Why China could rule the new age of games

This article written by Dean Takahashi was first published by VentureBeat on February 25, 2011.

As the games business transitions from console and PC titles to social and mobile games, China is set to take away the United States’ leadership in the business.

That’s the bold prediction from Tim Merel, who has made a splash analyzing the video game market in the past couple of years as the managing director at investment bank Digi-Capital. Merel believes that in 2010, video game investment and acquisition activity changed fundamentally and accelerated in a way that it never had in the industry’s decades-long history.
 

全球电子游戏投资概况：网络/手机游戏和中国市场的崛起，和投资高成长企业时代的到来

This interview was first published in China on Techweb on 22 February 2011 , as well as in the People’s Daily and others.

Digi-Capital是一个针对高成长数字技术公司的投资银行，并刚刚发表了2011年全球电子游戏投资报告（请见http://www.digi-capital.com/）。有关这个报告的主要结论，我们采访了Digi-Capital的常务总监Tim Merel先生。

问题：从对电子游戏进行投资的角度，您看到了什么样的未来趋势？

正如我们在2010年的报告中预见的，电子游戏行业的活动在2010年快速增长，并发生了根本性的变化。2010年，游戏行业的风险投资在融到的资金方面已经达到了2007年的水平，而且这是在总投资笔数降低的情况下实现的。前10位的投资约占2010年总投资的60%，并明显地转向了网络/手机游戏公司。但是，由于普通的风险投资市场本身的弱点和对网络/手机游戏这一复杂并快速发展行业的知识匮乏和对其中关系的无法把握等原因，普通风险投资公司对这一市场的投资有很大的挑战。

Financial Times article: China's got game

This article was first published by Tim Bradshaw of the Financial Times on 22nd February 2011.

Powered by social networks and mobiles, Chinese video games are set to topple America’s lead as the world’s largest gaming market, according to research by Digi-Capital, a boutique investment bank.
Its new report predicts that revenue from online and mobile games will grow from a third to a half of the industry’s total revenues, at around $44bn, by 2014.

Global Video Games Investment: China, Online, Mobile Ascendent

This interview was first published by Gamasutra on 22nd February 2011.

Digi-Capital, an investment bank focused on high growth digital companies, has just published its 2011 Global Video Games Investment Review (available at www.digi-capital.com or http://slidesha.re/dJwTaX). We interviewed Digi-Capital’s Managing Director, Tim Merel, about their major conclusions.

Question: From a video games investment perspective, what trends do you see?

As we anticipated in our 2010 Review, video games activity accelerated and changed fundamentally during 2010. VC games investment approached 2007 levels in 2010 in terms of funds raised, although the number of investments declined. The top 10 investments accounted for ~60% of total games investment in 2010, with a fundamental shift to online/mobile games company investments. However general VC market weakness and limited knowledge and relationships across complex, fast moving online/mobile games sectors still make generalist VC games investment challenging.

CCTV (China State TV) Biz Asia interview

Digi-Capital's Managing Director Tim Merel was interviewed by CCTV's (Chinese State TV) Biz Asia program about video games investment in China, as well as Chinese games companies investing internationally. The segment gives an insight into what is driving games in China, and some of the companies focused on its rapid development.

The segment can be seen here http://bit.ly/gNqtWU at 14:30 in the video.

Banquet for Chinese Vice Premier Li Keqiang

I was grateful to be invited to the banquet in honour of Chinese Vice Premier Li Keqiang (who many feel may become the next Premier) on 11^th January at the Royal Courts of Justice in London. Also attended by UK Foreign Secretary of State William Hague and Business Secretary of State Vince Cable, the impressive Chinese delegation of Government and Business representatives made a strong impression.

Vice Premier Li Keqiang spoke eloquently about China’s objectives in the forthcoming 12^th Five Year Plan, and I am particularly encouraged by the increased focus on Chinese companies growing and investing internationally. Combined with plans to grow the digital creative industries’ share of Chinese GDP substantially, this appears to represent a clear endorsement of Chinese digital companies’ domestic and international growth potential. From direct discussions with high growth Chinese digital companies, it is an opportunity which they are pursuing very seriously.

International growth opportunities for Chinese video games companies

This article, written by Tim Merel, first appeared in the China Daily on December 31, 2010 under the title "Global games there for the taking".

The global video games market is growing rapidly, driven by online/mobile games. China has produced some of the world’s best games companies, which are now looking to international markets for additional growth. This offers a significant opportunity, but investing internationally isn't as simple as they might hope. To explain why, let’s start by looking at the global market.

A great market for Chinese games companies

The video games industry is big, getting bigger and changing, rivalling Hollywood in 2009 ($77B video games vs $85B film global revenue). Online and mobile games should grow total video games market size to $87B in the next five years, and take 50% revenue share at $44B (18% CAGR 09-14F). The historically strong pure console sector is flat to down.

Asia Pacific and Europe should take 90% revenue share for online and mobile games (China 49%, Europe 17%, Japan 14%, South Korea 11%). While North America remains important, the dominant market for online and mobile games is and will be China. If you want to be in online and mobile games, if you aren’t in China then you aren’t anywhere.