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Garena Online

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These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model of Garena. Garena provides a platform for online multi-player games and is now striving to become a platform for a wider variety of activities. Players compete through both skill and money, with purchases of tools and characters helping them win games. Garena profits from the sale of these tools and characters. Garena also provides communication services that complement the online games and it is using these services to expand the breadth and power of its platform. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for Garena.

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Garena Online

  1. 1. Ling Ran (Kevin) Zhao Xiaoyi Lin Wenhao Lim Shuqiang MT 5016 Biz model for Hi-tech Products MT 5016 Biz Model for Hi-tech product
  2. 2. Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategy Control Customer Selection & Scope of Activities Future Development
  3. 3. Introduction • Garena is a consumer internet platform provider. – Headquartered in Singapore (Fusionopoli, One North) – Founded in 2009 – Started as internet game provider (LOL; Fifa Online, etc…) – Huge expansion within 6 years (4000+ employee; 6 countries) – $ 2.5Billion Valuation, biggest IT company in Southeast Asia
  4. 4. How online game works Offline Game Online Game Better Skills = More Victories More Money = More Victories
  5. 5. By pumping in money, players can buy best players and get maximum enjoyment Over $10 million transaction daily for FifaOnline worldwide
  6. 6. What are game platform providers Server provider & maintenance Game operation and supervision Platform integration Marketing & Sales Pay and PlayGame Development Bug fixing Platform ProviderDevelopers Player
  7. 7. How does game developer choose platform provider Stable server operation Precise game cheater spot Excellent marketing ability Event hosting
  8. 8. The ability to increase user base and let them PAY MORE
  9. 9. Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategic Control Customer Selection & Scope of Activities Future Development
  10. 10. Launched in 2010 An online game and social platform for people to meet, chat and make friends with each other PC Platform --- Garena + Mobile Platform --- Gas
  11. 11. A single platform login for all the online game hosted by Garena Average online user: 1.5million on weekdays ; 2.5million on weekends
  12. 12. For online game player • One single access for multiple games • Social interaction with other game players • Community building • Teamwork platform • Mobile access • Integration with social media (Facebook, Twitter, etc) Value Proposition
  13. 13. For game developer • Provider a larger customer base • Locality • Data management • Marketing platform Value Proposition
  14. 14. Value Capture 3 most popular game on Garena+ Game content Developer Garena+/Gas Consumer Game Platform Pay for Virtual equipment/ extra features Commission Royalties Advertiser Provide server Subscription Fee Buy Ads Place banner ads on welcome window / game interface
  15. 15. Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategic Control Customer Selection & Scope of Activities Future Development
  16. 16. Launched 2012 A highly engaging real-time video communication and game streaming platform For Audience • Real-time communication with DJ • Live streaming of popular game competition • Choice based on audience-driven criteria • Multi-sensory entertainment • Improvement of gaming skills For DJ • Earn more easy money • Generate sense of pride • Gain popularity Value Proposition
  17. 17. Value Capture Consumers registering for following channels. Commission fees from followers buying virtual gift to greet DJs. Advertisements.
  18. 18. Gaming DJ Live Show DJ TalkTalk Consumer Advertiser (game developer) Signing fees for popular DJs Subscribe shows Subscribe shows Provide live game instructions to attract subscribers Provide live shows to attract subscribers Buy virtual gift to greet DJs Share profit from selling virtual gifts Buyads Playadsonpopular channels Registration fees Permissions to subscribe channels
  19. 19. Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategic Control Customer Selection & Scope of Activities Future Development
  20. 20. Launched 2014 A mobile App for people to connect and communicate with each other based on locations and interests • Free messaging and calls • Easy connect with people nearby and with same interest • Business opportunities - Play games, order meals, order taxi • Best serves the emotional needs of people • Curiosity – Majority of users are young people with a huge portion of under 18 people • Fulfill loneliness --- peak usage after 11pm Value Proposition
  21. 21. Value Capture • Makes most of its money by selling customers virtual goods (like virtual gifts, online stickers and emoticons). • Make money from assigning VIP permission (permit to tract who has seen your personal portfolio, could set specific age range to search around, discount charge for virtual goods) • Investment from Gas (provide Gas’ trail version game to consumers, help to transfer customer to Gas) • Advertisement fee
  22. 22. Consumer Advertiser (game developer) Buy online stickers/icons/emoticons, Vip permission Free mobile social platform Banner ads on welcome window Buy Ads Value Capture Game function connect to Gas Provide game Thunder Strike Free trial version Thunder Strike Buy complete version Thunder Strike Investment
  23. 23. Introduction Garena+ Talk Talk BeeTalk Business transformation & Synergistic effect Competitor Analysis Strategic Control Customer Selection & Scope of Activities Future Development
