoft Corp. is stocking up on Chinese video game content to emulate Sony Group Corp.’s success with Genshin Impact, sources said, solidifying China’s transition from a land only of players to a hub of blockbuster developers. 

The US software giant and Japan’s vanguard of technology have for some years been offering big money to small developers to nurture programs and license titles, but the impact of Genshin Impact has added a sense of urgency, sources said. 

The action role-playing game from budding Shanghai studio miHoYo has generated billions of dollars since its release two years ago, and raised the bar in multi-player, cross-platform games — the type sources said Microsoft and Sony seek in China for their Game Pass and PlayStation Plus subscription services. 

Growing Western interest in Chinese games reflects a maturing of China’s game development industry, analysts said. Chinese games are now on a par with big-budget Western games, said Daniel Ahmad, senior analyst at research firm Niko Partners. 

“Chinese game developers are trying to standardize their development tools, create advanced production processes, invest in really large-scale teams,” Mr. Ahmad said. “Ultimately, that helps provide them with the competitive edge to reach a broad audience both in terms of geography and platforms.” 

Microsoft has been building a team to scout for Chinese games, two industry sources said. The Xbox maker mainly filled its subscription roster with big-brand titles but is now wooing even independent studios with big-money offers, they said. 

At the same time, filings showed Microsoft is expanding its subscription service to personal computers and handheld devices, increasing the appeal of Chinese developers such as miHoYo which have developed a reputation for multi-player, cross-platform compatibility — with Genshin Impact being a prime example. 

One executive, whose studio signed a licensing deal with Microsoft three years ago to feature its game on Game Pass, said the US firm recently offered a licensing deal many times bigger for a sequel. 

“We are not signing it yet because we think that when we fully complete our game, it will get an even better offer,” the executive said. 

Illustrating the money involved, filings showed Microsoft paid $2.5 million to feature action game ARK: Survival Evolved on Game Pass and $2.3 million for sequel ARK 2 — both from US developer Studio Wildcard, owned by China’s Snail Games. 

An executive at another developer, Recreate Games in Shanghai, said his company signed a deal with Microsoft last year for its upcoming multi-player title Party Animals to launch exclusively on Xbox. 

“Xbox contacted many projects in China and these projects primarily focus on developing console and PC games,” said Chief Executive Luo Zixiong. 

Microsoft did not respond to emailed requests for comment. 

PLAYING CATCH-UP
Microsoft was slower off the mark in China compared with Sony. The Japanese firm launched gaming accelerator program “China Hero Project” in 2017 aimed at helping Chinese developers publish games on its PlayStation. It has supported 17 titles of which seven have reached the market. 

“We’ve been quiet for the past two years. But the program is still very much humming along,” Kuangyi Zhou, former manager of the China Hero Project, told Reuters in April. “We are proud of all the games which have successfully emerged from the program… There is no doubt that a new batch will be coming.” 

In 2019, Sony partnered miHoYo, a little-known studio which was developing Genshin Impact. The game — a global hit when it was released a year later — is available for personal computers and handheld devices, but the console version is exclusively on PlayStation. 

Microsoft regretted missing out on Genshin Impact, two people familiar with the matter said. It spoke to miHoYo early in the game’s development but did not reach a deal, one of them said. The other person said the experience is the driving force behind Microsoft’s more active pursuit of Chinese developers. 

“Picking up Genshin Impact made Sony a lot of money,” the second person said, declining to be identified because the information was not public. 

There is no public data on console revenue from Genshin Impact, but data from Sensor Tower put the figure at $3 billion for mobile devices as of May. 

MARKET EVOLUTION
For much of the 21st century, Chinese gamers mostly played imported titles as home-grown games were viewed as being poorer in production value. Even Chinese gaming leader Tencent Holdings Ltd. started out publishing foreign games at home. 

As the market grew into the world’s largest, local studios increasingly invested in developing better-quality games. The trend accelerated with regulatory restrictions on new games and limits on the number of imports, and benefited from the return of engineers who had worked at top-tier studios such as Ubisoft Entertainment SA and Activision Blizzard Inc. 

Gaming executives now point to Genshin Impact as a global industry milestone, lauding its production value and seamless cross-platform game play. Apple Inc. even used the game to demonstrate the power of its premium devices including the new iPad Air equipped with its latest M1 processor chip. 

Another milestone was 2021’s Naraka: Bladepoint from NetEase Inc., China’s second-largest games firm. While most Chinese titles are free to play and profit from in-game sales, Naraka: Bladepoint sold over 10 million copies despite its $20 price, reflecting confidence in its production value. 

The game caught the attention of both Microsoft and Sony, two sources told Reuters. One of them said NetEase prioritised Microsoft which made the game a Game Pass exclusive in June. — Reuters

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