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B&COMPANY VIETNAM VIETNAM ONLINE GAME MARKET OVERVIEW

B&Company Vietnam June, 2014 0 COPYRIGHT B&Company INC. ALL-RIGHTS RESERVED.

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• This report and all materials directly related to it are properties of B&Company. All rights reserved. No parts of this report may be reproduced or transmitted in any form or by any means without the prior written permission. • Should you wish to use this report for any purposes, please kindly contact B&Company through the following given email address for further reference about the terms of use: [email protected]

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Overview Summary

•

Vietnam game market is continuously raising, reaching 250 Million USD and 20 million gamers in 2012. Vietnam is the largest game market in South East Asia

•

Vietnam is dominated by Chinese games, followed by Korean in term of number. Vietnam ranks third with only 6 games, all of them have basic design and simple game-play

•

VNG keeps being the largest player in Vietnam gaming market, with adventurous and fighting games, taking ancient Chinese theme. FPT and VTC develop more diversified types of games, including shooting, sport, modern war, … However, these two key players are going downward.

•

Mobile games and web games have had tremendous increase. Web games have stopped their booming and on the saturation stage, they need more improvement for the design, story and game-play in order to keep their fast development rate. Mobile games are on the way up. Revenue of mobile games is jumping significantly with annual growth rate of averagely 50%. Mobile game market is still potentially profitable Mobile game is taking more attention and interest: from being mobile version of PC games, now more and more developers are creating mobile games independently.

•

Vietnamese regulation on games, especially mobile games has various problems: Long time process in comparison with their short profitable duration These restricted regulations weaken Vietnamese mobile games in competition with imported games (which don’t need to have license) and games on international server On other side, Vietnam is loosening regulation on Client games (PC online games) and web games; therefore those games’ quality is not ensure d

Source: Press research

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Market size Vietnam online game market continuously increase, reaching 250 million revenue and 20 million PC gamers in 2012. Games market revenue (MUSD)

Number of online PC games by type Total = 76 games (2013)

250 200 Notice

8 Total game market

120

Of which, Mobile game sector

80 55 5 2007

2008

2009

2010

6 2011

12 2012

15 2013

• In 2012, beside 250 Million USD revenue from direct gamers, gaming industry generate over 1 billion USD revenue from advertising. • Almost games in Vietnam allow gamers to start free-of-charge, then charge fee if they want to upgrade their characters Source: Press research

5 0

0

7

7

2006

2007

2

7

5 2008

12

Web games

2

2

Client games

2011

2012

14

2009

2010

5

• As a life cycle, a game go through growing stage to mature, then decline stage. In 2013, Vietnam has 76 games still in operation. • Web games first appeared in Vietnam in 2008 and quickly raise in term of number • In 2009, there happened a boom in games registration with surprisingly high number of games released and survive until 2013 3

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Market size Despite the domination of Chinese games, Vietnamese games are growing fast, especially web game sector. Number of online PC games by country of origin, 2013

Number of games from China, Korea and Vietnam

100% = 76 operating games Japan US Korea

17

Other

3 4 3 10

China

14

China Vietnam 6

17

4

3

59

Vietnam

3

3

0

0

2006

2007

4

4 11

2008

2

1

11

2009

2010

Korea

4

3 0

2011

1 2012

• Overall, Vietnamese gamers like adventurous and fighting games, with ancient Chinese theme. This is a result of the long-time dominating coverage of Chinese films in Vietnam

• In 2009, Chinese games boomed the market with 17 in total of 22 games released. China always keeps top position in gaming source.

• Japan pays little attention to games for PCs. They focus more on games for game box (play station, Wii, XBoX, …) , which are offline games

• Korea is reducing quantity of games published in Vietnam

• Beside the above 76 games registered by domestic publishers, gamers may play unlicensed games and games at oversea servers Source: Press research

• Vietnam companies are quickly raising number of games produced. However, almost Vietnamese games have simple design and game-play. Vietnam is focusing on web games due to low requirement of technology and investment. 4

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Types of Games Games for mobile, in any type. is raising significantly, after the booming of Web game sector.

