China’s online game operators contending with a fiercely competitive home market are trying a number of tricks to bring back some excitement to their business and sluggish stocks, as evidenced by an interesting new overseas licensing deal from Perfect World (Nasdaq: PWRD). I previously applauded NetEase (Nasdaq: NTES) as one of the sector’s more interesting names for its ability to develop its own popular games, and now would similar kudos to Perfect World, which is looking beyond its home market with this new deal to offer one of its own self-developed titles in Brazil. (company announcement) The deal will see Perfect World license its new “Forsaken World” title to a local operator for unspecified terms. “Forsaken World” marks an interesting milestone for Perfect World, as it is one of the company’s first online games developed by a multinational team, which probably means a team led by managers from the US or Europe. That move sounds strikingly familiar to a similar one by rival The9 (Nasdaq: NCTY), which in December announced a landmark deal to offer “Firefall”, the first major title developed by its own recently acquired US-based team, to a Singapore company that planned to operate the game in several Southeast Asian markets. (previous post) While NetEase has been able to build its business by creating popular games based on Chinese themes such as the classic novel “Journey to the West,” such titles have relatively limited appeal outside China and thus can’t really be used to generate profits through licensing deals in other countries. By contrast, this new generation of Chinese-owned titles developed by Western-based teams has much bigger potential as such games typically are designed by teams with more international experience in creating games that can appeal in many markets. I also like the fact that both The9 and now Perfect World have chosen developing markets like Southeast Asia and Brazil to launch this new crop of titles developed by their international teams, as such markets tend to be less competitive than the West and the Chinese firms can also offer some expertise to their licensing partners in areas like technical operations and payments for these less developed markets. Investors seem to like this new, more international focus, bidding up The9 shares some 40 percent since it announced its Southeast Asia deal last year. Perfect World’s shares are also up about 30 percent over the same period, though it’s latest announcement didn’t do much to boost its stock, perhaps because the company is already one of China’s most outwardly focused online game firms. Still, this newer focus on developing titles with more international appeal should help both of these companies find stable growth over the longer term by giving them a dependable revenue source from licensing fees, helping them to diversify beyond their own crowded home market.
Bottom line: Perfect World’s new licensing deal in Brazil marks an important step in global diversification, a longer-term move that more Chinese online game operators need to take to survive.
Related postings 相关文章:
◙ Online Games: Where’s the Excitement? 中国网游企业增长有限
◙ The9 WoWs Wall Street With New Deal
◙ NetEase: Still a Gamer With WoW Renewal 网易续签《魔兽世界》运营权
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