Gaming Hub

Singapore Develops Its Game Industry

A couple of recent transactions in Singapore speak to the efforts made to nurture the domestic game industry (in the tiny city state of 4 million residents) to serve international audiences in both fast-growing social and mobile games as well as traditional MMO games.

Singapore headquartered mobile social networking and games service Mig33 raised $8.9 million in its third round of funding from the Indonesian telecom entrepreneur Sugiono Wiyono Sugialam and Japan’s leading mobile social game portal Gree.

Mig33 was initially founded in Australia and moved to Silicon Valley to gain visibility with the tech community and raise venture money. However it was eventually convinced to move and use Singapore as an operating hub when it found that most demand for its mobile chat and entertainment services originated from emerging markets in Asia.

Mig33 has successfully introduced its mainstay mobile chat service, social networking, games and entertainment services to consumers in countries such as Indonesia, India and South Africa, in spite of continued strong progress made by Facebook in these markets. The 40 million registered members of Mig33’s network are said to participate in 1 million game plays daily, exchange 1 billion Mig33 messages every day, and buy about 4 million virtual gifts per month.

“Mig33’s goal is to replicate the East Asian social networking service model to the rest of the world,” said Steven Goh, who serves as Mig33′s CEO. “The partnerships we’ve established today will be strategic in helping us consolidate our lead in emerging Asia as we tap these big, under-served markets.”

No doubt that Mig33′s established corporate presence in business-friendly Singapore helped its latest round of investors get comfortable in investing in a company that makes most of its money in emerging markets, where business practices are typically opaque and difficult to navigate.

In a separate development, Temasek Holdings, the Singapore government’s investment company, will be leading a consortium to pump $60 million into the MMO game publisher Gazillion Entertainment. Gazillion has acquired licensing rights to develop MMO games for a number of marquee kids and youth entertainment brands.

San Mateo, California based Gazillion has development studios in California, Colorado, and Washington. Each studio is responsible for different games under development, including Marvel Super Hero Squad and LEGO Universe.

With its investment, Temasek joins Gazillion’s other investors such as Oak Investments, Hearst Corporation, Revolution Ventures, Pelion Ventures, and the Abu Dhabi Media Company, in holding a minority position in what is probably the second best funded game company in the world, after Zynga.

Temasek already has stakes in two online game companies, 9You and Shanda, and will no doubt look to Gazillion to site game development talent in Singapore as part of its investment conditions. It will probably also encourage Gazillion to work with fledging Singapore based MMO game operators such as Infocomm Asia Holdings (also known as IAH Games) to publish its games across South East Asia.

Nintendo 3DS To Be Amongst World's First To Have Glass-Less 3D TV Content

Further to the news about the Nintendo 3DS launching in Japan in February next year, two of the six national broadcast television networks in Japan – Fuji TV and Nippon Television Network, will be leading a pilot program to broadcast 3D television (3D TV) content to the 3DS.

The 3D TV content, rumored to be shorts of local gourmet and travel shows, will be streamed on a daily basis to the 3DS via the device’s WiFi connectivity point. Like 3DS games, the 3D TV content will not require the console user to put on glasses to render 3D effects.

Assuming Toshiba keeps to its planned year end launch date for it’s glass-less 3D television sets, the Nintendo 3DS launch in February next year will give it the distinction of being the 2nd consumer device (that is freely available for direct purchase) in the world to offer a glass-less 3D viewing experience. No wonder the Japanese game industry are placing such high hopes on the 3DS to revive its erstwhile history of innovation and cutting edge technology.

NetDragon's CJ7 Online is adapted from popular Hong Kong actor / director Stephen Chow's feature film CJ7

Lin Xin, a vice president of the Hong Kong listed online games company NetDragon Websoft said yesterday that the company intends to launch a new version of its MMO game CJ7 Online to target the kids gamer demographic. Lin said that the move is part of NetDragon’s strategy for dealing with “slowing growth” of the online game industry in China.

