Posts Tagged ‘Asia’

Shanda Interactive Entertainment spins off Shanda Games – seeks IPO

Monday, September 7th, 2009

Late last week, Chinese online gaming giant Shanda Interactive Entertainment announced that they will be spinning off their gaming division, now to be known as Shanda Games Ltd., and will be seeking a new NASDAQ IPO. The parent company is currently trading under the symbol SNDA, and Shanda Games is expected to trade under the symbol GAME.

ShandaLike many of their Chinese competition, Shanda operates a number of freemium/item sales (microtransaction based) titles, along with pay-to-play time based games. Amongst the Shanda stables of games, they operate NCSoft’s Aion: The Tower of Eternity, the company’s top money maker. This pay-to-play, time based title is singularly responsible for Shanda’s record breaking revenue highs in 2009. With 8.6 million paying accounts, Shanda operates eighteen MMORPG’s and eleven casual games, with another sixteen MMO’s and eight casual’s in development, the firm shows no signs of slowing their rapid growth.

95 percent of Shanda’s revenues are generated by their gaming unit, thereby making Shanda Games, technically the subsidiary, a much larger organization than the (technically) parent company. Outside of games, the company is also working in the e-book publishing and distribution service, as well as a digital music service. This move harkens to Shanda’s competitor Sohu’s spin off of their gaming unit Changyou, which garnered a $146 million NASDAQ IPO earlier this year.

Now in the hands of the SEC (Securities and Exchange Commission), with underwriting provided by Goldman Sachs Asia and JP Morgan Securities. Shanda Games is looking to raise as much as $800 million in this IPO. The IPO follows a record quarter of growth, with Q2 revenues up 48 percent year-over-year to $181 million.

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Free-to-play Maple Story ranks among top moneymaking MMO’s of 2008.

Monday, February 2nd, 2009

DFC Intelligence is gearing up to publish a comprehensive study of MMO worlds next month, according to GigaOm.  Wagner James Au got a special preview of the report and shares some initial estimates.

DFC’s David Cole says that the 2008 numbers are on the “very conservative” side, indicating that the 2008 numbers are still being crunched, and more exact numbers will be reflected in the February 16th reports.  “We indicate ranges because these numbers are estimates for 2008 based on where we think these products will end up,” said Cole.  And while the numbers are still being tallied, Cole estimates that the rankings should stay more or less the same, with “maybe a slot here or there” changing.

And while it shouldn’t come as a shock that the Blizzard powerhouse World of Warcraft takes the number one spot, Cole believes that if viewed from a pure profit margin, WoW wouldn’t be taking home the gold.  Asian MMO’s, which are traditionally developed at far lower budgets, have a much higher profit margin.  “Profit margin on Asian games is incredibly high,” says Cole, noting that Asian MMOs charge on or around 5-6 cents per hour with prepaid usage cards, a business model that has yet to proliferate the western gaming market.

What’s interesting to note in this projected report is the high ranking of Nexon’s free-to-play Maple Story (supported by microtransactions, prepaid cards, and international licensing), and the catalogue of Shanda’s games (Virtual item sales, prepaid cards, and freemium subscriptions).

1. World of Warcraft, launched 2004
Genre/Platform: Western MMORPG; client install with 3D graphics
Revenue sources: Monthly subscription, retails sales, prepaid cards (in Asia)
DFC estimated 2008 revenue: $500 million-plus

2. Fantasy Westward Journey, launched 2004
Genre/Platform: Asian MMORPG, client install with 2.5D graphics
Revenue sources: Prepaid cards
DFC estimated 2008 revenue: $150-$500 million

3. Maple Story, launched 2003
Genre/Platform: Asian MMORPG for kids, client install with 2D graphics
Revenue sources: Microtransactions, prepaid cards, international licensing
DFC estimated 2008 revenue: $150-$500 million

4. Shanda (company, includes Legend of Mir and World of Legend series), launched 2003
Genre/Platform: Asian MMORPG, client install with 2.5 graphics
Revenue sources: Prepaid cards, virtual item sales, freemium subscriptions
DFC estimated 2008 revenue: $150-$500 million

