Mon, Sep 19, 2011 - Page 12 News List

FEATURE: Game makers find new avenues to boost profits

TOUGH MARKET:The landscape is competitive for game makers, and profits can plunge if users are unsatisfied with new releases, as UserJoy experienced this year

By Jason Tan  /  Staff Reporter

The appeal of online game content and diversification into other overseas markets and businesses are vital for the survival of Taiwanese online game publishers, industry players said.

UserJoy Technology Co (宇峻奧汀) dropped a bombshell on the online gaming industry last week when it said it was undergoing restructuring to cut expenses.

The news was surprising given UserJoy was the best performer in earnings results last year. It earned NT$12.21 a share last year, up from NT$10.42 a share in 2009.

Rival Chinese Gamer International Corp (中華網龍) reported NT$10.41 in earnings per share (EPS) last year, down from NT$12.25 in 2009.

However, UserJoy’s EPS plunged to NT$0.94 in the first six months this year, compared to Chinese Gamers’ NT$2.53.

“Our first-half earnings dropped drastically, and second-half earnings visibility is low,” UserJoy spokesperson Jenny Chung (鍾淑娟) said.

The company has no plans to roll out any game titles in the second half to boost revenue, and the two games launched in the second quarter, Ninety-nine Nights (九 十 九夜) and Moego Online (萌谷帝國) failed to impress gamers, she said.

That led the company to decide to lay off 50 of its 460 employees, with some higher-ranking executives to take a pay cut or go without a salary temporarily, Chung added.

Personnel always takes up the bulk of a software company’s expenses, she said.

“Not to mention that not every game introduced to the market will be a guaranteed cash cow. There are a lot of expenses involved in promoting a title and the marketing dollars is [a] huge [amount],” she said.

While UserJoy became a casualty of unpopular games, other newer entrants enjoyed an earnings boost thanks to their popular titles that won gamers over.

X-Legend Entertainment Corp (傳奇網路), for instance, was the best performer in earnings in the first half with EPS of NT$8.78.

OVERSEAS EXPANSION

The strong results stem from royalties income collected from overseas markets for Finding Neverland Online (聖境傳說), launched last year, as well as this year’s newly introduced Glory Destiny Online (晴空物語), which attracted more than 40,000 gamers playing simultaneously during its first-week launch.

“In this competitive landscape, it matters whether your games are well received or not,” said Iona Chen (陳韻茹), public relations official at Gamania Digital Entertainment Co (遊戲橘子).

Other important strategies include forays into overseas markets and other digital entertainment businesses, she said.

Gamania was the first Taiwanese online game brand to expand globally, with overseas branch offices publishing and developing digital entertainment content in markets such as Tokyo, Seoul, Shanghai, Beijing and Hong Kong.

Gamania saw its EPS in the January-to-June period inch up to NT$1.08, from NT$1.06 in the same period last year. It reported NT$4.82 billion (US$163 million) in revenue for the first eight months, a growth of 24.73 percent from same period last year, on the strong performance of its overseas operations.

Its self-developed titles Divina (月之歌) and Web Koihime Musou received an overwhelming response in Japan, while Dragon Nest (龍之谷) continued to boost momentum for Hong Kong’s operations, it said.

A 3D title launched last month, Soul Captor (狩神傳), will contribute to sales momentum in the second half, it said.

On Sept. 9, Gamania debuted its first animation production from Two Tigers (兩隻老虎) — its new affiliate established with animation production house Sofa Studio with capital of US$400,000.

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