Channel Game box

PC and laptop

Mobile devices

Types of games

Features

Offline game

• Can be played without internet connection • Very old and extremely diverse market with variety of products

Client games

• • • •

The largest and also most profitable game sector Play online by using an application in PC or laptop Long life expectancy (averagely at least 2 years) Good graphic and design, with strategy and stories

Web games

• • • •

Play on web sites without any required application in PC or laptop New trend recently. Convenient, but risky option Not so good design and not as strategic as offline and client games

Mobile games

• Play on mobile phones and tablets • Started as very simple games on mobile phones, gradually became an independent and profitable industry. • Quickly rising recently • Games stay at peak for only3-6 months

Trend • Offline games are changing into online games by Network-creating programs • Game with 3D graphics are getting more attention • Web games are upgrading designs and game-plays

• Rapidly growing • Mobile game creators are becoming more specialized and independent upon PCs games

Trend of creating multi-platform games (an online game can be played in all channels) 5

Source: Press search COPYRIGHT B&Company INC. ALL-RIGHTS RESERVED.

Key players Key Player of Game Market V.N.G occupies dominant market share. FPT and VTC, despite their decreasing revenue, keep their places in top 3 Vietnam Games market share, 2012

Top Game Publishers in Vietnam, 2012 No

1

2

3

Game publisher V.N.G

VTC Game

FPT Online

Establis hment

Revenue (2012) MUSD

Famous games

2004

130

• Vo Lam Truyen Ky • Kiem The • Gunny • Boom Online • Zing games

• China

• Cross Fire • Fifa Online 2 • Audition

• Korea • US • Korea

2006

2007

30

10

Source: Press search, Companies’ websites

• Thien Long Bat Bo • MU Online

Origin

• • • •

China China Korea Vietnam

• China • Korea

100% = 250 MUSD

Current situation

• Going up from 81 Mil USD revenue in 2011, taking over 50% market share of Vietnam Gaming market in 2012 • Having trouble in general • Closed some of its famous games • Raising in Mobile Game sector • Going down from 15 Mil USD revenue in 2011

Other V.N.G 32

52 4 FPT

12 VTC

6

Key players Key player in Mobile Game sector Mobile games sector is shifting from being mobile version of PC games to being independently developed Key players of Mobile games market •

Top 3 companies in Mobile games in Vietnam, 2012: MeCorp, McCorp and Teamobi

•

They all specialize in providing mobile games

Vietnam Mobile Games market share, 2012 100% = 12 MUSD

Other •

•

MeCorp and McCorp quickly succeed in Mobile games market - They are both established in 2010 and early 2011, the hot time of Mobile games - They both set partnership with big Telecom Operators: Viettel, VinaPhone, MobiFone … to introduce and sell their products. - They focus on the taste of Vietnamese gamers: online community games, with good design and adventurous game-play like a PCs game. - They take advantage of technology to consistently improve their products, becoming more independent instead of keep being Mobile versions of PCs games Teamobi was established earlier (2007), however their market share is not so large: - They do not focus on Vietnamese gamers’ taste, but rather serve them with offline games (40 offline games and only 5 online games) - They do not team up with Telecom Operators to fasten the distribution and payment process.

8

VTC

MeCorp

8 Teamobi

42 17

25 McCorp • VTC is focusing more in mobile games due to their downward revenue in PC games

Source: Press search; MCC, 2013

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Game release Game release procedure Vietnamese publishers are negatively influencing game industry by violating standard procedure of game releasing Standard procedure of Client and web game releasing ( 3 – 6 months) Pre-closed beta

Closed beta

Open beta

(Internal trial to test game quality)

(Public trial to test game quality)

(Public trial to test server capacity)

• Allow few pro-gamers to test and find out game bugs • These game testers work as company’s collaborators, or game developers

• Takes 1 – 3 months • Allow more gamers to test and find out game bugs

• Takes 2 – 3 months • Allow a large amount of gamers to play game as a trial version to test server capacity.

Official Release

• • •

Start Releasing the game for gamers to play At the end of trial time, all properties must be reset Almost games start free-ofcharge, then charge fee later then

Current situation of Game release in Vietnamese market Consequences

Current situation •

Vietnamese publishers are violating the standard procedure of game release by minimizing or even skipping trial steps to quickly release the game, attract gamers and get revenue

• Games come to the market within short time and large amount, making the game industry competitive • Publishers do not ensure game’s quality: game bugs, lag, server capacity • Publishers are not experienced to hacks, cheat, bugs,… so they can’t control the game properly • Low quality games, with bad game management and fast break-even point makes games’ life cycle much shorter

Source: Press search

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Game release Games release in Vietnam, difficulties and suggestions Vietnamese publishers are facing various problems raising from license of game releasing. Game release, difficulties and suggestions Difficulty

Mobile games

PC games (Offline games, Client games and Webgames)

