Inside Asian Gaming

INSIDE ASIAN GAMING | December 2009 24 smaller than in Hollywood, but like Hollywood they are escalating each year,” says Mr Woelm. “We see the distribution model operate [for MMOs] in a similar way to Hollywood. Let’s call the game developer the equivalent of the Hollywood studio. The developer invests millions of dollars into making the game. Once the game is developed, it targets different territories for distribution. In this case, it’s countries such as [South] Korea, China, Japan and the US. In those countries, there’s what’s called a publisher. The publisher operates and markets the game in the territory. The publisher pays a licence fee to the developer. The developer seeks to recoup most if not all of its costs via the licence fees.” The development budget for Dungeon & Fighter (often referred to by enthusiasts simply as DNF) was US$13 million over four years according to trade press reports. The game was created by South Korean company NeoPle and first launched in that market in 2007. The distribution rights to DNF for China were licensed to Tencent Holdings in December 2007, and the game had an open beta launch in China in 2008. Tencent Holdings is a Hong Kong-listed company most famous as the operator of the enormously popular Tencent QQ instant messaging service—a platform only available in Mainland China. Although Tencent hasn’t disclosed how much it paid for the China rights to DNF, the company’s consolidated cash flow statement for 2007 filed in Hong Kong shows spending of RMB197 million (US$29 million) on “purchase of intangible assets”, which the firm says in a note includes licensing fees. It’s fair to point out that licensing fees may be amortised over more than one quarter, so the company statement may be an imperfect guide. Industry sources say, however, that licence purchasers are normally asked to give a minimum guarantee up front to the MMO game developer, equivalent to 30% of the licence fee. Media speculation puts Tencent’s payment for DNF rights in China at anywhere between US$10 million and US$30 million plus. The investment appears to have paid off, because the game now reportedly has 900,000 concurrent players (i.e., people taking part simultaneously). Aion, from South Korean development company NCsoft, is described as “a game of celestial combat and adventure”. Players choose to be one of two warring races—the Angelic realm or the Demonic realm. The budget on Aion was reportedly US$25 million and it took four years to produce, entering the South Korea market in 2008, and China in mid-2009. In China, Aion has been licensed to Shanghai-based Shanda Interactive Entertainment Ltd for a fee of US$30 million according to a report by JLM Pacific Epoch, an independent research firm focused exclusively on China. Shanda’s marketing budget for Aion is said to be RMB10 million per quarter. Dungeon & Fighter Aion, from South Korean developer NCsoft MMO