How the Top 5 Games Companies Went Global - Alpha Games

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                      How the Top 5 Games
                      Companies Went Global

ALPHA GAMES
   @TeamAlphaBCN
 games.alphacrc.com   Every company had to start somewhere. Some were founded by a well-respected
                      businessman or businesswoman and received a raft of initial investment. Others
                      started out in somebody’s garage, and yet have still ended up dominating their market
                      globally. In fact, there is a surprising correlation between the garage-start-up company
                      and the names that have become global giants. That list includes Amazon, Apple,
                      Disney and Google, and there are many more started in a one-person office.

The question of how these companies have built from such small beginnings to
      positions of global dominance is a significant one. Other businesses at differing stages
      are keen to emulate them. There are, of course, many factors underlying such success.
      Great product is one; great business strategy another. But that isn’t enough to get you
      across continents. Successful global expansion comes down to effective localisation,
      and the top five global players can tell us a lot about undertaking the process correctly.

                               The Best of the Best

      Let’s take the top five firms in the Games sector. It’s worth differentiating between the
      pure games developers or publishers and those who also provide hardware or other
      software, such as Sony, Nintendo and Microsoft. Much of the latter firms’ revenue
      comes from these other sources, so the top five games firms we will look at are the
      pure publishers and developers whose revenue is the highest.

      At the top of the list is Activision Blizzard, the world’s largest pure games publisher
      formed out of a merger between Activision and Vivendi Games, who operated the
      Blizzard studio. The company is synonymous with record-breaking franchises, but was
      not successful overnight. In fact, when current CEO Bobby Kotick took over Activision in
      1991, the company was failing financially. With little money, the firm could not afford for
      any of their games to be failures, and so each game was carefully selected, and then
      received full backing, including localisation into multiple languages to ensure that it was
      a hit in multiple territories.

We are expanding our capabilities across platforms, genres, audience
demographics, and geographies — but always in the service of our players.
                                                      – Bobby Kotick, CEO, Activision Blizzard

      The company has now become known as a ground-breaker in localisation. When
      it released Starcraft II: Wings of Liberty in 2010, it featured not only voiceovers in
      multiple languages, but also fully localised text in each part of the game. This meant
      that every bottle of beer and every news ticker in the background was fully localised,
      and that meant full immersion for players, resulting in great reviews.

      Activision Blizzard has also pioneered its own software for voice-over syncing.
      FaceFX allows for the movements of the onscreen characters’ faces to match the
      speech in every localised version. It is a development that others have since looked to
      replicate, thanks to the strong positive response from the gaming community.

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From International Beginnings…
      Ubisoft was the game publisher which understood the need for localisation at the
      earliest point in its history. The company may be one of the largest game publishers
      and developers in the world, but it did not begin as a creative force. It was founded
      in 1986 as a games distribution company, and swiftly made deals with Electronic
      Arts, Sierra On-Line, and MicroProse to sell their games to the French market. By
      1993 it had become France’s largest games distributor.

      When the company moved into game development and publishing, it did so from
      the perspective of a company which had existed in order to bring games to new
      countries. It is therefore unsurprising that the firm’s expansion was international
      in its direction. In 1996, Ubisoft opened offices in Annecy, Shanghai, Rennes and
      Montreal.

      The firm now has 29 studios in 19 countries, and with subsidiaries in 26 countries,
      it has become one of the largest international players in the games market.

      The drive to become an international presence has been reflected in the localisation
      of its own titles. Ubisoft has localised its games into increasing numbers of
      languages, and with The Division, it has become one of the first major publishers
      to fully adapt one of its AAA titles into Arabic. This adaptation has included cultural
      alterations in order to accommodate laws on violence, sexuality and gender; as well
      as real modifications to the interface in order to support right-to-left lexicography.
      Ubisoft has also moved fully into the censorship-heavy Russian market by opening
      its own office in Moscow and working there on cultural adaptation alongside
      development.

[We wanted to] Try to understand how the Arabic people play games and try
to localize the games if we can…They play games and buy games already,
but localizing the products will bring us closer to the people.
                                       - Yannick Theler, Studio General Manager, Abu Dhabi

                              American Firms Gone Global

      Given the level of revenue available once companies go international, it is not
      surprising that some have prioritised the move to globalise. To step away from the
      Games industry briefly, it is worth taking a good look at mega-company Amazon’s
      business plan was based, not around initial profitability, but on dominating the
      market. In its first five years, the company planned on achieving profits of essentially
      0%.

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Bezos’ plan was to become a household name, one that users would keep coming
back to out of both habit and trust. Achieving that level of awareness, however,
involved two things: the first, incentivising use, which Amazon did by offering low-cost
products with absolutely reliable, quick shipping times. The second was to open its
services globally, and it did this by plunging its profits into purchasing warehouses
and development offices in countries across the world.