5. Lineage I and Lineage II , launched 1998 and 2003
Genre/Platform: Asian MMORPG, client install with 2.5 graphics (Lineage) and 3D graphics (Lineage II)
Revenue sources: Subscription, prepaid cards
DFC estimated 2008 revenue: $150-$500 million

6. Runescape
Genre/Platform: Western MMORPG for kids, web-based with 2.5D graphics
Revenue sources: Premium subscription, prepaid cards, real-world advertising
DFC estimated 2008 revenue: $50-$150 million

7. Club Penguin, launched 2006
Genre/Platform: Virtual world for kids, web-based 2.5D graphics
Revenue sources: Premium subscriptions, prepaid game cards
DFC estimated 2008 revenue: $50-$150 million

8. Lord of the Ring Online
Genre/Platform: Western MMORPG, client install with 3D graphics
Revenue sources: Subscription, retail sales
DFC estimated 2008 revenue: $50-$150 million

9. Warhammer Online
Genre/Platform: Western MMORPG, client install with 3D graphics
Revenue sources: Subscription, retail sales
DFC estimated 2008 revenue: $50-$150 million

10. Age of Conan
Genre/Platform: Western MMORPG, client install with 3D graphics
Revenue sources: Subscription, retail sales
DFC estimated 2008 revenue: $50-$150 million

Wagner continues his conversation with Cole around the most popular, in terms of active players, MMO of 2008.  To answer this question, we’ve got to go even a bit further out on the speculation branch, but Cole points out that Fantasy Westward Journey registered 2-3 million concurrent players back in August.  And although Warcraft likes to beat it’s own drum regarding their estimated 11 million+ players, “You’re lucky to get 5-10 percent [of them] playing at the same time,” says Cole.  Minho Kim, developer of Maple Story said in December that the title has 87+ million registrations, but wouldn’t comment on how many of these registered users were/are active monthly users.  Joost van Dreunen from DFC’ estimates the number to be more in the 13 – 17.4 million regular Maple Story players, roughly 15-20 percent of Kim’s estimation.

Cole admits that this year’s list looks remarkably similar to the 2007 list with Conan and Warhammer being released in 2008.  And while only 2 of the top 10 contain some type of microtransaction support, I’d estimate that this list might look very different one year from now with a number of highly anticipated (think Free Realms and Battlefield Heroes) free-to-plays coming online in ’09.

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EA’s Star Wars microtransaction based economy?

Friday, December 12th, 2008

Well it wouldn’t be a week without at least discussing the flurry of activity surrounding EA CEO John Riccitello’s ‘misunderstood’ comments regarding BioWare’s upcoming Star Wars MMO: The Old Republic.  Nick Breckon and Chris Faylor at shacknews first broke the story on Wednesday at 1 in the morning, and ignited a series of comments, forum posts and he said/she saids.

The comment(s) from Riccitello in question:

“We are continuing to stick to the plan relative to building out our direct-to-consumer models which include microtransactions and subscriptions,” said EA CEO John Riccitiello in a conference call today. “The recent launch of Warhammer [Online] is a great example of that.”

“Other initiatives we’ve announced, for example [the] Star Wars online MMO, are mid-session games which are microtransaction-based,” he continued. “You’ll be hearing more about those in the February [conference] call.”

As shacknews goes on to point out, other “mid-session” titles in the EA stables include FIFA Online and NBA Street, both of which are free and then supported by microtransactions.

EA obviously has a valid interest in microtransaction based titles, but with their flagship Battlefield Heroes still mired in the springtime mud outside of Moscow, perhaps EA is looking to other titles to test the waters with?  To be clear, I’m quite certain that EA has no plans of dropping Battlefield Heroes anytime soon, but based on the relative success of their “mid-session” microtransaction based games, especially FIFA in Asian markets, perhaps they’re comfortable with testing other waters?  During the conference call, Riccitello did discuss online gameplay and monetization (read: microtransactions) as a “global, not just Asia phenomenon.”

The Old Republic is currently being billed as a large-scale MMO (AAA title) with a number of single player attributes including dynamic NPC’s that will act as companions.  BioWare co-founder Ray Muzyka has been quoted as saying, “Knights of the Old Republic] 3, 4, 5, 6, 7, 8, 9 and beyond,” with the official FAQ stating, “the majority of the game can be accomplished by playing alone.”  If that doesn’t sound like a launching board for microtransactions….I’m not sure what does.

