A Path To Western Online Games Success In Asia

By Tim Allison

[How do you take a Western MMO and bring it to the Asian market? Consultant Tim Allison, who works on titles such as Pirates Of The Burning Sea for Asia, looks at some of the positives and pitfalls of making your game work for the East.]

Each market in Asia is different, with its own unique requirements; however, there are certain traits both in development and business approaches that can be discussed in generic terms. Omake Interactive deals across all of Asia, Australia, and India with a wide variety of clients and online game-related content.

Great IP and product design can be global, however in Asia, particularly from an online perspective, the delivery must be localized both from product design and business structures.

We break the "Asia" approach into both localization of design, and business structures due to the complexity of online requirements going far past just having a great game. We also emphasize the true success in revenue terms for Asia is not from license fees, but having the title actually perform in-market. This means having both partners share that common understanding.

It also means what licensee fees you do earn you should reinvest those back into supporting your Asian partners. Many western developers would cringe at that thought of spending their license fee, but with the title performing in-market those license fees will quickly diminish in total revenue terms.

There are areas where western developers can have great success in Asia, and this article will touch on that. That success needs to be on the back of a wider understanding of the Asian markets and a longer-term approach to company branding. There is no magic bullet approach, and Asia needs to be treated as its own unique region.

Part 1: The Key Online Markets

The 3 major markets are China, Korea and Japan. Recently, a Korean major very clearly gave us their spin on who rules the online space: "The size of Chinese PC online game market is approximately 1.3 billion USD while Japanese PC online game market size is approximately 1.8 billion USD. The Korean PC online market size is bigger than these two primary Asian markets, with the size of approximately 6 billion USD."

South Korea is the creator of the MMO sector. The South Korean government, both through its late 1990s subsidies for game development and rollout of the broadband network, became the key driver of this segment. Even in 2008 where overall the Korean MMOG content is not up to its usual high standard the Korean companies are still setting the industry terms.

Korean companies are expanding internationally and testing new consumer monetization models both in games and social networks. We believe Korea will need to continue being more global to maintain its dominant position against China. Like any company expanding internationally, Korean firms are experiencing cultural challenges with content.

It is understandable that many Asian companies, in entering the west, make similar content mistakes as the west does in entering the east. The Korean online market is dynamic and companies are willing to take risks; they will test any western IP owner trying to gain success their local market.

Japan, as a mature games market, stands alone within Asia as a separate discussion. It also can provide us a window to how the other core Asian markets could develop in time. For example: multiple deliveries of game systems, great local online development, high international standards, and wide, varied consumer segments.

Its online segment is growing very quickly, but seems to be driven by a new breed of internet-focused companies. The developers are starting to use their experienced international game design talent to produce what will be both successful and global online content. Japan may not yet be fully seen as a major online market, but there are many examples of how it has already had great success in this segment.

In 2005, one of the earlier Japanese online companies Warpgate converted the Korean Game Knights Online from subscription to item trading. It was a huge risk for the company, but it saw a revenue increase of 400% for an aging game.

This was not primarily increasing users, but simply increasing their individual average spend. Going back even further, Ultima Online was very successful in Japan, making Japan one of the earliest adopters of online gaming.

Japan was one of the first Asian markets to license both Lord of the Rings Online and Dungeons & Dragons Online, so clearly as a mature market, it is more open to western content.

Within China, three years ago Omake did most of our dealings with only three online majors. In 2008 the list is closer to eight majors.

If, two years ago, you asked us about game development in China, we would have hesitated. Now in 2008, well over 60% of all online content for the Chinese domestic market is created locally. The country's pool of local talent is large and growing daily in experience and quality.

Also as the overseas Chinese, VCs, and global companies flow into the mainland, you can see their positive impact on international business approaches. Like the Korean companies, the Chinese majors will spread internationally and they will seek global representation of their content. The impact of China's online games today is only a fraction of what it will be in years to come.

Giant Interactive's ZT Online

One of the best examples of the pace of learning in China is ZT Online, run by Giant Interactive. This is one of the highest performing games in China today and has perhaps the best item system in all of Asia. Gamers can buy and gamble their way to a godlike level 170. It may be free to play, but every step of the way to 170 will cost you.

