Tencent and NetEase Race to Secure Their Positions: What Does UGC Really Mean?

"Game Tea Roundtable" is a Q&A series launched by Game Tea House. Each week, we’ll discuss various topics with industry professionals. We also welcome you to share your thoughts in the comments section. We’ll award a Steam key for a game to the two users with the most likes in the comments for each episode.

User-generated content (UGC) seems to be becoming a standard feature in top-tier games.

Peace Elite’s “Oasis Awakening” event surpassed 33 million daily active users, with the single UGC mode “Eat Pills and Cultivate Immortality” generating over 20 million yuan in monthly revenue; Egg Party’s creator base has surpassed the 50 million mark; Genshin Impact’s “Thousand Star Realm” has garnered widespread attention since its launch;"Honor of Kings" has also released numerous UGC-related job openings—all signs point to UGC evolving from a peripheral "cherry on top" feature into a strategic priority for top-tier games.

User-generated content is by no means a new concept. The map editor in *Warcraft III* gave rise to the MOBA genre, and *Roblox* has built a market capitalization of tens of billions of dollars on the strength of its UGC ecosystem; the potential of this approach has long been proven time and again.

However, in the domestic market, UGC has long occupied a somewhat awkward position: while major companies occasionally test the waters, few have managed to establish a truly viable business model; and while user enthusiasm remains high, it is often stifled by technical barriers and a lack of incentive mechanisms.

However, over the past two years, this situation appears to have shifted significantly. Tencent, NetEase, and miHoYo have all ramped up their investments in the UGC sector almost simultaneously, and have already achieved tangible results: creators are generating substantial revenue, and player engagement is steadily increasing thanks to a continuous supply of content. A closed-loop ecosystem—where “platforms provide tools and traffic, creators contribute content and creativity, and players enjoy fresh experiences”—is proving its viability.

The logic driving this collective shift is straightforward. Traditional R&D cycles can no longer keep pace with users’ ever-increasing consumption of content, while UGC offers the potential to expand content at a lower marginal cost; Gen Z users, who have grown up alongside short-video platforms, naturally possess a stronger inclination toward content creation; and as leading products generally enter a phase of maintaining existing user bases, UGC has also become a key strategy for extending product lifecycles and re-engaging users.

What have the platforms that have achieved initial success done right? Is the sudden surge in UGC merely a coincidence in a few isolated cases, or is it a replicable industry trend?

For this episode of "Game & Tea Roundtable," we invited UGC creators and industry professionals to discuss the question: "What does UGC really mean for today's gaming market?"

▍Huang Xinlong, Director of Game Design for "Peace Elite"

First, we’re offering developers a more “streamlined” path to entrepreneurship. Currently, for small and medium-sized teams, the costs of art and servers are prohibitively high when developing games independently. By opening up our mature game platform and editor, we aim to enable teams and individuals with ideas to validate their gameplay concepts at virtually no cost. The tools are ready to use, the user base is already established, and the revenue-sharing model is transparent. This way, the intrinsic value of creativity can emerge more directly, allowing fresh talent and unexpected, innovative gameplay to continually emerge within the industry.

Second, we aim to make the player experience “richer.” By putting creation tools in the hands of the community, we’ve essentially launched a “never-ending UGC content engine.” Whether it’s improved versions of popular modes or completely unexpected new gameplay, new content can emerge quickly. The ultimate goal is to ensure that whenever players open the game, there’s always something new to play—and much of that content comes from the creativity of other players and developers.

Third, we aim to cultivate a "fertile ground for innovation" within the industry. Once mainstream platforms open up, a wide variety of new gameplay concepts can be rapidly tested, iterated upon, and refined here at minimal cost. This is beneficial for the entire industry, as the prototype for the next nationwide sensation might just emerge from a map uploaded to our platform by a small studio. This approach is far more effective at driving the evolution of gameplay itself than any single company acting alone.

Overall, Peace Elite’s approach to UGC is rooted in our belief in the creativity of both players and developers. By providing user-friendly tools, platforms, and services, we aim to connect talented developers with players eager for new content, allowing great ideas to flourish naturally so that everyone can enjoy the game to the fullest.

▍Dai Xiaofan, Producer of *Eating Pills to Cultivate Immortality*

The UGC gaming market is bound to take off—it’s a mutual attraction between consumers and the market.

First, the platformization of high-DAU games: Top competitive games boast high quality, engaging gameplay, and robust social systems, and—backed by major studios—offer superior service. Essentially, they represent a game-changer for traditional mobile app stores, attracting a large pool of users with similar interests in a manner akin to interest-based communities. Consequently, the challenge for these high-DAU platforms is how to diversify their offerings to meet the needs of these users.

Second, the emergence of Gen Z’s creative potential: Having grown up in the internet age, Gen Z members have benefited from better educational opportunities and well-rounded skills. For creative work like game development—which requires both creativity and logical thinking—they are better suited in terms of skills and more naturally drawn to it in terms of interest. With the surge in popular high-DAU games releasing UGC editors, this mutual alignment has become inevitable.

