When Activision Blizzard - the joint venture between the Western gaming companies responsible for hit titles such as World of Warcraft - called a media pitch for its global business in January, executives embarked on a real-life quest to expand its empire into Asia.
Activision Blizzard, formed by a US$18.9 billion merger in 2007, is the largest gaming publisher in the world, ahead of ElectronicArts (EA). Yet it so far has had a minimal footprint in the region.
Following in the footsteps of developers including EA and Giant Interactive, both of which maintain offices in Asia, Activision Blizzard has visions of regional success and 2009 may be the year to test the waters, a spokeswoman said.
“When the companies did the merger one of Activision Blizzard’s goals was to gain a footprint in Asia - Asia is absolutely important given the profitability of the online games business,” she said. “The company has general plans for the region. Without releasing any specific timing or details, Asia is clearly in the long-term plan.”
Asia is already World of Warcraft’s biggest market. When the game hit 10 million users in January 2008, 5.5 million of them were in Asia. What’s more, gaming is one of the few online areas in the region that turns a decent profit; Asian gaming firms have developed businesses based on micro-payments - basically, giving the game away for free to gain scale then charging for extra elements within it.
Local developers have long staked their claims to become regional powerhouses. North Asia is the heart of the region’s gaming industry, with players such as Nexon in Korea, Namco Bandai Games in Japan and NetEase in China. But that doesn’t mean Western developers are shut out, analysts say.
For example, Japan was among the first international markets to license Dungeons and Dragons and Lord of the Rings online, signifying its acceptance for Western games. And, according to InGame Ad CEO Steven Hu, Korean gamers have seen interest in local games plateau, making way for companies with an outsider’s perspective to enter the fray.
Last year WPP invested in InGame Ad in expectation of growing revenues from advertising within games. Online gaming allows so-called ‘dynamic’ ads to be placed - these are slots than can be updated as campaigns change, unlike ads that are embedded into traditional games.
This is still an emerging model, though it is one the gaming firms are understandably excited about. Pratik Thakar, EVP and chief planning officer for China at McCann Erickson, argues that the market is still being educated about the possibilities, though he cites an online game his agency set up around the Puma China website.
China is now recognised as the key market to enter within the region. According to a recent survey conducted by the China Youth Social Service Center, 73 per cent of Chinese youth have played an online game, and nine per cent of those say they play for more than four hours each day.
For multinational brands, the arrival of Western gaming firms may provide an easier way into this demographic. Hu for one welcomes their focus on the region. “In the long run,” he says, “the more Western gaming companies seriously commit themselves to the Chinese market, the higher level the overall industry in China will compete at.”
