Source: Dissertation Reviews (2/26/22)
New Frontier of Digital Media and Entertainment: Exploring Entrepreneurship in the Chinese Digital Game Industry, Ph.D. Dissertation, by Gejun Huang, University of Texas at Austin, 2020. 179 pp.
By Daniel Dooghan
Gejun Huang’s dissertation seeks to understand how gaming entrepreneurship works in China. Rather than adopting a top-down approach through the analysis of government policy, Huang goes to the entrepreneurs themselves to learn how—and if—government and industry supports function as intended. The dissertation employs a dataset of 33 interviews with gaming entrepreneurs in Shanghai collected by the author.
The first chapter constitutes an introduction to the work as a whole. It summarizes the professional and regulatory environments for the Chinese game industry. Huang notes that Chinese developers have benefited from protectionism and nationalist cultural programs. However, the growth of the gaming sector has led to a more global focus for game makers, who are encouraged to parlay their protected domestic profits into global expansion. The viability of Chinese games overseas, in part due to the rise of games with culturally agnostic content, has enabled new entrepreneurs to break into the industry despite the power of established players.
Huang’s main theoretical lens is that of the entrepreneurial ecosystem. This leads him to examine the organizations, policies, and people that facilitate entrepreneurial activities in an area. Of particular interest for this dissertation is how government support for entrepreneurship both nationally and locally applies to the game industry. The establishment of a supportive infrastructure for entrepreneurship—incubators, co-working spaces—is one avenue of local government support. However, these resources may not be accessible or even known to entrepreneurs without sufficient industry connections. Thus, Huang looks at how social capital affects how entrepreneurs access resources in their local ecosystem. Given its centrality to the dissertation, Huang gives an account of the literature on social capital and its variable effects on entrepreneurial ventures at different stages of their development. Huang derives two research questions from his theoretical presentation of entrepreneurial ecosystems and social capital. The first asks how gaming entrepreneurs navigate their local ecosystems. The second asks about how these entrepreneurs employ their social capital when both conceiving of and building their businesses.
Chapter Two examines how gaming entrepreneurs use government-supported resources, and whether those resources effectively drive the industry. It explores how government policy has facilitated Shanghai’s growth as a center of game development. Among these policies is an award paid to companies that make significant inroads in foreign markets. Financial support is also tied to implementing the government’s cultural line in games. Huang asks how Shanghai’s local government has affected the development of an entrepreneurial ecosystem through its sponsorship of Creative Industry Clusters: supporting infrastructure for new business ventures. He explains his sampling methodology for finding interview subjects, whom he then contextualizes among gaming entrepreneurs across China. He also gives an account of the offices and activities of the Shanghai government that support the local gaming industry.
Despite the availability and stated goals of governmental financial support, Huang found that nearly two-thirds of his subjects did not receive any. Developers focusing on trendy technologies such as blockchain and augmented reality were more likely to receive funding than were more conventional developers. Moreover, many developers reported obstacles to accessing government programs due to limited awareness of or facility with their applications. Others said that the financial resources available were insufficiently useful, and were skeptical of the grant review process.
Infrastructural supports, such as co-working spaces and incubators got similarly mixed reviews. Some entrepreneurs liked the availability of business services, but others found that they were not especially relevant to the game industry and imposed significant bureaucratic burdens. Collaborations based on shared interests in particular technologies, facilitated by incubators, got more positive reviews. The chapter concludes that the Shanghai government’s policies supporting technology sector startups broadly could be better calibrated to benefit gaming entrepreneurs.
Chapter Three examines how gaming entrepreneurs identify market opportunities, noting the ability of startups to compete in established markets. However, the entrenchment of China’s major game makers and the government approval process for games pose challenges for entrepreneurs. Huang looks at the entrepreneurial activities of China’s gaming startups through social capital theory, looking at how entrepreneurs leverage their social capital to first recognize opportunities and then evaluate them. He follows the same interview-based strategy from the previous chapter, and groups the subjects according to their market focus instead of the hardware focus of earlier research; these categories are commercial, indie, and fledgling. Commercial entrepreneurs look to develop games that are readily salable; the indie entrepreneur is largely a self-appellation based on models of game development that favor passion projects and less concern for immediate marketability. The fledgling group works with emerging technologies.
All three groups downplayed the utility of social capital for opportunity recognition, arguing instead that past market success or individual passion initially shaped their projects. By contrast, Huang’s subjects said that social capital was more useful while evaluating opportunities, since entrepreneurs could draw on networks with market experience or familiarity with emerging technologies. However, those working in more established sectors of the game industry occasionally faced negative reactions from their professional networks regarding new ventures. The comparative agility of independent and fledgling entrepreneurs provided some compensation for their less developed professional networks.
Continuing with the same dataset and the social capital theory of the previous chapter, Chapter Four examines how gaming entrepreneurs use their social capital to secure funding for their ventures. Huang notes that more conventional funding sources, such as banks, find gaming ventures to be risky investments, so he investigates the broader entrepreneurial ecosystem in Shanghai to see how gaming entrepreneurs seek financing. The chapter maintains Chapter Three’s tripartite division of entrepreneurs by industry category.