Duly noted: shacknews did receive word from EA, and appropriately updated their post with “no statements have been made about the Star Wars business model,” and attributing Mr. Riccitiello’s comments to a misunderstanding.

So is that a yes, or a no?  Obviously, EA is going to respond in that manner, as an admission of microtransactions in a western top tier game would certainly rock the proverbial boat.  Looking at the context of Riccitello’s comments, and where Star Wars falls in the EA hierarchy, could this have been an accidental slip o’ the tongue?  Certainly John’s got 99% of what he’s going to say prepared, but perhaps there was a bit of a slip in the heat of battle?  Who knows.  Maybe I’m complete off here, but then again, shacknews and a number of other commenters have already started the pro and con vocalization.

Either way – EA/BioWare just got the kind of publicity you can’t buy.

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Approximately 67% of Korean users in their 20s purchase paid digital content

Wednesday, September 3rd, 2008

According to a new study compiled by Pearl Research and recently published by Research and Markets, approximately 67% of Korean users in their 20s purchase paid digital content.  They forecast that the Korean market will exceed $1.7 billion by 2011.

While not surprising, the study found that casual games that are free-to-play, easy to learn, and can be played in “micro-slices”, i.e. games that can be played in ten minute or less segments at a time.

Some highlighted key findings from the study include:

  • South Korea has a sophisticated information technology (IT) infrastructure with 80% of households connected to the Internet.
  • Korea has one of the highest adoption rates of purchasing virtual items and micro-transactions. Approximately 67% of those in the 20-30 age cohort purchased online paid content. Of those who have purchased digital content, 91% purchased music while 39% purchased community and avatar items
  • A common strategy in Korea is the operation of large game portals that provide a wide selection of games, including massively-multiplayer online role-playing games (MMORPGs), casual, and web board games all within one convenient site. Top game portals such as CJ Internet’s Netmarble, NHN’s Hangame, and Neowiz’s Pmang can attract 500,000 to 1 million unique visitors a day. More than 11 million Korean adults visit game portals every month, according to this reports estimates.
  • While South Korea has a robust games market, critical challenges include intense domestic competition; prevalence of “me-too” or derivative titles; challenges in expanding overseas to the US and China; and rising development costs. The “Games Market in Korea” report provides an in-depth analysis of the Korean online games market and contains an executive summary; 2007 to 2011 forecasts for the online games platforms; inhibitors and drivers to growth; deep marketplace analysis; discussion of key market players, and strategic conclusions.

With all the flurry surrounding Korea’s neighbor to the west, it’s often easy to lose site of the ‘other’ gigantic market in Asia.  With a 67% purchase rate, Pearl’s prediction of $1.7 billion by 2011 could be spot on.  The question is…who’s handling all these microtransactions, and how do you and your title reach the market before it’s too late?  The answer is already staring you in the face.  fatfoogoo can bring your title to the Korean marketplace in days rather than months.  With out vast experience in multi currency transactions, fraud detection and prevention, and plug and play integration, we can help YOU today!

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Power leveling – Not just for China

Sunday, July 6th, 2008

When one mentions the phrase ‘Power Leveling’ a few things come to mind.  Marathon sessions of grinding rep, gold, gear, etc.  The other thought that comes to mind might be power leveling services.  In other words, players that have cash, but not time, and rent their characters out to professional power leveling ‘companies’.  It’s a well known fact that most of these power leveling services reside in China and often have teams of players that work around the clock to get your n00b to a fully purpled character in about a week.

Well hold on a second their China, you aren’t the only players in Asia – there’s a new kid on the block, and these guys are rockin’ and clockin’ not in Hong Kong but rather Na Noi and Ho Chi Mihn City.

It seems as though Vietnamese gamers got mad skillz as well, and are willing to level you up as well.  The average Vietnamese pro-leveler earns around VND2.7 Million a month (USD 160).  A gaming company in Ho Chi Mihn’s 7th District employs players to work from 9am to 8pm daily and offers a salary of VND1.7 Million (USD 103).

To put this in perspective, the average Vietnamese teacher earns anywhere between USD 60 and USD 100 a month.

