The NetEase Games booth at the China Joy conference in Shanghai on July 30, 2021.

Arjun Kharpal | CNBC

Chinese internet giant NetEase has opened another gaming studio in Japan as the company continues to expand overseas.

The Hangzhou-headquartered company hired Toshihiro Nagoshi, who was formerly from Japanese game developer Sega, to run the new Nagoshi Studio in Tokyo, Japan.

The studio “will focus on developing high-quality console titles that will be released globally.”

NetEase has been less aggressive on its international expansion than its rival Tencent. The latter has looked to go global via acquisitions and investments in smaller gaming companies. NetEase, meanwhile, has been setting up studios and taking minor stakes in other companies.

Tencent and NetEase have traditionally been focused on PC and mobile gaming, which are extremely popular platforms to play on in China. The fact that Nagoshi Studio is focused on console titles highlights NetEase’s push to appeal to an audience beyond China, where console gaming is popular.

Console gaming accounted for nearly 28% of revenue of the $180.3 billion global gaming market last year, according to market research firm Newzoo. But in China, where consoles were banned for about 14 years up until 2014, the market is significantly smaller.

That’s why Chinese gaming firms like NetEase and Tencent are focusing on console games as part of their international push.

In 2020, NetEase opened Sakura Studio, another gaming venture in Japan with a focus on console gaming.

In an interview with CNBC last year, Hu Zhipeng, vice president at NetEase and one of the top bosses of the technology giant’s video games business, called the console market “pretty attractive.”

He also said that he aims to have 50% of its gaming revenue come from overseas in the future, up from around 10% now.

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