APRIL 19, 2010 • Plenty has been written about the rise of online games in South Korea, India and China during the last 10 years. One Asian market that hasn’t gotten much press by comparison is Taiwan. Best known as a major manufacturing source for well-known consoles such as the Xbox 360 and PlayStation, Taiwan also has a well-developed and growing game development community. In the area of online games one of the leaders in Taiwan is Gamania Digital Entertainment. Gamania, is the leading game operator in Taiwan and also has started developing its own games for release in Taiwan, and increasingly the rest of the world.

Having developed strong relationships with the games industry in Korea, Gamania hit it big when it licensed Lineage from NCsoft for the Taiwanese market. While the company had already notched up a number of home-grown success previously, the response to Lineage pushed Gamania into a new level of success. Lineage was a subscription based game where users pay by the hour or month.

Like many of the Asian companies, in recent years, Gamania has seen a great deal of growth from free-to-play (F2P) games that feature a virtual item model. Some of the big successes for Gamania has been in its relationship with Nexon to bring popular F2P like Maplestory and Kart Rider to Taiwan.

Taiwan has a very active online gamer population. However, with only about 23 million people, growth is clearly limited. Thus Gamania is making a major push to expand globally.

The company has had subsidiaries in Hong Kong since 2000 and Japan since 2001 and together those divisions account for about 20% of revenue. However, the biggest growth area for Gamania is clearly expanding into mainland China and also coming to Western markets.

To launch in the U.S., Gamania partnered with the Cartoon Network to co-produce a TV show and a free-to-play game based on the property Hero: 108. The television show launched in March, and the Hero: 108 game starts beta on May 11, 2010.

Gamania recently opened a new office in Irvine, Calif, and DFC saw this as high time to find out more about Gamania from marketing manager Yuwei Chang.

DFC: So give us the big picture overview of Gamania today. What are your primary products? How many employees do you have? How many users do you have?

Yuwei: Gamania Group originated in Taipei in 1999, and since then has expanded to five territories in Asia, including Korea, Hong Kong, Japan, and China. In October 2009, Gamania Digital Entertainment (U.S.) was established in Irvine, Calif. as the newest branch office, bringing the total employee count to 1,300 worldwide.

Since introducing the Korean online game, Lineage I, to Taiwan in 2000, Gamania forever changed the online game industry in that market, as well as the consumers’ habits and expectations for games. In Asia, Gamania has made a name for ourselves as an online game publisher, but since 2003 we have released several self-developed game titles, and now we are making the expansion overseas, by stepping away from the publisher strategy and releasing only games that are developed in-house, starting with the multi-platform Hero: 108 Online. Our ultimate goal is to build a global digital entertainment experience, easily accessible to people all over the world.

DFC: How did it happen that Gamania had the largest game server center in Asia by 2000? Which companies were early to launch such servers in Taiwan, and explain the business strategy that led Gamania to push for the largest server capacity.

Yuwei: In 1995, Gamania’s CEO, Albert Liu, and his friends were so passionate about games that they started the company Full Soft to develop fun games, facing struggles and hardships along the way before finding success with the game Convenience Store in 1999. From then on, Albert had the vision to expand internationally, ultimately changing the company name to Gamania. The company name consists of two words, “game” and “mania,” representing to game enthusiasts that as a company they are prepared to maximize the gaming experience for their customers.

In 2000, Gamania moved from the role of PC game developer to online game publisher by acquiring the Chinese version licensing rights to Lineage I, and its huge success ignited Taiwan’s entire online game industry. At the time, no one knew how to host game servers and IDCs for online games. So, for security reasons, the only solution was for Gamania to build our own game server with 24 hour surveillance. The unprecedented success of Lineage I meant that we needed to create game server capacity for at least 180,000 concurrent users to handle our needs.

However, we now have game servers in other locations, since the industry has matured and is more experienced than it was 10 years ago.

DFC: Gamania entered the Korean market fairly early in 2000. After launching Gamania in 1995, what led you to make that jump five years later? Were you StarCraft fans too?

Yuwei: Following the success of Lineage I in Taiwan, we opened our Hong Kong and Korea offices in 2000, where we published the Korean version of Convenience Store 1, which became very popular selling nearly 150,000 copies. By the end of the year, we simultaneously launched our Convenience Store 2 in Taiwan, Hong Kong and Korea. It was a business strategy in-line with expanding Gamania overseas.

DFC: How challenging was it building good business relationships in Korea?

Yuwei: Korea is a very mature and challenging market for sure, but even more so as an overseas company. For Gamania to enter this market was tricky, because Korea is a very unique market with a lot of local government support in the gaming industry. However, Gamania spent a lot of time understanding the intricacies of the Korean gaming industry and overcame the initial entrance struggles.

DFC: Those Korean relationships paid off well with Gamania. What does it take to localize a Korean game so that it has the most appeal for Chinese players.

