As the mobile game industry grows globally, publishers are looking to expand internationally — taking their success in one region and trying to succeed across the major markets of the world. The latest example of this trend comes from NetEase, ranked as the #5 mobile publisher globally in revenue and the #2 iOS publisher in China. NetEase recently opened its first overseas office in North America, and today announced the formation of the NetEase Success Fund. The new funding initiative provides up to $500,000 for independent developers to fund marketing and advertising for their mobile game. NetEase notes that the program is designed to empower developers to retain the rights, creative control, and full ownership of their products.
Unlike typical publisher deals, the title-based NetEase Success Fund is a revenue sharing program in which NetEase will only receive a pre-defined set dollar amount as repayment. Once the revenue share cap is reached, the developer will have no additional financial obligations to NetEase.”There are so many developers with games that have great potential, but are constrained by rising user acquisition costs,” said Ryan DeSanto, director of business development at NetEase North America, who is managing the fund. “Our goal is to create an alternative to the traditional mobile game publishing model, where developers can gain access to the resources necessary to scale their audience without giving up control of their business.”
“Not only are we committed to bringing NetEase’s games to a Western audience, but also to becoming an active member of the global game developer community,” stated David Ting, general manager of NetEase North America. “The NetEase Success Fund gives us the opportunity to expand our reach in the mobile space and help more developers bring fun experiences to gamers.” Ting spoke with [a]listdaily to provide more details of NetEase’s Success Fund.
Why did NetEase decide to set up the NetEase Success Fund for mobile developers?
As mobile game developers and marketers ourselves, we recognized that there is a gap in funding options for independent developers who need a little extra help to get noticed but want to retain ownership rights to their products.
One of our goals as an organization over the next few years is to continue expanding our business into global markets. We wanted to dig deeper into the industry and start establishing stronger partnerships with some of the quality game development studios out there. In the mobile industry, there are many small studios making really incredible games that might not otherwise have the resources to get noticed on today’s app marketplaces. Additionally, while they’re focused on making a great game, most don’t have the resources to then shift their attention to the business side of launching a product.
We noticed that the biggest challenge to developers was negotiating revenue share and ownership of the IP, so we set out to offer a program that completely eliminates these concerns while providing a foundation of support for the business side of game launches.
How many games does NetEase anticipate enrolling in the program this year?
There’s really no telling at this point, but based on early conversations we’ve had with developers so far, we’re already seeing a positive response to how much control they’ll have over their games and the financial upside. Ultimately, though, it comes down to quality. We’re not interested in signing a high number of developers just to make the program look popular. We’re focused on working with developers who make great games that are fun to play.
Is NetEase looking for particular genres or types of games, or developers with a certain track record What sort of proposal would be most likely to be accepted by NetEase for the Success Fund?
No specific genres, and our focus will be Free-to-Play but we’re open to other opportunities. It’s more about the quality of the game and the team behind it. More importantly, any submission that can make their ambitions and creative skills shine will most certainly catch our attention. We want to hear about games that are still in the concept stage to games that have already been live for a year.
It’s interesting that NetEase has chosen to only receive a set dollar amount as repayment rather than an ongoing percentage of revenue. Why did you choose to structure the fund this way?
We set up this fund to target developers that have games that are looking for an alternative to current financing options available. We think that the way the repayment model is structured will make this fund more accessible to a larger number of developers who would not normally work with a publisher because of traditional payment terms. We’re excited to hopefully attract some great content and introduce mobile consumers to some new high quality games.
The biggest challenge for mobile games is discovery — how will NetEase help with that for games in the Success Fund What’s NetEase’s marketing strategy for customer acquisition?
The two main problems smaller developers face when launching a mobile game are access to capital and the expertise required to raise awareness among mobile consumers. This program helps to address these challenges and we can offer support where needed. As long as the quality of the game is there, supplying the additional support for marketing through this program should, hopefully result in great success.
NetEase has a strong market position in China but is not well known in North America. How do you intend to grow NetEase in North America — by bringing games over from China, or by creating new titles in the West?
Prior to introducing this program, our North America office was set up to identify and work on a pipeline of games that our Chinese teams are driving, getting involved in development early to find and culturize games that are ideal for Western audiences. In other words, we have our own pipeline of first-party titles being developed out of China that we’ll reveal throughout the year, starting with the already-announced Speedy Ninja, launching later this summer. These aren’t simple ports of games already available in China, but culturalized products that we feel have the most potential and ensuring that everything from game mechanics to monetization and art style will appeal to Western gamers. Combined with the huge successes realized by our team in China, we strongly believe that we can build a successful business that reaches around the globe.