Globalisation can seem to be an expensive gamble, but for Amazon it paid off.
By opening sites in Canada, the UK, Australia, France, Spain, Italy, Germany, The
Netherlands, India, Mexico, Brazil, Japan and China, the company achieved global
domination within its first five years of business.

Not all businesses need to accept 0% profits in order to go global. For those companies
wishing to undertake a more measured rate of growth, localisation can account for
only a small element of revenue spend. Additionally, the increased revenue from initial
stages of localising products and content can fund ensuing stages, making it a low-risk
undertaking.

                         Two Companies –
                         Worldwide Territories

For Electronic Arts, the move towards going global happened both through a series
of forward-thinking partnerships and acquisitions, and through a direct link with
consumer trends. EA’s starting-point was to be an entertainment-focused game
developer, with its developers hired for their artistic capabilities and their stories
derived from independent script-writers who submitted to EA for review.

Their model was more like Hollywood film studio than like a traditional software
developer, and EA swiftly gained a reputation for player-focused, artistic games. The
company retained this prioritisations of consumers by creating an in-house sales team
which was able to keep in touch with consumer trends via retailers, and report back
to the company directly. It was this link that made it push towards creating more new,
original games from 2006 onwards, recognising that gamers were facing franchise
fatigue.

Electronic Arts was also a company which moved to export at an early stage. Even
by 1995, before its various large-scale international acquisitions, almost a third of
EA’s revenue stemmed from international sales.

Square Enix also offers a good case study in going global via mergers. It began
as two Japanese game developers, Square and Enix. Despite different working
methods, with Square very much an in-house developer and Enix based on
outsourcing, the two had several factors common. Each had a major title which had
spawned a franchise, and was looking to build an international reputation outside
their home country of Japan.

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The merger gave the company a much greater weight in the international market,
      and allowed them to acquire, in 2013, Eidos Interactive, a UK-based games publisher
      which released major titles such as Tomb Raider and Hitman. Eidos was to become
      Square Enix Europe, and with the move came a much greater distribution of the
      original Square and Enix games to European countries.

      But the takeover was not the first step towards globalisation that either of these
      companies had taken. Each had been localising for the PAL and Northern US regions
      since the 1980s, well in advance of many of their competitors. The approaches had
      been different, with Enix outsourcing to Western translators who had little contact with
      the developers themselves, while Square set up its own translation and localisation
      team. After the merger, localisation moved in-house and the department grew to some
      40 employees.

      The extent of the firm’s English-language sales buoyed the success of their
      franchises, and by the time Final Fantasy VII had become a huge hit, the company
      took on localisation on a much more major scale, with translation from Japanese to
      English, and from American English to British English, French, Italian, German, and
      Spanish.

“The global focus is critical, because fully 65% of internet users speak a
language other than English.”
                                                               Sanjay Raman, Google Apps

                               The Future of Localisation

      The global economy is experiencing an unprecedented shift in power toward
      emerging-market cities. A rebalancing of great scale and speed is happening from
      West to East and the global economic balance is shifting to emerging markets. In
      fact, we are observing the most significant economic transformation the world has
      seen. Twenty-first century China is urbanizing on a scale 100 times that seen in
      nineteenth century Britain, and at ten times the speed.

      The Wells Fargo 2016 International Business Indicator shows that U.S. companies
      maintain an optimistic outlook on international business. While the increase from
      2015 is not significant, this year’s score indicates that businesses remain unfazed
      in the face of global volatility: Six in 10 U.S. companies expect the level of their
      international business activity to increase in the next 12 months; 57% believe
      that the international component of their business will become more important.
      Conducting business beyond the U.S. appears to be a fundamental strategy as 87%
      of companies agree that international expansion is critical for long-term growth.

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For the gaming industry, localisation is perhaps even more significant. Gamers
     want immersion in their titles, and poor localisation is one of the quickest ways of
     tripping players up in their enjoyment of the gaming experience. The swiftness of
     online reviews and positive or negative commentary on forums means that good
     localisation is now directly tied to games sales, even from first release. The days
     when games were only available to play in a single language are no more.

     The expense of localisation remains a sticking-point, however, and independent
     studios often face challenges in full cultural adaptation. While a company like
     Blizzard can afford to have multiple language teams around the world to localise
     their titles, and can also invest heavily in software to get round any issues faced,
     others aren’t so lucky. This, however, is where external vendors that specialize in
     audio and visual language support are providing an answer. Even if a large portion
     of the world speaks and understands English, those who do not won’t have to miss
     out on experiencing something incredible.

Source: Wells Fargo 2016 International Business Indicator 2016.

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