NetDragon has previously announced that CJ7 Online, a crossover from Hong Kong actor / director Stephen Chow’s feature film CJ7, entered into an open beta test in July this year. Feedback received in this open beta test probably shaped NetDragon’s decision to broaden its audience reach and skew the game toward younger game players, instead of pitting it against other MMO games that traditionally target 18+ year old gamers.

NetDragon also announced yesterday that it was releasing the first expansion pack for Disney Fantasy Online, The Awakening of Justice. Developed in partnership with the eponymous global kids and animation powerhouse, Disney Fantasy Online is targeted at the same kids audience as CJ7 Online.

NetDragon’s CJ7 Online and Disney Fantasy Online will continue to face competition from dedicated online kids game operators such as Taomee, which we covered in an earlier commentary. Additional competitors include Aobi, whose parent company BaitianInfo scored $4.39M from Sequoia Capital in a Series A funding round December last year. According to Sina Game News, Tencent is also rumored to be secretly developing an online kids MMO game product.

The Tokyo Game Show saw a declining number of Trade Visitors in 2010

Organizers of the Tokyo Game Show 2010 officially released today it’s well reported visitor numbers – the 2010 show was the first in the annual series to exceed 200,000 visitors.

However, a closer look into the actual attendance numbers will show that increase in attendance was primarily driven by visits from members of the public, as opposed to trade visitors (i.e. game industry professionals).

The total number of trade visitors to the Tokyo Game Show in 2010 was 48,973, down from the 52,040 trade visitors in 2009. ChinaJoy in Shanghai, in contrast, saw trade visitor numbers increase to 18,000 to 19,000 in 2010, up from 6,342 in 2009 — note: ChinaJoy 2009 and 2010 visitor numbers are from different sources.

While this decrease in trade attendance at the Tokyo Game Show only represents a slight 5% annual decline, it does speak to the center of gravity for the games industry in Asia shifting away from Japan towards other locales.

The TGS2010 organizer’s press release is re-printed in full below and can also be downloaded here.

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China eSports Operator CY Foundation Tainted by Corruption Allegations

Hong Kong listed CY Foundation, which organizes eSports tournaments, and P2P game tournaments in over 20,000 internet cafes in China, released a statement today about its Chairman and his wife being arrested by the local anti-graft agency on suspicion of corruption:

The Company was notified by Mr Cheng Chee Tock Theodore (“Mr Cheng”), the Chairman and executive director of the Company, that Mr Cheng and Ms Leonora Yung, the spouse of Mr Cheng, a substantial shareholder of the Company and the Vice President of Human Resources & Administration Department of the Company, are currently under the Investigation initiated against them in their own personal capacity by ICAC for an alleged corruption and use of false documents to deceive the board of directors and shareholders of the Company in relation to certain property transactions, but no charges have been laid against Mr Cheng and Ms Leonora Yung by any regulatory or governmental authority.

CY Foundation owns & manages the e-sports tournament International Entertainment Festival (IEF), and has co-organized China’s 2010 E-sport National Team Trial in partnership with the General Administration of Sports of the PRC.

CY Foundation also owns the exclusive licensing rights in China to the MMORPG Rohan, published by the Korean online games company YNK. Government approval for operating Rohan in China was granted in mid August 2010.

With 190 staff across Beijing, Shanghai and Hong Kong, CY Foundation’s internet cafe network is largely owned by the Communist Youth League-owned Network Media Center, and the 2 companies operate a P2P game tournament business in a joint venture.

CY Foundation’s P2P game tournaments mainly feature Asian & Western casino games such as Texas Hold’em, Doudizhu and Mahjong. Earlier in May this year, some gaming machines and software owned by CY Foundation were confiscated by the police in China as they were allegedly used for unlicensed online gambling.

According to the South China Morning Post, both of CY Foundation’s Chairman Teddy Cheng and his wife Leonora Yung have impeccable pedigree and strong personal connections in China’s business and political inner circle. Teddy Cheng is the nephew of Cheng Siwei, a former vice-chairman of the National People’s Congress, and Leonora Yung is a cousin of former government-linked conglomerate Citic Pacific chairman Larry Yung.

