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Globalisation ; Video games

I am sitting in a small coffee shop on Nanjing Road in the heart of Shanghai’s central business district as I write this post.As I look around me the energy of this metropolis is palpable.There is a sense of optimism and a can-do attitude that is remarkably similar to what I experience in every vibrant economy worldwide.

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There is another common thread. Gaming is pervasive. Wherever I look, whether in the coffee shop or in the subway or bus station, people are enjoying video games and immersed in their phone, tablet, or laptop.

Last week, I expounded on the first of three secular orces that I believe are changing the videogame industry and today seems more relevant than ever to discuss the second one: globalization. The global software market for video games was approximately $52 billion in 2012. In Just the last 8 years, the emerging markets have gone from 12% to 47% of the market size and are growing at a compounded annual rate of nearly 30%. While the growth is broad based, countries like China, Brazil and Russia are on a tear, growing upwards of 100% in categories like Android and iOS.

In most of these markets, consoles are a very small art of gaming today, though that is also starting to change as even countries like China are re-evaluating long held policies on allowing consoles. As I look at technological and game play trends, it is my strong belief that the market for gaming is going to sustain this growth for many years to come and in most cases even accelerate. However, with globalization comes a very different set of technical challenges. Companies can’t simply replicate their success in western markets with a “rinse and repeat” of existing strategies for new geographies.

Companies that simply ranslate their products verbatim and release it into new markets will fail. To succeed, you have to think global but act local. What does this mean in the context of videogames? Each country is different in its gaming patterns, consumer behavior, infrastructure, commercial norms and local regulations. Different aspects of the game have to be tailored for local playing conditions as though the game was built from the ground up for that market.

A few examples: New game content that has local relevance and appeal Architectural changes that cater to local infrastructure, such as accounting for expected network latencies and packet losses. Introduction of different business models such as free-to-play Respect for local commercial norms, such as Konbini in Japan or Boleto Bancario in Brazil Expansion of the backend platform to support local offers, promotions and pricing changes Even though videogames are prevalent around the world today, there are cultural nuances that are extremely important to react to when it comes to delivering digital entertainment and services.

It’s not Just about marketing products differently (which is also very important) but the technology backbone that goes into supporting these titles also needs to adjust for he country or region you’re in. Everything from payment systems, gameplay mechanics and monetization strategies could be different. One such example is Plants vs. Zombies, a spectacular tower defense game from PopCap that has a massive consumer base in North America.

It has had remarkable success in China with its Great Wall edition which was released on mobile in China with local content, consumer data plans (26 and 36) and local network topology. Another example is FIFA Online 3 which was recently released in Korea and is based on the game mechanics of the popular FIFA 13 console game but tailored for the local market. It has already broken records with 2. 4 million players in Just the first four weeks since launch.

It’s a format that works better for that market and gives us the opportunity to deliver one of our core franchises to a new audience. Global connectivity has expanded the opportunities for our industry while also completely changing the demands on our technology infrastructure. I have to be thinking global with every decision I make. My next post I’ll address what I see as the final secular force – social connectivity. In the meantime, I’d love to hear how going global in business impacts your day-to-day.

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