• • • •

Each publisher has a large amount of new mobile games Long time processing license (2-3 months) Short profitable time (first 3-6 months) Competition from Games from oversea server, which comes to customer faster as they are free from license regulations

• Unlicensed games, mostly from China is ruining the profitability of Vietnam gaming market • Competition from oversea servers • Hack, cheat in games

Source: Press search

Proposed solution • In order to have a game released, a license is needed for only the publishers, not the particular games • Improve domestic games’ competitiveness • Need more management over the release of Online games • Game publishers need to invest more into their products

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Hot games Game

Logo

Game publisher

Type

Producer

Free/Paid

CUU*/registration number/frequent login

Gunny

VNG

Webgame

7Roads (China)

Free

Maximum 170,000 CCU Monthly login: 4 million

Fifa online 2

VTC

Client

EA (US)

Free

Maximum 100.000 CCU Daily login: 1 million

World of Tanks (WoT)

VTC

Client

Wargaming (Belarus)

Free

Maximum 250,000 CCU

Cross fire

VTC

Client

SmileGate (Korea)

Free

Maximum 60,000 CCU 1.5 million registration accounts

World of JX (Kiem The)

VNG

Client

KingSoft (China)

Free

Maximum 80,000 CCU

*CCU (concurrent users): number of users playing game at the same time Source: Press search

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COMPANY INTRODUCTION

B&Company Vietnam 11 COPYRIGHT B&Company INC. ALL-RIGHTS RESERVED.

Company Overview Founded in 1997, B&Company dedicates to provide reliable business expansion support, research and consulting services.

Japan B&Company Joint Stock Company Established : 1997 (2007 switched to Joint Stock Company) Representative: Shigemasa Ohta Business • Strategic marketing • Support newly established companies. • Venture investment. • Foreign business investment (Vietnam). Vietnam B&Company Vietnam Co., Ltd. Established : 2008 Representative: Shigemasa Ohta • Market research: Desk research, Industry Business interview, Costumer survey, etc. • Investment consulting and supports. • Business tour/ Business matching. • M&A supports.

Representative profile • Advisor on overseas market development – The Organization for SME and Regional Innovation, Japan • Advisor of Center Tokyo Area, Tokyo Small and Medium Enterprise Management Consultant Association. • Advisor SMEs on overseas market expansion – Tokyo Stock Exchange. • Special Advisor for government and business reform – Osaka Prefecture and Osaka City. • Senior Advisor for SMEs on international ventures. • Member of the National Research Committee for TEPCO Fukushima Nuclear Power Plant accident. Company’s qualifications • Member of ESOMAR. • Member of Japan Business Association in Vietnam. • Consultant for SME of the Tokyo Chamber of Commerce & Industry • Partner of JETRO Hanoi.

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Service Menu With reliable market data, we provide highly competent market research services.

Service menu

Descriptions

Industry Interview

Interactively interview customers, governmental officials, industry insiders or experts working in relevant industries to collect needed data or information.

Consumer Survey

Survey targeted local consumers to understand their behaviors and awareness by various methodologies namely street survey, focused group interview, family visits, etc.

Business Matching

Support client’s whole expansion process from finding potential local customers, partners and suppliers; negotiating until official execution.

Business Tour

Properly adjust contents of field trips or business talks with enterprises (in relevant industries) according to clients’ various requirements.

General Investment Consulting

Support client’s successful establishment in term of investment regulations, business establishment related documents and procedures.

Other services

Desk research, Exhibition participation support, M&A supports, Business event planning, Marketing supports and Document interpretation, etc.

※For further information, please contact us via email: [email protected] or telephone. COPYRIGHT B&Company INC. ALL-RIGHTS RESERVED.

13

Contacts

Tokyo Name

B&Company, Inc.

Hanoi

B&Company Vietnam Co., Ltd.

Contact person

Sugiyama (Mr.)

Address

3F, Kinshichou Sunrise Building, 3F, TH Building, 1 Do Hanh 2-14-7, Kotobashi, Sumida-ku, Str., Hai Ba Trung Dist., Tokyo, Japan Hanoi. 〒130-0022

Telephone 03-3846-2680

Ho Chi Minh

Van Nguyen (Ms.)

(84)-4-3978-5165

URL

http://b-company.jp

Email

[email protected]

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Phuong Bui (Ms.) 2F, Indochina Building, 4 Nguyen Dinh Chieu Str., Dist. 1, Ho Chi Minh city.

(84)-8-3910-3913

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