Game, set, match for China?

• Online games development in China sees new approach by Malaysian publishers
• Game publishing already a bustling and regional play

HERE’S a surprising development that is dictated by economic reality: Rather than become a game developer yourself in Malaysia, and really in any other market in South-East Asia aside from Indonesia, you have a better chance of success if you invest US$100,000 in a new game developer in China instead.
 
“Cut a deal where in return for your investment – they keep the rights for China, Taiwan and Hong Kong, and you keep the rights for the rest of the world,” says Ganesh Kumar Bangah (pic), chief executive officer of MOL Global.
 
Developing an online game is not child’s play and it can take between 40 to 50 people, with no guarantee of success. Because of this and wanting to leverage on the cheaper cost of investing in a games developer n China, Ganesh knows of some Malaysian game publishers who have taken this route.
 
He feels that if the economic realities are such, entrepreneurs just have to go with it.
 
“Their [Chinese game developers] costs are half and their market 100 times larger. They make enough money from their local market that anything they get from you licensing their game is a bonus. So, how are you going to compete?”
 
At the end of the day it all boils down to economic value. “If our companies get enough economic value out of being games publishers and create jobs, there is no need to be fixated on Intellectual Property (IP) [through creating games]. I mean, you can spend a lot to develop IP which may not bring any economic value at the end of the day,” says Ganesh.
 
To emphasise his point, he asks: “Name me one Malaysian game developer that has published for the Xbox, a platform that generates RM30 million (US$9.6 million) a month? How about a game developer that has generated RM20 million a year?”
 
Point made.
 
Ganesh observes that in terms of economic value and jobs creation, game publishing is bustling and starting to go regional with Malaysian publishers licensing games out of China for South-East Asia. He also makes an interesting point about this. “Even though they are licensing the games out of China, they are bringing in export revenue into Malaysia.”
 
But if the economic realities of game development are so compelling for China, why don’t our entrepreneurs just launch a game company in China then or create a game from Malaysia but targeted at the Chinese market?
 
Not so fast, cautions Ganesh. Firstly, he says that creativity has almost zero value in the Chinese market.
 
“If you design a good game for their market out of Malaysia, they can copy it tomorrow and publish it. And if you are thinking of going to China to set up, how are you going to compete with the large Chinese internet companies like Tencent and Shanda (pic) which have between 10,000 to 15,000 engineers each,” he poses.
 
Incidentally, the companies raked in US$843 million and US$220 million respectively in first quarter 2012 revenues.
 
Indeed, Ganesh feels that innovation and creativity have very little value when it comes to the game industry. “It is about reach, customer service and even luck,” he says.
 
It is a good thing that most game developers are in it for the passion because very few will make money, says Ganesh wryly.

 
Previously: MOL Global now one of the top game payment providers in the world