Inside Asian Gaming

February 2009 | INSIDE ASIAN GAMING 17 Cover Story T he emergence of soft gaming as a business model potentially creates exciting new opportunities for gaming product providers to sell services, but it also presents new challenges and ethical questions for governments and regulators. The scientific community is far from united on the topic of alleged ‘gaming addiction’ in relation to casual and role- play games, but the topic received major publicity in China in 2007. The local media reported that a young and overweight Internet user from northern China collapsed and died after spending the entire lunar new year holiday playing computer games. Game over The man, identified as Zhang and whose age was given as 26, was said to have spent almost all the seven-day holiday in front of the computer screen, leaving it only for toilet breaks and to snatch a few hours sleep on the bed next to it. During the AiG conference, Shailesh Naik of CryptoLogic quoted a newspaper report from southern China about a woman who spent the equivalent of around US$7,000 at current exchange rates on an online subscription-based role-play 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 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 of material and equipment 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. Behaviour issues Common factors in the success or failure of all games appear tobe thedegree towhich they stimulate or interact with underlying traits of human behaviour, including risk taking and compulsive behaviour. It may be inevitable therefore that over time there will be convergence between elements of hard and soft gaming in terms of the way consumers seek to access and play them. The cases mentioned above are extreme examples, and it would probably be dangerous to draw any specific conclusions from them. It’s likely though that if more and more young people start accessing games online, where regulation of game content may be beyond the immediate reach of the national regulatory authorities, it will have the potential to bring service providers into conflict over issues already familiar to the land-based casino industry—namely the emergence of obsessive or compulsive behaviour in play or spending. Macau had been tipped during 2008 to publish a new set of rules to regulate online gaming. It’s understood that a draft document has already been prepared, but so far the government has made no announcement on its future. Singapore is another jurisdiction expected to enact specific online gaming regulations in the next year. In the absence of such regulation, the emergence in Asia of voluntary industry codes outlining the rights and responsibilities of players and service providers in online gaming may be the best way to protect the image of soft gaming, protect it from hostile attention by governments and ultimately allow the sector to blossom. Early Days Asia’s lack of online rules isn’t necessarily a good thing for investors “Korea’s rules are very specific,” says Ken Crouse. “You are allowed to have an online poker tournament, but you are not allowed to have a winner. You are though allowed a final table payout to the top three players. You can give them a prize such as a trip to Las Vegas, but you can’t announce in advance what the prize will be. The reality is that once you’ve given out prizes of a trip to Vegas the first time, players know what to expect.” Other content providers have also noticed Korea’s structural strengths, such as its high level of 3G mobile telephone ownership. International attention In December, New York-listed Electronic Arts Inc., the developer and licence holder for popular game franchises such as Fifa Soccer and NBA Street, announced the acquisition of J2MSoft Inc. a Korean developer of PC online games. J2M develops free-to-play online games with a revenue model based on micro- transactions for products such as on-screen avatars for players and advertising. Online games created and wholly owned by J2M include RayCity, TAAN, and Debut. “This is a significant step in EA’s strategic plan for developing and publishing online games in Asia,” said Jon Niermann, President, EA Asia in a prepared statement. “J2M is an experienced team of developers and we can’t wait to have them start creating online games based on new properties and powerful EA franchises,” he added. F rom an investors’ perspective, one of the key challenges in expanding the subscription and role playing game model is the lack of a regulatory framework in most Asian markets. This creates uncertainty, because without clear online gaming regulationwhat’s legal today could suddenly become illegal tomorrow. In countries that do have clear rules, such as Korea, it allows investors and operators to plan ahead. Korea opportunities Korea, where CryptoLogic last year launched an online poker room, was chosen as an important target market because of its combinationof highbroadbandpenetration, clear regulationandopportunities tooperate a new revenue model. Content from J2MSoft Inc Flash Point Gaming content convergence could lead to an ethical debate about compulsive behaviour