Such high profile relationships and partnerships with Chinese government agencies don’t come easy. In CY Foundation’s case it goes to show that political traction acquired can also be lost quite rapidly – it looks like someone may have fallen into the bad books of people in high places.

Nail Household vs. Demolition Team, a casual Flash based game based around the theme of battling homeowners and real estate developers, spreads virally amongst gamers in China

In a sign of the times, Nail Household vs. Demolition Team – a new flash-based casual game released by Mirage Games in August this year, lets gamers join China’s ongoing battle between homeowners and property developers, via WSJ and The Independent.

Nail Household vs. Demolition Team, is set in a cleared pit, empty except for a lone three-story house marked “chai” — the Chinese word for demolition.

The goal? To defend your house against guards and gangsters brandishing knives and bouncing on jackhammers. The characters you can play include a woman in curlers who throws sandals at encroaching attackers, a pot-bellied man who drops dynamite from the roof, and an old man with a shotgun.

When you win a level, the woman appears, pointing a finger at the Forbidden City, the symbolic center of the government’s power. When you lose, the house collapses in a cloud of dust.

The game, widely available free-to-play on most of China’s online casual game portals, is the latest example of how home ownership and the battle with greedy property developers is permeating into popular culture in China. In early 2010, Li Chengpeng drew attention for “Avatar: An Epic Nail House Textbook,” which compares the plight of the Na’vi race created in James Cameron’s film, to Chinese people who live in “nail houses” – so named as their residences built in construction sites stick out like a nail in a plane of wood.

The popularity of Nail Household vs. Demolition Team has spread virally with gamers, and it is reported that more than 50,000 comments about the game have been posted by users of the social-networking site Renren.com. The instant popularity of the game has also gained the attention of mainstream media in China, who have given the game extensive press coverage along with over 10,000 personal blogs publishing commentary about the game.

Mirage Games have certainly had their finger on the pulse and hit on a game storyline that resonates with Chinese casual game players, awarding them with instant and free distribution amongst the thousands of casual games vying for gamer’s attention. However dovetailing a sensitive contemporary social problem with gameplay in the tightly regulated Chinese games industry can only increase the risks of the game (and the game developer) being black-listed.

Watch a video of the game, after the jump….

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Baidu's Post Bar Intersects Search & Social Networking, and now Games

One of Baidu’s earliest innovations, the Baidu Post Bar, is looking to introduce social games as a monetization path.

Shu Xun, GM of the Chinese Internet company Baidu’s Post Bar BBS division, said that Baidu will release self-developed social games in early 2011 on it’s Post Bar platform. Depending on the success of this social games strategy, Baidu may also develop a game API to allow third-party developers to release games on the Post Bar platform in future.

Baidu Post Bar is a forum that combines search and social networking to help internet users link up with people with the same needs and interests based on the web search keywords they use. It was placed under management as a separate division in August 2009.

Traffic to Baidu Post Bar has doubled in the past year, reaching 1 billion daily visits at its peak. With more than 2 million “bars” created to date, Shu added that Baidu Post Bar’s next goal is to improve the site’s social networking functionality, iPost Bar. Since its release 10 months ago, iPost Bar has reached 60 million registered users.

While Baidu Post Bar is not the first product to extend it’s reach into the red-hot social games space, it’s heritage as one of the most under-rated of Baidu’s homegrown innovations could prove to be a dark horse in the making. Interesting distribution and monetization models could arise by throwing games into the mix of search and social networking, and Post Bar is more than equipped with a proven platform and fire-hose of traffic to experiment and innovate. Read the rest of this entry →

Sunity Online Entertainment

Yet another China based online games company has filed for an IPO in the U.S. Sunity Online Entertainment Limited is looking to raise a surprisingly low $10 million through a NASDAQ listing.

