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Mobile games emerge as Garena's main growth engine

Such games account for 85% of the company's revenue in Q4 2018; shooter game Free Fire is a star performer

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It also presented an opportunity for Garena to expand its reach beyond South-east Asia.

Singapore

MOBILE shooter game Free Fire is not only a favourite among mobile gamers globally, but is also a key factor behind Garena's success, contributing 44.5 per cent or about US$103 million to its topline in Q4 FY2018.

Speaking to The Business Times, the company's vice-president of global publishing and platform, Mars Zhou, said Garena's first fully self-developed game has "performed beyond the company's initial expectations".

"We expect continued growth for the rest of 2019, and to sustain this performance for a long period of time."

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Since tapping the burgeoning mobile gaming space in 2014, homegrown Garena has contined to make inroads as one of the largest game publishers in the region.

The digital entertainment platform, which has roots as a PC game publisher and social platform for gamers, identified the immense potential of the mobile gaming space as one that would provide a platform for long-term growth and sustainability.

It also presented an opportunity for Garena to expand its reach beyond South-east Asia.

Mr Zhou said: "The mobile space continues to be full of potential and in recent years, has been driven by deeper smartphone penetration in global markets, especially in emerging economies with large populations."

"Moreover, the increased availability of affordable smartphones and the decreasing cost of mobile data subscription plans globally has ensured that growth has continued."

In FY2018, Garena generated a bottomline of US$262.5 million, up 50 per cent from the previous year.

Meanwhile, it posted a revenue of US$661 million, a year-on-year growth of 33 per cent, and which was 63 per cent of the year's revenue of its parent, the New York Stock Exchange-listed Sea Ltd.

Mobile games have played an increasing role in the company's business. In Q4 FY2018, such games contributed to around 85 per cent of revenue for that quarter.

In other words, mobile games are the main engine of growth for Garena.

Key to this growth is the decision to set up a game-development studio back in 2014, a move which Mr Zhou said has enabled the company to develop and distribute high-quality games at a much lower unit cost than its competitors.

With Free Fire, a battle-royale first-person shooter game developed entirely in-house, the move to undertake to develop its own publishing capabilities has certainly borne fruit.

App Annie, which tracks app analytics and market data, last year listed Free Fire as the fourth most downloaded game globally on the Apple App Store and the Google Play Store.

Globally, Free Fire has more than 350 million registered users and more than 100 million active monthly users.

The game has made particularly strong inroads in South America. App Annie data showed Free Fire as the top-ranked game in Brazil last year, going by average monthly active users, downloads and consumer spend.

It was ranked in the top five in each category in both Mexico and Argentina.

Another key facet of the success of Free Fire is agile development.

Mr Zhou said that this enabled Garena to go live with its first version of the game with limited features, but more quickly than its competitors could.

He added: "Then, we had a very aggressive update schedule to improve the product."

The company is at the moment not considering a sequel to the game. Instead, it is optimising the gaming experience as a long-term service to players.

Gaming and eSports are often viewed as complementary activities, and Garena has placed an emphasis on building the gaming ecosystem.

Mr Zhou remarked that eSports events not only strengthen the player community but "support the growth of the gaming industry by making the games stickier among the user communities".

Garena has an in-house team that plans eSports events across different markets, the most notable of which is its yearly Garena World event.

Last year, the event showcased 11 games published by Garena with 11,000 teams taking part. Approximately 240,000 people thronged the event over a weekend.

The seventh instalment of the event is underway in Bangkok this weekend, which sees the debut of Free Fire's first global eSports tournament - the Free Fire World Cup.