Without taking anything away from WoW, The9 in China made that great game a success through its visionary marketing link with Coca-Cola. Millions of cans supporting WoW took it to the mass of the internet community.

The greatest challenge or change to come in the Chinese domestic market is the segmentation of the gamer. It is a young gaming market that has enjoyed many similar RPGs, but the local major operators need now to quickly develop new consumer segments.

Casual online is a form of segmentation that is expanding rapidly. Consumer segmentation will provide openings for western content, if it is localized hand-in-hand with Chinese partners. Trying to throw western content over the wall simply won't work.

Southeast Asia, although important in online gaming, has less of an immediate impact on an approach to Asia at large. One of the key elements is recognizing the lower machine spec requirements. The markets of Thailand and Vietnam have large and active online gaming communities. Games like Lineage (NCSoft Korea) and MapleStory (Nexon Korea), as lower spec casual online RPGs, have had tremendous success in across SEA.

Learning Online Lessons from Asia

Understanding the online requirements is the first step. Implementing them is the second. Implementing in each market is the third. If we were to add a fourth key learning point, it would be to keep up with the speed of change and delivery within the online mechanism.

Do not underestimate the online expertise that is currently established and evolving across all of Asia.

Examples of the key features are:

Online distribution. The console retail facings across the western markets continue to squeeze PC out. The ability to have large and focused PC launches is getting more difficult. The Asian model of free client and beta trials must be understood as being critical to success and future distribution of PC gaming.

Gaming social networks. We all know about social networks like Facebook. However, the Asian majors have been dealing with very large numbers of gamers coming in to play specific games for many years. It is critical to manage them not only as gamers, but also as a group of people with community needs before and after they enter the game. As an online operator you want to hold that community within your game environment, not let them float to other companies' games. The community socialization, particularly in some casual games, can be more important than the game itself.

Monetization. You have large numbers of people entering trying the game for free, but how do you make money from them? Western single player download games typically have a conversion (purchase) rate of 2-3%. Think about how many people you have brought into the game only to leave without recognizing revenue. The Asian model of item selling is very exciting for many reasons; it puts more control into the hands of the gamer, and lessens the barriers to entry.

The need for leveling can be done through items - buying your way in the game. However, allowing consumers to buy their way into a game can be potentially damaging to the gameplay. The operators dynamically watch the game and will manipulate areas like:

- Functional items (power enhancing items that may be purchased)
- Resource items, creating more or less to stimulate activity
- Creation of bonus items to encourage development in certain areas
- Purchase items, unique cosmetic items focused on increasing operator revenue

The item system is not set in form, and needs to be flexible. Advertising in-game is emerging rapidly as another revenue model for online game communities.

Server Design. Large numbers of people means large numbers of servers. They need to be considered in game design not only to optimize numbers but also to address hacking, macros, gold mining, item trading, auctions, and more. The technology quickly becomes a critical factor in bringing a game into service. Payment systems, database management, and chat are all part of the equation. How will the local partner integrate their systems into your game? They will add these costs onto the license fees and marketing costs -- making the whole launch process more expensive than it first looks.

Game Controls. Using the WASD keys as an example of typical Asian game controls. In Asia the gamers want to have their right hand free to answer the mobile phone, smoke or drink while playing. Forcing the use of function keys and complex UI creates a new learning process for players.

What is more important is that it is familiar, particularly if the content is unusual (western). You need the Asian player to enter the game with ease; if you make the controls complex and unfamiliar then acceptance will be that much harder.

Character Design: Generally speaking western characters are very real to the game setting. They can be hard and harsh. Asian players prefer fantasy-based characters, which are both different to the real world and part of the fun of the game. The point being that you need to be prepared to change to the market style. It is unlikely you can design a suitable character for Asia; the in-market partner will always be the best guide.

What the west can share with Asia?

There are certain areas of expertise that western content can still offer Asia if it is delivered in the right method.

