INVESTMENT

Animoca partners with Ourpalm as China's gaming industry aims to 'out-innovate' the West

PUBLISHED : Monday, 13 July, 2015, 12:43pm
UPDATED : Monday, 13 July, 2015, 1:33pm

Hong Kong mobile games company Animoca Brands is looking to accelerate its global expansion through a new strategic partnership with Beijing-based Ourpalm.

“Our partnership is mutually beneficial in the access it gives us to both mature and emerging markets,” Robby Yung, the chief executive at Animoca Brands, told the South China Morning Post.

Games publisher Ourpalm last week agreed to make a cash investment of A$3.1 million (US$2.3 million) in Animoca Brands, which is listed in the Australian Securities Exchange, to purchase 14.8 million ordinary shares representing 11.11 per cent of the developer’s expanded share capital.

Ourpalm, which trades on the Shenzhen Stock Exchange, was also granted an option to further invest up to US$5 million in Animoca Brands.

That deal followed an agreement with Ourpalm in May to publish Animoca Brands’ Doraemon Gadget Rush game on the Android platform in China, the world’s fastest growing mobile gaming market. 

The popular mobile puzzle game was initially developed by Animoca Brands for Apple’s iOS platform on the iPhone and iPad.

“China’s gaming industry, which didn’t exist 15 years ago, is moving towards exports and out-innovating the West,” Yung said

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Ourpalm has stepped up its innovation efforts by pursuing mergers and acquisitions with various game developers. 

It recently acquired Chinese developers Dovo Entertainment, PlayCrab and ShangGame, and made strategic investments in H&R Century Pictures and San Francisco-based Unity Software.

Yung pointed out that Animoca Brands’ location in Hong Kong provided “a geographical, economical and cultural bridge” between the advances being made in mobile games development in China and more developed Western countries.

Research firm Newzoo predicted that mainland China’s total games market would hit US$22.2 billion in revenue by the end of this year, up from US$18.5 billion last year. This could push it past the United States, which was forecast to reach US$22 billion.

China’s mobile games segment has become the biggest part of that domestic market in terms of number of players.

Internet consultancy iResearch forecast the number of mobile gamers in China to reach 390 million at the end of this year. Data from the country’s Games Publishers Association showed there were 358 mobile gamers at the end of December.

READ MORE: Infographic: China's online game industry made HK$105 billion in 2013

Yung said that expansion was being fuelled by the release of mobile games based on popular intellectual property and famous characters.

“That happens to be Animoca Brands' core business strategy, so the partnership with Ourpalm will allow us to ride that wave of growth,” he said.

Animoca Brands’ portfolio of 358 published mobile games includes titles based on US comic strip Garfield and Japanese superhero television shows Astro Boy and Ultraman.

“Licensing popular global brands is a significant competitive advantage,” Veritas Securities analyst Levi Hawker said in a report. “This strategy creates more opportunities to produce hit games.”

Doraemon Gadget Rush, based on Japan’s “manga” comics, became the most-downloaded iPad game in China, Hong Kong, Taiwan, Macau, Japan, Indonesia, Vietnam and Brunei after it was released in February, the report said.

As of the first quarter this year, Animoca Brands estimated that it has more than 500,000 daily active users and that its mobile games have been downloaded more than 130 million times.