Via Playnoevil

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Turbine lands $40M in financing via Time Warner and CGV Capital

Thursday, June 5th, 2008

Turbine Inc. makers of top titles ‘The Lord of the Rings Online’, ‘Shadows of Angmar’. ‘Dungeons and Dragons Online’, and ‘Asheron’s Call’ have sealed a $40M financing deal with top investors Time Warner Inc. and CGV Captial.

Time Warner Investments target non-control strategic investments, and is an integral part of the Time Warner parent company, a leading (if not THE leading) media and entertainment company in the US.

CGV Capital is a leader in expansion-stage venture capital investments in the U.S. and China.  The firm manages over $1B in global capital from it’s offices in Silicon Valley, Shanghai and Singapore.

“Our investment in Turbine is an important addition to Time Warner’s entertainment initiatives,” said Rachel Lam, Senior Vice President and Group Managing Director of Time Warner Investments. “Online interactive
entertainment is a huge growth market and we are very excited about Turbine, its unique capabilities and the obvious opportunities that exist with our own broad portfolio of IP.”

“The demand for massively multiplayer online worlds is exploding both geographically and in terms of platforms served,” said Hany Nada, managing partner, GGV Capital. “Turbine is a proven leader in massively interactive online entertainment and the incredible technology that supports it. We look forward to marrying our strengths both here and in Asia with Turbine’s unique capabilities.”

Turbine CEO Jim Crowley says, “This is truly an exciting time for Turbine. The addition of Time Warner, one of the world’s largest media companies, and GGV Capital, one of the financial community’s most sophisticated investors, adds a level of access, perspective and experience to Turbine that is singularly unique in the global online entertainment space. Turbine has an extraordinary team, incredible technology and a growing portfolio of games based on some of the most popular brands ever created. With this funding we are uniquely positioned to change the future of online entertainment as we bring new titles to market, expand the platforms we support and introduce new technologies to sustain self-evolving game worlds.”

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Fatfoogoo goes b2b with bbq flava

Wednesday, June 4th, 2008

Focusing not only on the needs of the player alone, after careful research and consideration, your favorite foogoos are now opening the doors to partnerships with individual game publishers. No worries, the current state of fatfoogoo isn’t going anywhere, and we’ve still got your back for all things trading. We’ve simply added another dish to the menu.

We took a long hard look at not only the technologies that we’ve developed in house, the experience and knowledge that we’ve gained, but also at what players and publishers across the world are looking for in a gaming experience. Combine that with the current state of the industry and the tremendous interest and revenue streams in the micro transaction field, adding the fatfoogoo partnership program was a no brainer.

In a recent interview fatfoogoo CEO Martin Herdina sites, “The trading and selling of virtual assets is truly the future of online gaming. It is an important alternative business model to the classical subscription fee-based programs that are currently dominating the industry. Fatfoogoo looks to fulfill a demand for this market. Our new Partnership program enables us to provide the best of both worlds: Primary Market trading, i.e. Publisher to Player and Secondary Market Trading, i.e. Player to Player trading. With the incredible growth of both primary and secondary trading markets, most major publishers understand that there is a need for an independently operated, fair and secure marketplace for virtual goods and services.”

And what a demand it is. The secondary trading market for virtual assets alone is currently growing at astonishing rates, going from revenues of approximately $1 billion in 2006 to an expected $7 billion in 2009, according to Nielsen.

This model has already been proven in Asia with Maple Story and Kartrider, both published by Nexon games. Research has shown that 8%-30% of all players purchase items via micro transactions. This in turn results in a higher revenue stream for publishers as opposed to the traditional subscription fee model. According to industry experts, on average, ‘Free to Play’ games generate anywhere between $15-$20/month. In the April edition of Fortune Magazine, senior writer Devin Leonard weighed in on the future of gaming:

(Game Publisher) Nexon pioneered this business – hooking players with a seductive free game while urging them at every turn to purchase extras using prepaid debit cards sold at retail outlets like Target. Nexon collects ad revenue in overseas markets, but in the United States the big money so far is in these microtransactions: $1.6 million a month. John Chi, CEO of Nexon America, says that the Nexon card is the second-best-selling prepaid card at Target – after the iTunes card. (Target will say only that Nexon cards are “doing really well.”)

