Inside Asian Gaming

INSIDE ASIAN GAMING | March 2008 20 Mobile Gaming notion of role playing games being betting games may be difficult for some people— especially Western investors—to grasp, suggests Mr Naik. “Are role playing games gambling? We think that the inevitable convergence will see some RPGs take on gambling characteristics,”he asserts. “Already, there are massively multiplayer games (MMORPG) where there is a random number generator in the program used by the player. The player doesn’t know what the outcome will be and the player uses the game to generate outcomes typically in the form of virtual currency or real winnings.” Mr Naik quotes a recent newspaper report from southern China about a woman who spent the equivalent of US$6,000 on an online subscription- based role-playing game. “She spent many, many thousands of hours playing this game until she got to the level of the queen. She had spent about 50,000 yuan–about US$6,000 on it. The fundamental trigger here is what she called a chest. She said: ‘Paying to open a treasure chest on this game was like a casino slot machine.All kinds ofmaterial andequipment spin inside the chest like the drum on a slot machine.’ “During a crazy period, she said for her it was like gambling in a casino,” adds Mr Naik. This exhibiting of what some might call gambling behaviour in a technically non- gambling setting raises ethical challenges for content providers, carriers and governments. If it’s not illegal, what gaming company can afford to ignore this revenue stream? If it’s not banned, what telecoms carrier— faced with downward pressure on carriage charges from industry regulators and consumer groups—can afford to turn away content that keeps people on the phone for 50% longer or more each day? What government, when faced with content that potentially redefines gambling and also has the potential to produce huge revenues, can avoid taking a policy position on the issue? Relentless march of online gaming “Our view of online gaming is either that governments will take charge of it, or it will overrun them,” says Mr Naik. “Wehavealready seen this in Japan,where the government has not yet regulated for online gaming. Yet, if you speak to legislators there, they will tell you it’s very evident that a large rush to online gaming means that sooner or later they will have to embrace and regulate it. We are asking ourselves what we can do to prepare for that.” “Ninety percent of professional money managers can’t beat the money or equity market,but governments allow that industry in nearly every country,” says Mr Crouse, himself a former investment adviser in Silicon Valley. “In my mind that’s way more gambling than what we do in online poker.” CryptoLogic - History and Strategy CryptoLogic is apublic company listed inToronto,LondonandNewYork.It specialises in the development of high quality games for online use, including those delivered to mobile handsets. It also provides support services including e-cash management, marketing and customer care. The company’s products feature more than 200 games in all major languages. The range includes original versions of classic card and gambling games offered for fun play or cash wins, role play products and slot style games featuring famous characters licensed from partners including Marvel Comics. CryptoLogic is a mature company in online gaming terms. The business was founded in 1995 by two mathematicians who created an online encryption program for secure payments via the Internet.They discovered the system offered huge benefits to the gaming industry, and as a result decided to set up a gaming software provider. In its e-cash management role, the company has processed more than US$54 billion in secure electronic transactions for more than 2.5 million players across the world. In 1999, on the strength of its products and reputation, CryptoLogic signed up William Hill, a major UK gaming brand since 1934 and the first land-based operator to establish an online casino. Other clients include Playboy and the Scandinavian poker licensee Betsafe. The company was recently named Top Casino Software provider for the third consecutive year by a leading industry award scheme. “In Asia,we’ve chosen fivemarkets,identified on the basis of broadband penetration, mobile phone uptake, a massive and growing middle class and an interest in electronic gaming and gaming generally,” says Mr Naik. “They include Japan and Korea. Korea has the highest and most intense broadband penetration on the planet right now—far ahead of anything in Europe or the US.” Cryptologic’s other target markets are Greater China (including mainland China, Hong Kong, Macau and Taiwan); Indo-China and the Philippines; Southeast Asia (including Malaysia, Singapore and Indonesia) and India. CryptoLogic says it takes a responsible approach to online gaming, and that all markets are addressed with appropriate products. Some markets, such as Muslim Indonesia with 234 million people at a median age of only 26.9 years,are hard to ignore, and CryptoLogic will offer only those casual and skill games that are acceptable culturally and legally in such countries. “You have to decide whether you want to be in a market for the long term or the short term,” says Mr Naik. We are here for the long term, and so we seek strong engagement with governments and regulators in the region. We strongly advocate government involvement and regulation in all aspects of gaming, to ensure safe and responsible entertainment for all consumer segments.