Perfect World gears up overseas expansion to integrate worldwide resources

Perfect World Co Ltd, a leading Chinese gaming and movie conglomerate, is gearing up its overseas expansion as it looks to gain an edge in the global gaming market.

"Globalization is a key strategy for us," said Xiao Hong, CEO of Perfect World. "After years of overseas development, we are now seeking to integrate global resources instead of simply seeking expanding business in overseas regions."

Ever since Perfect World established its first overseas subsidiary in the United States in 2008, it has made a name and money for itself. The company was one of the largest game exporters in China during the past decade, occupying about 40 percent of the total at its peak.

The Beijing-based company reported in April that its revenue for 2018 rose 1.31 percent year-on-year to more than 8 billion yuan ($1.16 billion), of which 5.42 billion yuan was from the gaming sector. And its overseas revenue reached 1.48 billion yuan in 2018, up by 20.09 percent year-on-year.

The company said its overseas revenue was mainly from the overseas PC and console gaming sectors.

"We aim to become an influential player internationally," Xiao said. "Entering a new phase of global resource integration, we are committed to combining global expertise and taking the good parts to offer a world-class product."

For instance, the company's French team Magic Design Studio has developed a 2-D action-adventure game called Unruly Heroes. Based on the story of China's classic fantasy novel Journey to the West, the game was nominated for Best PC Game and Best Visual Art award at the Ping Awards 2018.

"Gaining a high score of 9.9 on Taptap (a mobile game sharing community), the game is the latest example of our global resources integration strategy," Xiao said. "And now our team will develop a new mobile version of Unruly Heroes."

So far, Perfect World has wholly owned subsidiaries in North America, Europe and Asia, and has set up 20 overseas branches in countries and regions including the US, the Netherlands, France, South Korea and Japan.

Now, Perfect World wants to expand to more markets globally, especially emerging markets.

"To further boost our overseas business, we need to focus on those emerging markets with exponential growth potential," Xiao said.

According to the Global Games Market Report 2019 from Newzoo, mobile gaming will remain the largest segment in 2019, generating revenues of $68.5 billion - 45 percent of the global games market. And the growth in mobile games revenue will continue to outpace PC and console revenue growth in the coming years.

Seeing this booming trend, Perfect World is accelerating its push to develop mobile gaming in overseas markets, especially Western countries.

"Previously, we mainly provided PC and console games in Western countries, as the two categories occupy the largest share in the local gaming market," Xiao said. "Noticing the rapid growth in mobile games, we will make new moves in the North America region this year."

Another report released by Google and Chinese gaming database Gamma Data Corp shows that revenue generated by Chinese mobile game companies only accounts for 15.8 percent of the total overseas market, and thus there is huge room for growth.

China's mobile gaming revenue reached $19.44 billion in 2018, occupying 30.8 percent of total global revenue, the report said.

In fact, China's mobile games market is suffering its slowest revenue growth in a decade. The country's licensing freeze lasted nine months till December, contributing to a 15.4 percent year-on-year growth in the mobile games industry last year, compared to the 41.7 percent year-on-year increase in 2017, statistics from Gamma Data showed.

Liu Wei, an analyst from market research company iResearch, said the approval freeze led to thousands of new games being blocked from the market in 2018.

"The demographic dividends are wearing off, which is another factor driving the slowing growth," Liu said.

"While the gaming sector is still under a regulatory environment of tight controls of total video games numbers, it will take a while for gaming companies to adapt to the new environment and make moves accordingly," he added.