Interview

It's not all about China: US is still 'an important market', says Perfect World CEO

Robert Xiao on his latest strategic play

It's not all about China: US is still 'an important market', says Perfect World CEO

The Pocket Gamer-curated Global Games Stars track during the GMIC 2013 conference in San Francisco was a time to discuss strategy.

Hence, it was an appropriate time to meet up with Dr. Robert Xiao.

The CEO of Nasdaq-quoted Chinese publisher Perfect World is currently launching the MMOG specialist into the mobile gaming market, both in China and the US.

Indeed, it's already had some success in China with top 5 top grossing game Return of Condor Heroes and also has announced its wider ambition with new global investment arm, PWin (Perfect World investment).

Pocket Gamer: What's Perfect World’s mobile strategy?

Dr. Robert Xiao: It's about content and about partners. We have good IP and an active user group, but how do we meet the needs of wider consumers?

In the mobile space, things move fast. How do we apply our online, RPG, MMO experiences to a new era? That becomes the challenge. That’s the content we need.

We are trying several different approaches, from simple to more sophisticated mobile games such as car games, simple strategy games, RPGs and 2.5D games. Gradually we are understanding how people are spending time and spending money and then we're building the right content for that group. That’s one key part of the strategy - the people.

On the other hand, there's the issue of marketing capability - promoting your brand while reaching out to as many people as you can in terms of channels. This is harder because mobile has lower barriers to entry barrier, so everyone can get in.

So before the industry consolidates, the key is to get as many people on board as possible.

What can you tell us about your PWin program?

It's an extension of our existing activity. We've just given it a new name. As you know, we spent $50 million to acquire Cryptic from Atari and we've invested several million dollars in Runic.

Dr. Robert Xiao

We've been dong these investments [in the US], as well as a lot in China too.

So PWin is an investment brand, and the focus is on console gaming - because we haven't touched console before - and on mobile.

Is it pure investment or a publishing partnership, or could it be a bit of both?

It could be a bit of everything. Mainly we’re looking at investment first, but if that’s not an option, we can have all kinds of options for our partners.

What sort of developers or partners are you looking for?

That’s a hard question to answer. I don’t want to frame myself or limit myself.

Of course, the majority of the games will be focused on mid to hardcore players, because that's our existing customer base. But I never rule out the possibility of a team who could bring something extra to our existing portfolio.

The key thing to me in terms of partnering, investing or acquiring a company is talent.

In their particular area - whether it be MMOs, RPG etc - these guys need to be experts. Second is their culture; how does their way of believing, their value system, their future goals, their whole mindset fit into that of Perfect World.

Mobile games are simpler than MMOGs so do you think you'll have to become more casual to find success?

I think mobile will become a broader spectrum. On the lighter end you’ll need a large audience because the ARPU is very low. With these games, you get a blockbuster and so many people are playing the game, it becomes a phenomenon. Lots of players contribute a very small amount of money.

Xiao talks to Pocket Gamer's Chris James

On other side of the spectrum there are always players who love to play and are looking for new games that can be more sophisticated and fit their needs. At the same time they’ll pay money for this, so ARPU will be high.

Asian MMOGs and mobile games don't always work in western markets. Do you think that will change?

I think there is a cultural factor at play. We've been operating in the US for five years. We have to admit this. Even the way we understand the consumer in the PC MMORPG is different, so we have to tune into a new group of people.

In the mobile space that’s even moreso, so what we’re trying to do now is invest in the US mobile space. We have a game that just launched.

But we are not expecting the first game to be a huge success.

In China, we released three games and only the third was a hit. We have patience to gradually increase our understanding, by testing the water, making incremental investments, getting feedback, tweaking and reviewing, and gradually finding what works in the market.

So, you're like water. You're going to wear away the competition?

You know, I’m not in a hurry. We’re a listed company [NASDAQ: PWRD]. What I want is more sustainable growth rather than make a hit, get the money and get out.

So we have to strategise the situation. Mobile is the future and US is an important market and we have to start to work on that.

How important is mobile for Perfect World's future plans? What sort of percentage of revenue do you expect in 3-5 years?

As in my chart [shown during his GMIC presentation], there are three meaningful markets - console + smart TV as one big chunk; PC+MMO as another chunk; and also mobile (tablet + smartphone). And these three will be similar in size. Even though an estimate is just that, my vision is to grow these three areas as the pillars of my business.

These would be my long-term expectations. In terms of how I set up my KPIs for 2013 or 2014, I’m not 100 percent sure, but I hope mobile and console will grow as fast as possible.

What are the most interesting mobile market trends?

The most exciting thing is that mobile grows everywhere - greatly improving human life. Mobile gaming is just one area. That is making people excited.

All of a sudden everything is on mobile, so what about games? That is the question everybody asks us, and our answer is yes, mobile will be a big chunk of people’s entertainment and that keeps us, keeps me, excited all the way.

Also, when it comes to mobile, the distance between people is shorter and shorter. Not only in Asia, but also in the US.

People will see what is happening in China and ask, 'Can we do it in the US?' People will see what's at the top of the US iOS chart and quickly duplicate it in China. Distances are shortening and people are becoming more unified as a consumer group, so that makes things more interesting.

 

CEO

A footy game fanatic and experienced editor of numerous computing and game titles, lively Chris is up for anything - including running Steel Media! (Madman!)

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