  24. 24. WHY:  Southeast Asia is less mature than Chinese game publishing and game operations  A very tough competition in Chinese market and less capital  The strong consumption power for potential customers in SEA Key for success--Blue ocean strategy First Entry for South East Asia
  25. 25. • Performance  Commercial expansion on emerging markets in SEA, HongKong and Taiwan  Learn successful experiences from big firms in Red ocean market(Tencent), apply it to emerging markets.  2009-2010,10X revenue, 2010-2011,4.5X revenue,2011-2012,3X revenue Key for success--Blue ocean strategy
  26. 26. 2010: Garena+ 2012: Talk Talk 2013: BeeTalk 2015 Shoppee Product Suites & Transformation Transformation from online game provider into a comprehensive IT company Key for success: First-mover in South East Asia
  27. 27. New business <10% >90% Revenue Stream
  28. 28. Purpose • Use Synergistic Effect to promote gaming business.
  29. 29. Synergistic Effect • TalkTalk was integrated in the Garena+ platform to transform game player into the game streaming audience. At the same time, TalkTalk is streaming popular game competitions provided by Garena+ • Highly overlapping of customers! • However, the intended connection failed due to insufficient user of TalkTalk (mainly because the company failed to predict the customer behavior). • According to the Garena employee, TalkTalk will be suspended in SEA market
  30. 30. Synergistic Effect • Game function on BeeTalk platform is connect to Gas (Garena+ on mobile) for only the most profitable game Thunder Strike. This will transfer potential customer from BeeTalk to Gas/Garena+ • BeeTalk game platform has become the major (almost all) revenue income for the products.
  31. 31. Customer Selection & Scope of Activities Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategic Control Future Development
  32. 32. Customer Selection Table 1. Study on 200 games with 465 million monthly active users
  33. 33. Customer Selection • Gamers • Male and Female • Average age: 18 – 35
  34. 34. Scope of Activities • Vertically Disintegrated • Is an online internet platform provider • Share risk and more responsible to changes in market conditions Outsource • Developing of games • Advertising • Maintenance of games In-house • System Management • R&D • Marketing • Payment (AirPay) • Partnership and investment • Maintenance of system and relevant add on functions
  35. 35. Customer Selection & Scope of Activities Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategy Control Future Development
  36. 36. Competitor Analysis  Focus in Vietnam market  30 million active users  Products spread spans from social media to entertainment to mobile games  Games were of poorer resolution and quality VNG Asiasoft  Focus in the Thailand market  Provides promotional media and advertising activities  Device that increases level of security  Absence of complimentary social media or add on features Garena+ Focus in Taiwan and Hong Kong market  28 million active users  Products spread spans from social media to entertainment to mobile games  Any?  Complimentary assets such as Talktalk and Beetalk to enhance user’s experience
  37. 37. Customer Selection & Scope of Activities Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategic Control Future Development
  38. 38. Emphasis in brand awareness: - Exhibition like Garena Carnival - Cosplay competition - Communication with gamer - Lottery Strategic Control (Branding)
  39. 39. - Enhance Network Effects - Partnership - Healthy ecosystem of developers and stakeholders Strategic Control (Network effect)
  40. 40. GPL as a part of eSports ecosystem, enhances the connection and network effect between online gaming platform and TalkTalk (i.e. free gifts or lottery), thus, push its hot games ultimately. -More incentive (High reward like LOL S5, nearly 200m) -Large scale competition Strategic Control (Network effect) Garena Premier League (GPL) is a professional Garena LOL league with teams in SEA, which lasts for few months annually
  41. 41. - Sole agent in Taiwan & SEA - Low ‘ping’ value-better network connection - High switching cost to other servers Strategic Control (Appropriability)
  42. 42. - Build in new and integrated support features (Garena Authenticator ) - Enhance stability and connectivity of systems (One account log-in all products) - Enhance security in payment (AirPay) AirPay, an Indian third-party payment provider, affords payment gateways to Garena. Strategic Control Garena Authenticator providing 2-step authentication for your Garena Account
  43. 43. Introduction Garena+ Talk Talk BeeTalk Business transformation & Network effect Competitor Analysis Strategy Control Customer Selection & Scope of Activities Future Development
  44. 44. Changing trends in games: • Esport is still hot now!! But more revenue is in market. • Thunder Strike (Existing hot Garena mobile game)is not enough. Garena needs to import more hot mobile games to BeeTalk and Gas http://blogjob.com/oneangrygamer/2015/05/global-games-market-to-hit-74-2-billion-in-2015-according-to-superdata/ Future Trends
  45. 45. MMO game revenue sharing rule MMO game developer Game Platform >60% <30% Alliance /Acquisition=> Independent developer Models can be followed:  Alliance: NetEase corporate with Oriental DreamWorks (movie company) and game designers from other labs that developed Kung Fu Panda mobile game  Acquisition: Tencent Acquires Riot Games (League of Legends developer) for $400M - Develop competencies for game developing Future Development

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