Yuwei: Acquiring the Chinese language rights to Lineage I in 2000 paved the way to build and maintain the strong relationship that we still have with our Korean partners today. In terms of Lineage I, to be honest, we were very lucky and took full advantage of being in the right place at the right time.

It was not only our first time licensing an online game, it was actually the first online title in Taiwan. At the time, we simply used the exact same Korean version in Taiwan and Hong Kong, which brought us great success. To this day, the developers still continue to give us great support with game expansion and development, allowing Lineage I to continue its success as the game still maintains an impressive 150,000 daily concurrent users after more than 10 years.

However, there are now hundreds of titles released annually in Taiwan and Hong Kong (traditional Chinese), and during the past three years we’ve seen a lot of progress in game development in China, with nearly 600 more games launched in simplified Chinese. Due to intense competition, games not only need to be localized, but they also need to be “culturalized,” depending on the market’s expectations, target audience’s preferences, gameplay, game design, etc. It’s also important for the developers to be able to respond immediately to the publisher’s immediate requests according to each territory’s target audience and local holidays. An example of culturalization is when we launched EverQuest II, we had to modify the character designs to suit the Eastern market.

DFC: Tell us more about your GASH points payment system. When did GASH go into operation, and how fast did users get used to using these points to pay for items?

Yuwei: The GASH (Gamania + Cash) system is a payment gateway system developed in-house by Gamania and has been in full operation for more than nine years, used in over 30 titles in all territories. Currently there are 15 million active members using GASH. In 2004, Gamania launched our mobile phone payment system in Taiwan, allowing all members to purchase GASH points through their mobile phones, making Gamania the first company in Taiwan to offer an integrated virtual payment system. Today, we have a full 24/7 customer service department and provide a variety of payment options, including credit cards, GASH prepaid cards, ISP, mobile, land line, etc.

DFC: In 2004 you integrated GASH purchases from mobile phones. How successful was this option with users, and in what markets is this mobile phone integration supported?

Yuwei: With the high penetration rate of mobile phones in Asia, this payment option gained great success and currently this GASH integration support is available in Taiwan, Hong Kong, Macau, China, and Japan.

DFC: What’s Gamania’s overall mobile strategy? Are you pushing content to mobile in addition to general utility options?

Yuwei: Our core business is still online games, but we are also in development of iPhone games, with Hero:108 being our first iPhone game.

DFC: Bright Shadow was your first major self-produced online game. Why did it take until 2007 for Gamania to produce and release its first online title?

Yuwei: Actually, Gamania had released self-developed games before Bright Shadow. In Taiwan, we launched our self-developed game COCOCAN in 2003 bundled with the game soundtrack single, which resulted in 250,000 registrations in just two weeks.

In 2006, Gamania Group announced the launch of five self-developed online games at the Tokyo Game Show: Super Rich, Bright Shadow, Xian Mo Dao, Zodiac Online, and Art of War, generating industry buzz immediately.

DFC: How much of Gamania’s business is focused on internal developed products versus licensing the appropriate product for the appropriate market? How do you see this trend going forward, will Gamania tend to focus more on finding the best products and bringing them to new markets or will you look more to developing products from scratch designed for a specific market(s)?

Yuwei: Supported by continuous growth and a focus on internally developed games, in 2002 Gamania acquired several Taiwanese subsidiary developers, including Fantasy Fish, Seedo, Playcoo, and RedGate, to produce games in-house for release. Since opening the U.S. branch office in 2009, Gamania’s global strategy has shifted to focus more on self-developed games, with the local branch office working closely with the in-house developers to create games modified for a specific market early on within the development stage.

DFC: You now have branch offices in Seoul, Beijing, Tokyo, Shanghai, Hong Kong and Irvine. We hear Europe is next. Where in Europe will you put your first Gamania office?

Yuwei: We are still evaluating the market and the best location to set up our first European office.

DFC: The online game market in China is already fairly well developed, if not saturated. What are the competitive realities for a content provider like Gamania, and how do you boost market share?

Yuwei: Yes, China’s online game market has been growing quite rapidly in recent years with an accumulated growth rate of about 35%, whereas Taiwan is only 8% as it is a smaller market, and Japan is 21% with a market that is moving from PC and console to online platforms.

Chinese companies are doing a great job on the development side, and even though many companies have been making great progress for the past few years, there is still room for improvement in game design and gameplay that just comes with experience.

In terms of the entire game industry, China is so big, that there’s always room to grow. With an internet penetration rate of only 25%, it’s important to note that other than Beijing and Shanghai, there are still many second tier and third tier cities waiting to be developed.

For Gamania China, we’ve aggressively focused on expanding our R&D team since last year, and in the future we are planning to enter the China market with more selfdeveloped games. It will be a big challenge to boost the market share; even a 1% increase would be considered a noteworthy improvement for companies trying to enter the Chinese market.

DFC: How popular is Gamania and its titles in Japan, and how are you winning over more users in a market not always friendly to the PC platform?

