During our time in China last week, Gamasutra visited the 15th floor Shanghai offices of major worldwide publisher Ubisoft, to take the pulse of a development studio that is, in many ways, a parental figure to today's Western-facing development scene in the vibrant city. We spoke to Ubisoft Shanghai studio head Corinne Le Roy about the unique circumstances behind Ubisoft's second-largest development studio, and why the company is still the only developer making AAA original IP console titles from scratch in China. Ubisoft's China Status Quo Starting out with the basics, Le Roy explained to us: "This company was set up in Shanghai at the end of the 1996. Today, we have 500 full-time employees." Within the 13 studios in Ubisoft, this total is surpassed only by the Ubisoft Montreal development complex, making Shanghai a surprisingly low-profile powerhouse within Ubi. Le Roy also noted that the company expands with temporary testers at project completion times, but commented that overall: "We have grown quite a lot in 2004 and 2005... we are consolidating this growth by training the junior staff... [and will] start the growth again in 2007." Ubisoft Shanghai is the only Chinese game development studio to work on AAA-style console products from scratch, including all elements of development, right now. Le Roy noted that "...sometimes we share the development of games" with other Ubisoft offices, for example for Splinter Cell Double Agent for Xbox 360. For that title, the offline element is being done in Shanghai, and done online in the South of France. But overall, it was explained: "today we have teams on 6 different games" at the Shanghai office. These include the aforementioned Splinter Cell, plus Brothers In Arms for PSP, and Le Roy revealed: "We are working on a new license creation - original IP - we are creating the entire IP in Shanghai." In fact, this expansion toward from-scratch game creation and original IP has been key to attracting quality foreign employees, according to Le Roy, who commented: "We have less expatriates when we were doing only porting," the job of the Shanghai office in its first few years of operation. Ubisoft's China Status Quo As those who have read Gamasutra's China coverage may have noticed, a great deal of other significant Shanghai-based companies, including a number of the notable outsourcing firms, are comprised of ex-Ubisoft Shanghai staff. We put this to Le Roy, not particularly suggesting that Ubisoft was poor at retaining employees, rather that there was plenty of opportunity out there, and she agreed: "We understand that - you don't have to sign [to work for us] forever. We try to do everything we can. We can't always retain all of [our senior employees]. Venture capitalists... can give you money." Nonetheless, she pointed out that it is Ubisoft that has built up a lot of the expertise in the Shanghai game scene from scratch: "I think it took time for us to reach this level... The Chinese government was very reluctant to give a license to us as a 100% independent company. This was a difficulty." She also noted: "People from university were not as prepared to work in a video game company" when the company was initially formed. But, now that's all changed, and Ubisoft is clearly a prime employer as the Shanghai scene burgeons. Le Roy notes of today's putative Chinese game professional artist: "We don't even bother looking at their resume if they don't use 3DS Max or Photoshop [at least at a basic level]... every year the level of students is higher." Non-Compete Controversy? One particularly interesting subject that came up during our stay in China was the non-compete clause. Ubisoft is notable (or notorious, depending on who you speak to), on insisting on a 6-month non-compete in contracts when you sign up to be an employee of Ubisoft, and this has already led to notable controversy in the Montreal area. When we asked Le Roy to explain the intention behind the non-compete, she firstly explained: "I don't think it's the non-compete that helps us gain the loyalty of employees," going on to note: "We develop a lot of people... the quality of what they are doing relies on them." She concluded that employees "can stop their contract at any time," and that "Ubisoft as a company has a financial duty" to ensure that the people it trains are not taken away quite so easily. Piracy Perspectives Le Roy was most passionate during the interview when discussing console piracy and the 'Catch 22' type situation for the Chinese market. She bemoaned the business model of console game development as it related to China, noting that "paying royalties to the first party are more than [any affordable Chinese] public price," commenting: "The first parties have to adjust... [it's] not commercially interesting for publishers." With first-party fees as much as $8, it's impossible to penetrate the Chinese market with legitimate console games, currently. Le Roy then related a previous Ubisoft publishing experiment, before online gaming and microtransactions took off and supplanted physical distribution, with a "massive distribution network" for legitimate PC games in China. She noted that you can "decrease price when you can sell a huge number of copies," and Ubisoft sold games in newsstands for 3 or 4 US dollars, a possibly sustainable publishing model for China. She was particularly vehement on this point: "Chinese consumers are ready to pay [for real, legitimate games]. We have to change this image for Westerners - we have people who are utilizing the economical differences to create a counterfeiting market." She continued: "Consumers themselves don't want to buy fake products. They want to buy the real ones if they can afford it." Conclusion Interestingly, although Le Roy's development studio makes games almost entirely for the foreign market, the studio still publishes a few legitimate PC titles for the Chinese market, as previous referenced, and Le Roy concludes: "We want to keep maintaining relations with the market." In fact, she notes: "We are not involved a lot in casual games or MMO games... [but] we are still keeping an eye on it, and are prepared to enter this market." It's unclear whether any such entry would be in such a major way as, say, Electronic Arts' major push into the region, but it's telling and interesting that Ubisoft has not completely given up on the Chinese market in its push to make great worldwide games from China.