These different categories showed significant differences in their funding sources. Commercial and fledgling developers both drew on venture capital and government resources at similar rates, whereas indie developers received less funding from the government, and none from venture capitalists. By contrast, indie developers relied on angel investors at a higher rate than either fledgling or commercial entrepreneurs. Perhaps unsurprisingly, commercial entrepreneurs did not receive funding from incubators and accelerators, but fledgling entrepreneurs made the most use of them, followed by indie developers. All groups drew on personal funds or those drawn from their immediate circles, though indie entrepreneurs relied on these more heavily than the other groups.
Contacts from earlier industry work proved valuable in securing angel investments for all groups. Similarly, commercial entrepreneurs were able to take advantage of their extensive professional contacts to secure venture capital. Social connections also were useful in navigating the application processes for government funding among all groups. True to their name, indie developers resisted the structure that venture capital or accelerators might impose. By contrast, fledgling entrepreneurs benefited financially from the contacts available through the structure of incubators and accelerators.
The interviewed entrepreneurs saw some of these funding sources as unsustainable. Many saw venture capital and accelerator support as geared toward quickly turning out a salable product rather than building a business. The obstacles to receiving government funding discouraged the cultivation of contacts in that sector. For all groups, building social relationships with angel investors, often through gaming industry events, provided useful and flexible sources of funding.
All groups were able to access financial resources through social networks largely drawn on previous colleagues and industry contacts. However, Huang suggests that Shanghai’s entrepreneurial ecosystem is not efficiently providing new ventures with access to capital, leading to an overreliance on angel investors and personal funds rather than a more expansive fundraising strategy. He recommends further research into the ways that different funding sources function structurally within Shanghai’s entrepreneurial economy.
Based on the findings of his three approaches to the dataset, Huang concludes in Chapter Five that Shanghai’s cultural policy does not have significant traction among the city’s gaming entrepreneurs. Although some gaming entrepreneurs, particularly those working with emergent technologies, benefited from these policies, others saw them as ineffective or irrelevant with regard to the gaming sector. Programs like startup accelerators posed bureaucratic and managerial obstacles for many gaming entrepreneurs, and often appeared to be targeted at fostering growth in technology fields other than gaming. This misalignment extends to the cultural aims of these policies when compared to the creative ambitions of some entrepreneurs.
Nevertheless, Huang suggests that some of these issues may be rectified by continued research on and engagement with gaming entrepreneurs directly rather than applying existing critical models to them. This atomic, foundational engagement with Shanghai’s entrepreneurial ecosystem allows Huang to identify how entrepreneurs actually employ the resources available to them, as well as the reasons why they might not. The dissertation’s emphasis on social networks and resulting revelation of the importance of angel investors to gaming entrepreneurs shows that the private sector plays a major role in facilitating the growth of Shanghai’s game industry.
Finally, Huang recommends policy changes and offers further suggestions for future research. He proposes that government policy toward new creative enterprises better understand their differences from more established businesses, particularly when considering the nature of game development. He also argues that these developers should be the focus of government outreach to ensure that its policies toward creative and cultural industries are having the desired effects among gaming entrepreneurs.
For the entrepreneurs themselves, Huang recommends targeting their networking activities based on their commercial ambitions, as his interviews revealed that different types of gaming entrepreneurs productively drew on different types of business and financial support. All types, though, could reap benefits from building social networks based on past work in the industry and engagement with other players in the field, both aspiring and established. Given the present fundraising situation, using these contacts to find angel investors should be a priority over attempting to draw on other financial supports.
Looking forward, Huang suggests that future research should expand the dataset, turning from the qualitative to the quantitative. This will allow for a broader, more comprehensive understanding of the gaming entrepreneurs in China. He also sees the expansion of this kind of inquiry as bringing greater demographic resolution, and offering ways of understanding and addressing gender and class disparities within the industry. Similarly, looking at more components of the entrepreneurial ecosystem beyond funding sources, for example, will contribute to a more comprehensive picture of the motivations and formations of gaming entrepreneurs.
Supplementary materials helpfully include the survey questions, brief descriptions of the interviewees, and a short glossary of key terms. 15 tables and figures concisely present key points and data throughout the dissertation. The bibliography includes 176 entries from English and Chinese sources.
Bio:
Daniel Dooghan is Associate Professor and Chair of Department of English and Writing at the University of Tampa, USA. He researches patterns of exchange in world literature and philosophy, particularly between China and Europe. His work examines the effects of translation on globalization and political discourse. Dooghan frequently speaks at conferences on problems of translation, modern Chinese literature and world literature pedagogy. He is writing a book about the twentieth-century Chinese author Lu Xun and is beginning a project on the role of world literature in university curricula and scholarly research. Additionally, he studied Chinese and taught English in Taiwan.