Yuwei: Japan’s online market is growing, and their accumulative growth is at 21%, therefore making it a market with high potential, which more and more developers are noticing and are evolving accordingly.

Users are also developing, in a way similar to the U.S. market that has been mostly accustomed to playing console games. In Japan, it’s actually more important to ensure success on the laptop platform instead of just the PC platform.

Gamania spent seven years in Japan before winning over the market, facing a lot of difficulties and paying a lot of attention along the way. In 2009, we rose to the seventh spot in the country’s top ten game company list, which is especially successful as we were the only foreign company in the list. Japan is also a unique market, in terms of their culture and management habits. In 2008 we launched Lucent Heart, our self-developed game, and soon rose to number one on several of Japan’s gaming websites, and finally number seven overall in 2009.

DFC: What is your strategy for emerging markets such as Asia, Latin America and Eastern Europe?

Yuwei: After 10 years in this ever-changing gaming market, we take every step carefully. Last year we opened Gamania U.S., and by the end of this year we plan to do well in both U.S. and Europe, therefore for now we won’t think too much about other emerging markets as we need to focus on our current territories. We have an International Business Office that surveys and observes other markets, but currently we are taking things one step at a time and focusing on the road ahead.

DFC: Please tell us more about what your U.S. branch is responsible for?

Yuwei: Our U.S. branch is our operational office, making the strategic decisions regarding product management, including public relations, marketing, customer experience, and GM support. We work very closely with the Taiwan office and the developers to ensure that the product is best suited for the U.S. audience.

DFC: In coming to the U.S. are you are doing some very specific development targeted towards that market? In working with companies like the Cartoon Network what can Gamania provide that they currently don’t have from their existing online game offerings?

Yuwei: Hero: 108 is the first ever cross-platform collaboration between industry leaders Gamania Digital Entertainment, Cartoon Network, Moonscoop Entertainment, and Playmates Toys. The final result is a multi-platform full entertainment experience for kids and teens, first introducing fans to the Hidden Lands of the Animal Kingdom with a quirky, colorful, fast-paced and actionpacked massively multi-player online game (MMOG). Cartoon Network co-produced the animated television series with Moonscoop Entertainment, which can be seen on Cartoon Network globally throughout the year. The Hero: 108 franchise will also add a distinctive line of consumer products with collectable Hero: 108 toys, in partnership with Playmates Toys, later in the year.

Therefore, each partner is the leader in their own industry and can bring to this collaboration their specific expertise for fans of all age and genders, regardless of geographic territory.

DFC: How hard is it to develop MMOs like Hero: 108 Online for the U.S. market? What are the challenges?

Yuwei: One of the key challenges was identifying and understanding the differences and preferences of the Asian and Western players, and how to tweak the game to suit those different needs. In Asia, the players start playing online games at a much earlier age and are more familiar with the basic guidelines of gameplay. There are also cultural differences in terms of how the players would react under certain circumstances.

Through communicating closely with the Taiwan developer, RedGate, and listening to each other’s needs, we not only end up creating a game that’s suitable for the US market, but still remains true to the original concept.

DFC: Hero: 108 is a true multimedia brand with an animated series and a soon-to-be released MMO. What led you down this wider franchise path, and do you have other properties in planning destined for television, as well as online?

Yuwei: Gamania’s Creative Center originally developed Hero: 108 as a unique graphic interpretation of the 14th Century Chinese novel The Water Margin Stories, an epic clash of spirits, outlaws and emperors.

In 2003, Hero: 108 earned the animation prototype award at the “2003 International Digital Content Prototype Awards”, and we eventually co-produced the animation series with Cartoon Network UK and Moonscoop, finalizing the collaboration in 2007, for the actual cartoon launch on Cartoon Network U.S., UK, Italy and Germany on March 1, 2010.

DFC: Tell us how you monetize your online business. How much of your revenue comes from advertising, versus virtual item or subscription sales? How does this monetization mix vary by country or region?

Yuwei: We would rather not disclose any figures, but our main revenue source is through micro-transactions of virtual items.

DFC: You have said that you would like to grow your business through finding “new applications” of digital entertainment. What does that mean?

Yuwei: Looking at the gaming industry today, there are so many different applications other than console or PC downloads, such as browser games, mobile games on the iPhone and now the new iPad, Nintendo DSi, etc. The possibilities are endless for gaming!

DFC: Gamania has said that it wants more diversified titles to attract more users. What game genres are you considering, and why?

Yuwei: Gamania is open to evaluate all different game genres for consideration in each of our six territories, we always look for the title’s potential and how much fun players can have with each game.

DFC: Added R&D capacity is a goal you have set for Gamania. Are you talking about more game development, or completely new product areas?

Yuwei: Currently we are focusing on our core business, game development. We are always open to collaboration with partners in other product areas, such as releasing limited edition products that are highly coveted.