Our experience in the virtual world micro transaction field is unparalleled. Not only have we created a multilingual platform, currency, taxation, and support system, but also gained real life experience and have weeded out a lot of headaches. As with anything in life, nothing is 100% certain, but here at the foogoo, we’ve already dealt with a whole number of things that could go wrong, have fixed them, and have learned from them. No other system in the world can match our level of multi national experience.

Back at the top-secret underground foogoo labs, our partnership engineers are already hard at work developing solutions for clients. Stay tuned, as we’ll be announcing some of our exciting partnerships soon!

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ION Game Conference in Seattle: redefining online

Tuesday, May 27th, 2008

ION Game Conference in Seattle: redefining online

Under the motto “Redefining Online”, the Annual ION Game Conference took place in Seattle, WA ion between the 13th and 15th of May. The global gaming industry converged at ION to discuss the future of Online Gaming, exchange news, and set new goals for the coming years. Besides industry titans from both the US and Asia such as EA Games, Bigpoint, Crytek, and Epik; fatfoogoo was one of the few European companies present. We were here not only to represent Fatfoogoo, but also to get a view of the newest developments in online gaming. How these developments look, and where they will be taking the next generation of Online Gaming, we proudly present to you here:

Free Games with downloadable content and additional services

The first Trend that’s abuzz in the industry is the increasing alternatives to drive revenue generation. Publishers will sooner or later move further and further away from costly subscription fees and expensive stand alone games, and more in the direction of a “Free to play” platform, i.e. the game is free to download and play, but it’s also self financing by additional downloadable content, services, and micro-transactions between player to player or publisher to player. An excellent example of this concept would be South Korean publishers Nexon, who with Court Rider and Maple Story have banked over $230M in turnover, or German publisher Bigpoint whom already have over 10 million users. On average 8%-30% of these users have already, or will in the future pay for additional functionality and levels.

Outsourcing

The second trend amongst game publishers deals with competition in the global market and the often negative feelings/opinions associated with outsourcing. In order to spend more time in developing games, publishers are increasingly relying on third technologies; game engines, sound creation tools, and/or micro transactions (the selling and/or trading of objects, items and services within a game), between players or between publishers and players. The time and money saved with outsourcing should be reinvested in the core components of manufacturer; game development. There’s already a prime example of a masterful use of outsourcing in Epik’s Unreal 3. Unreal 3′s engines are pretty much the same as any 3D shooter, but they employ various sound engines from the Dolby Engineering labs, or micro-transactions from operators like fatfoogoo. The already existing cooperation with second and third line suppliers of engines and services should be worked out in the future. At it’s essence this will free up game publishers to do what they do best: Develop and publish games.

The merging of (suppossed) opposites

The third trend focuses on the fusion of the various different pieces of Social Networking and Gaming. The border between PC and Console, virtual worlds, games and personal net applications, mobile and casual games is becoming more and more blurred each day and should interoperate with each other – technically, functionally and economically. The platforms will be open to each other, and offer the end users several different levels of interaction. Nevertheless, the challenge for this kind of openness in technology lies not only in the tech sector, but the judicial as well. Copyright and tax laws vary from state to state, country to country. The challenge of a functional multinational system is a priority not only for software and hardware manufacturers, but for politicians as well.

Final Thoughts

Final thoughts and personal observations from Martin Herdina, our foogoo on the ground at ION:

A letter from America

Martin HerdinaBeing back in Europe the jetlag still doesn’t allow me much sleep at night but – and what’s a lot more relevant – I am looking back to a super exciting week at fatfoogoo.

Listening to the industry legends from EA, THQ and NCSoft talk about micro-transactions as the future revenue model for online gaming and to the success stories around Nexon’s “Cartrider” in Korea ($ 250M p.a.) has been extremely interesting and demonstrated once again that fatfoogoo is serving exactly the right market segment at exactly the right time.

Apart from these business aspects I met a full crowd of great people from the US gaming industry, enjoyed some super cool US Ska music at night (check out http://www.myspace.com/dealsgonebad) and was successful at avoiding all business-development meetings taking place in one of Seattle’s strip clubs.

Best,
Martin

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