Market segmentation. In Korea and China the online markets are growing and they will start to mature and segment. As the developers in Asia still tend to repeat styles they find it increasingly difficult to stand out. The gamers, within time, will seek other styles and the operators need to provide that. This provides content opportunities for western IP owners.
Top quality. Western game design and technology development is still leading the world. The creative approach to game design and the disciplines of timelines, management of developers are still in advance of Asian standards.
Setting and delivering achievable milestones. We have seen many Asian games not reach the required outcome as features are cut due to unrealistic planning.
International business requirements. These are wide, but very important in setting standards in support for local partners.
Tapping markets. Casual game design versus hard core positioning.
New creative IP. Within the game Granado Espada (USA name Sword of the New World) published by Hanbitsoft Korea, the multi character control (MCC) was presented as a new gaming feature. From a western perspective RPGs have used this for many years. Classic games like Baldurs Gate used party control as a critical part of play.
Cinematic skill. Theatrical elements like music, camera angles and lighting are better implemented by western developers at present.

Why Consoles Won't Be Successful in Asia

As consoles dominate the west, and consoles are moving online, it is important to address issues also facing the console market in Asia. Why PC dominates in Asia, and not console, is also a learning process in understanding success factors for Asia.

Importantly, markets like China and Korea have governmental controls on the distribution of certain electronics, specifically consoles.

Like PC, it is not only a question of great games and IP, but one of how it is delivered. If we use Japan as a possibility for the rest of Asia in the future, then it is quite conceivable the console market could succeed elsewhere. But today, the simple demographic profile prevents wide success outside Japan. Many other factors come into the success equation - but let us consider this in a generic example.

In the simplest of concepts consider two significant demographic features:

The markets of greater China, South East Asia and India. People generally live in smaller homes (compared against the west) and, in the major cities, within small apartments. Disposable incomes are typically low; most households would see a television as a luxury. Physical space is limited.

Not many households would allow their one TV (if they had one) to be dominated by a console, let alone allow their children to spend their household money the console hardware and games.

Socially, look at the wide spread use of internet cafes. These are places where young friends can socialize within a different environment to home. They can enjoy gaming entertainment within a group environment. They can spend money on games without directly being seen by other household members. They can play fantasy games with their friends to provide some escapism.

In this context it is not the content as the major issue, but the delivery for each market and currently console hardware is limited in many ways. Perhaps the Nintendo DS is more a step towards a suitable direction; however it now needs to also develop for a large mobile social network interaction and communication. And then free play and item transactions.

Entering The Asian Market

Brands and development reputation will play a key part in opening the doors in Asia. The western MMO developer needs to remember they are seeking to compete with local experts. As a visitor to their market you need to be respectful of the local products and online innovations.

What are the key success factors?

IP, part one. Major licenses may be easier but be aware of the localization and culturalization challenges. Major brands do carry significant weight in Asia, but not all western brands will succeed there.
IP, part two. Original IP needs great design and technology. Using proven engines and middleware would be an option worth considering.
Experienced development teams. If you're not from Asia, then allow Asian companies and players to be involved in early testing. Listen and understand their comments.
Funding. You must allow enough money for changes to the game later on. Incorporating Asian MMO traits will make the game ultimately better for the western markets too.
Great Asian contacts. Look for contacts across multiple markets. There are different elements and requirements to be learned from each major market.
Partnering in Asia. Find companies you can have shared goals with and trust. The ongoing support of the market partner for beta testing, updates and specific changes is absolutely critical. Support and listen to them.
Openness and local help. The ability to communicate across different languages and cultures is critical. Unlike single player games, you do not walk away from them after launch. The development and support needs to be market focused and ongoing.
Time. Unfortunately funding can direct launch timing. As with most games there is no second chance.

In Review

There are great opportunities in Asia for 2008 and onwards, for those who are willing to accept Asia in terms of its own unique requirements. If you do that, a lot of hard work and great partners will be a strong step in the right direction.

Even though the divide between Asia and the west is wide, there are ways to combine the best elements of both together. There is no substitute for experience, meaning employ and partner with people who have experience.

Going through that hard work and actually having successful content in Asia will not only be one of the most rewarding experiences but also a learning process that will lead to more global design strength for future online titles.

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