▍Wang Bing, Head of the UGC Incubator Kaiwu She

I think this is an inevitable trend in the history of gaming:

First: From the perspective of communication media

UGC is, in itself, a form of content creation. With the widespread adoption of UGC platforms like Douyin, Kuaishou, and Video Account, the medium through which content is disseminated has undergone a profound transformation. This shift in the medium of dissemination is bound to reshape the mindset of young users and create new opportunities: could the power to create games also be handed over to ordinary players? If so, what would that look like? This opens up a vast realm of possibilities.

Second: From the perspective of how the gameplay originated

Let’s take a look back at some of the game concepts that have become wildly popular in the gaming industry: the MOBA genre that emerged in the early years, followed by battle royale games, then auto-battler games, roguelike games, the pet-catching games that took off in 2023, and the recent “search-fight-retreat” gameplay. Undoubtedly, it is the gameplay that defines the genre—but where do these gameplay styles originate? It’s a fascinating process.Over the years, truly innovative and original gameplay mechanics in the gaming industry have actually been gradually decreasing, while player-created gameplay styles continue to emerge.

Finally, from a business perspective:

Every game company owner has faced a relatively objective challenge: “Where is your next product?” Once a product has been launched and has been operating successfully for 3–5 years, it will likely begin to decline. Due to various objective factors, it is difficult to maintain a lasting competitive edge through continued operation. This presents a core question for all game companies: After all these years in the industry, what have you built up? Is it methodology, game mechanics, or something else?

On another level: The pace at which DLC is released for older games doesn’t fully meet user demand. Players can consume a year’s worth of DLC in just two months, gradually leading to a dilemma: fast updates mean skyrocketing costs, while slow updates result in user churn.

So, is there a product that could address the above issues on a phased basis? At present, there may not be a perfect solution, but in discussions with industry producers, there is a consensus that UGC can extend a product’s lifecycle and have a positive impact on user retention. After all, everyone wants their product to retain users. When OGC content is insufficient, UGC serves as an excellent supplement, opening up many new possibilities for the product.The most immediate benefit is that when users want to try new gameplay features, they don’t need to switch platforms or products. Instead, they can directly leverage the existing product’s assets and dive right in—the barrier to entry is extremely low.

In closing, I’d like to say that players’ pursuit of “play” is endless.

▍He Shihao, Founder & CEO of Antitongue Technology

Major tech companies are investing in UGC gaming platforms primarily because this sector is reshaping the gaming market, with UGC games emerging as the next generation of social platforms. This trend is particularly evident among the Alpha generation, as it is becoming a tangible prototype of the metaverse. The concept of “user-generated value” in the gaming industry is no longer merely theoretical; it is a reality being put into practice by young people around the world.

Take *Roblox* as an example: it is not merely a gaming platform, but an ecosystem where young people express their creativity and engage socially. Users create endless possibilities through user-generated content (UGC), which directly drives the platform’s user retention and growth.In today’s market, where low-code editors are becoming increasingly widespread and AI-powered games are poised to take off, demand for personalized experiences is set to explode. The UGC sector offers a low-barrier, high-return entry point, enabling more people to participate in value creation. This is not merely a business opportunity but an engine for industry innovation, helping developers rapidly iterate on their products and reach users worldwide.

As an early entrant in this field, I firmly believe in the vast potential of UGC games and welcome more developers to join us in exploring and building this vibrant ecosystem. At Mockingbird, we offer end-to-end 0-to-1 partnerships—from education and incubation to publishing—specifically tailored for UGC games. We invite you to join us in riding the wave in this blue ocean!

▍Tian Haibo, CEO of Dongji Liugan

We’ve been producing UGC ever since *Artisan Wood*, and *The 24 Solar Terms* is no exception.

Cultural dissemination requires player participation, and UGC is the best way to achieve this. In the game *Craftwood*, we (the developers) created 56 core levels, but players have independently created and uploaded over 140,000 levels. The game’s achievement of 10 million registered users and a steady monthly growth of 100,000 new users is largely attributable to the appeal of its UGC ecosystem, which has further strengthened our resolve to deepen our commitment to this model.

In our view, UGC not only helps fill content gaps but also serves as a driving force for content dissemination. One of the core motivations for creators is to share their work, which naturally fuels the organic spread of content. That is why we have consistently adhered to a “Culture + UGC” product strategy.

In addition, the success of *Roblox* and the industry’s long-standing lack of tangible products based on the “metaverse” concept may also be factors driving top-tier games to explore UGC as a new direction.

▍Zhihu Answerer: "It tastes awful"

UGC is like clearing land; you can never predict what interesting things might grow there.

To give a recent example, Duckford launched the Creative Workshop—which is a form of UGC—and within a few days, community players had already added kill sounds, looting effects, multiplayer mods, and first-person view. While Duckford certainly has an advantage in terms of coding—editing isn’t as labor-intensive as it is for big-budget games—if they hadn’t opened the Creative Workshop, you’d be expecting that five-person team to hand-code everything bit by bit, and they’d probably be at it until next year.

So the purpose of UGC isn’t to enable everyone to grow something good in their garden, but to provide fertile soil for promising seeds to thrive, so that they can eventually grow into mighty trees.

As we all know, seeds take time to grow; you can’t expect a seed planted yesterday to bear fruit today. Fermentation takes time and a bit of luck. As long as there’s enough creative freedom and a large enough pool of creators, something interesting is bound to sprout from this soil sooner or later.