Here are some highlights of Sunity’s online game operations in China, via its preliminary SEC filing:

• Sunity started business in 2007 as a mobile value added services (VAS) provider, and momentarily dabbled in RFID technology products, eventually switching focus to online games shortly as regulatory changes crimped their mobile VAS business.
• Annual gross revenues of $9.5 million in the year ending March 2010, of which $5.7 million (or 59.7% of total revenue) is game operation revenue, and the balance mobile VAS provider revenue. Total net income was $3.9 million.
• Sunity currently operates 2 self-developed webgames. 52% of total revenue is derived from Qihang (QHG) – a cards and chess game, which operates under a time based subscription revenue model. Around 8% of total revenue, ~$760 thousand, is derived from the other game, Han Dynasty Game (HDG) – a Chinese mythology RPG, which is free-to-play with revenue generated from virtual item sales. Read the rest of this entry →

A Life Sized Re-creation of a World of Warcraft Character On Display In China

Blizzard Entertainment confirmed today that the subscriber base for its World of Warcraft (WOW) franchise has exceeded 12 million players worldwide, making it larger than the population of Belgium.

The milestone was attributed to the Mainland China launch of WOW’s second expansion,Wrath of the Lich King, and global anticipation for the December 7 release of WOW’s third expansion pack, Cataclysm.

A little unsure about how “global anticipation” for a yet to be released expansion pack helps grow new subscriber numbers. This anticipation would presumably be from existing WOW players, as non WOW players getting excited about the game after finding out about Cataclysm would wait until the new expansion pack is released before signing up, no?

We previously wrote about how dedicated WOW China aficionados were flocking to Taiwan servers to play when the WOW service was disrupted in China a couple of years back. We also commented on how even with local licensing partner NetEase acknowledging mistakes that affected the smooth  roll out of Wrath Of The Lich King, WOW China peak concurrent users  still reached 2.6 million at the end of September (and probably higher now given that it is the week long Golden Week public holiday in China).

Even with such obstacles, this uptake in new subscribers only re-confirms the strength of the WOW franchise in China. If it were not for the expansion pack launch in China a few weeks ago, 2010 could well have been another year of stagnation for WOW subscriber growth internationally.

Blizzard will probably try to continue finding ways (e.g. Cataclysm launch in December) to balance public perception on the dominance of players of the game from China, and ensure that the game remains inclusive and accessible by a wide global audience. Regardless, it is indisputable that China is the most important market for Blizzard to help keep WOW’s growth going for the foreseeable future.

Nintendo 3DS Will Only Be Released In Japan in February 2011

Nintendo reported in its Nintendo Conference 2010 held in Japan earlier today that the new Nintendo 3DS console will be officially released for sale in Japan in February next year.

The announcement damps speculation that the 3DS would at least be launched in time for this year’s holiday season sales. Launch dates for markets outside of Japan were not confirmed. The retail price in Japan for the 3DS will be JPY 25,000, around $300.

The holiday shopping season accounts for a large chunk of the game industry’s annual sales, and the Nintendo 3DS’ delay will clear a path for competing consoles to gain traction before Nintendo. Besides Apple’s iPhone and iPad, which continue to gain popularity as handheld game devices and competes directly with the Nintendo 3DS, Microsoft also plans to launch its Kinect motion-sensor accessory for the Xbox 360 in November, while Sony has already commenced sales of its PlayStation Move motion control device earlier this month.

Nintendo also reported that it now expects its net profit for the fiscal year through March to come in at JPY 90 billion, less than half the JPY 200 billion it previously forecast. A series of factors were cited for the cut in profit outlook, including the delay in shipping date for the Nintendo 3DS and the strong Japanese yen. Nintendo expects to post a JPY 2 billion net loss for the six months ending September, compared with the JPY 70 billion net profit it previously forecast.

On a brighter note, the screening of a Nintendo 3DS software line-up trailer during the press event reiterates that a relatively strong line-up of games should be made available for the device at launch, although the final list of games was not confirmed. All the major Japanese game publishers including Capcom and Sega, intend to release 3DS games. The trailer boasts excellent graphics – even in 2D – which should please Nintendo console fans and help the 3DS better compete in an ultra-crowded and competitive game console marketplace.

Watch the trailer, after the jump …

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