Tung Nguyen Khac assumed the leadership of the management board of German game publisher ProSiebenSat.1 Games in December 2012.
Prior to accepting the position of Chief Executive Officer, Tung Nguyen Khac was a management consultant who also worked as a business angel and investor for start-up companies, and as an industry advisor for private equity, online gaming and ecommerce enterprises. In his earlier career, Nguyen Khac held the positions of Managing Partner and CEO Advisor for Bigpoint in Hamburg, where he contributed significantly to the company’s build-up and remarkable success.
As ProSiebenSat.1 Games CEO, Tung Nguyen Khac is responsible for strategy, M&A and all online games publishing departments.
You gave a lecture at Casual Connect Asia 2014. Can you tell us what it was about?
The talk was about the role of TV for mobile marketing because today you have diverse instruments for bringing your app on the app store and making it visible with performance marketing. However, performance marketing has become very expensive and unfortunately, the traffic quality is often not so good, especially with incentivised traffic.
We believe that the combination of TV and performance marketing can really work well. We have proven this in Germany and Europe. This combination can not only drive a high number of installs on the app store but can build substantial brand awareness and – as a consequence a lot of spill over traffic and installs.
An interesting thing is that you don’t only see smaller developers publishing with TV nowadays, but also with the big ones. For example, Supercell and King have started to go strong into TV advertising as well.
Could you recommend TV advertising as a successful marketing tool at the global level?
We believe very much that TV can be used on a global level but you need to have certain prerequisites.
To be realistic, TV is not the sole magic formula. So in every case, you need to have a game which is very well polished, performs very well in its gameplay and is spreading with viral social features. In the end it has to monetise well. If you don’t have a game that is good enough in its monetisation, we would not recommend using TV. But we will also not recommend doing any marketing at all. It would become a challenge as performance marketing has become very expensive.
Nowadays, TV is not as expensive anymore. It can be comparable in the pricing ranges with other forms of performance advertising but it has the benefit that you can really build brands and emotions when you promote the game on TV. It is a platform, which is globally used but it is a local execution kind of thing. Meaning you have to find the right channels that fit to your target audience and find all the right placements when you promote your games von TV. The challenge is to find the right combination of using TV with your own viral and social activities, performance advertising and of course, product PR.
Business with TV stations has changed over the past years. TV can now encompass a variety of media channels. Please explain how this works. TV is a traditional platform of the past but still with huge potential, one the one side in combination with other digital platforms, on the other side with new. But it has a really vital role in the future as well. You can combine it with doing placements on YouTube for example or specific gaming video sites like Twitch for example. It has to be a combination because standalone TV cannot be the only instrument but I also think the same goes for viral. It is like a meal, you have to put in the ingredients very well and make it very tasty in order to make a good food. For the future we expect that Smart TV channels can be very interesting as well.
Is there any connection between the content of your lecture at Casual Connect Asia and the recent acquisition of Aeria Games?
Yes. We believe very much that mobile is a very important platform and market of the present and future. The acquisition of Aeria Games was a very big jump for us to go into the mobile market. Before the acquisition, our mobile revenues was about 5% of our total revenues but now with the acquisition, it has increased to about 25%. We really want to speed up there as Aeria has shown good speed and also high traction on the mobile side. As you know, in dynamically changing markets speed is essential. That one of the reasons why we did the acquisition.
We also did the acquisition because we wanted to build larger critical mass in our business and also because we were able to leverage costs synergies in fields like marketing and monetisation. So the combination of the two businesses of ProSiebenSat1Games and Aeria can enfold a much stronger power than before in performance marketing, a strong and solid PC business, a dynamically growing mobile business and the advertising piece for 3rd parties where we want to expand fast as well. This will make our position much stronger. It’s important for us to stress that we are publishers and not developers; therefore we look for many new mobile and PC licenses in our Key sourcing markets in Asia.
Can you give us any background information regarding the acquisition of Aeria Games Europe?
We heard that Aeria Games gave you the opportunity to enter the mobile games sector. With this acquisition comes licenses too and makes you one of the biggest publishers in Europe
We are currently number 3 in the European market now and we are aiming to go to the top. For this we are now centralising all our gaming activities in Berlin. All the gaming activities which were in Munich have been moved to Berlin. In Berlin we have now about 270 people but we are looking to increase that size to 300-400 within the next 12-18 months. We are also looking to license more games, online and mobile. For this we are going deeper into the markets like Korea, Japan and Greater China to look for new gaming content.
We are also planning to open a rep office in Seoul or Tokyo to be closer to the developers and our partners. There is a high likelihood it will be in Seoul as most of our current licenses come from Korea.
There is another thing we want to expand within our publishing business. We call it our “Port & Publish” Model. Which we find is fitting for the mobile network. As you know many games that are successful in Asia have a rather manga style or exotic looking designs and graphics compared to the taste of the Western audience but they monetise well. So what we are looking for are games that are already in the market and have proven metrics as we are very analytics driven. We want to identify the games that are top grossing for example and where the developer has found the “magic formula” to make a good game and to monetise it very well. What we do together with the developer is to take the game and make adjustments to the graphics for example to make it fit to the taste of the Western audience.
One good is a game called “Guardian Battle” from Pokelabo in Japan. We have taken this game, culturalised it. It was a large adjustment in changing the graphics and some slight changes on the game balancing but keeping the monetisation piece and launching in into the Western territories with the new name “Immortalis”. It has been mutually successful for both partners as we have been top grossing in Germany and France for over a year, among the top ten. Right now we are top 4 or 5 in Germany and in America Immortalis has enjoyed significant success as well. So what we are doing now is looking for more games which fit into this scheme by talking to developers like Nexon, NHN and Konami for example. Our goal is to find out what are the games that match our strict criteria and try to structure a partnership to bring those games to the Western markets.
The interesting thing we recently learned from a business trip to Japan, Korea and Taiwan is that the Asian developers are really open to this as they realise that it is a challenge for them to bring their games outside the Asian markets into the Western markets. None of them has ever really succeeded on a broader scale. Even large AAA publishers are talking with us intensively about finding the right game which we will bring to Europe and US in such a partnership.
Asians publishers and developers mostly concentrate their focus on Asia. Number One priority is mostly China, then Southeast Asia. I mean China is very big. Southeast Asia is already very big. So it makes perfectly sense to concentrate first on these neighbouring territories when expanding beyond their home market than going to Europe. It is also a hassle for them to localise their games in around 13 to 15 different languages and launch in around 18 countries. So the feedback we have from talking to potential partners is very good and they express keen interest in a partnership with us.
We talked about Europe and Asia as a market for SevenGames. What about the US market?
Generally speaking, we focus on all international markets outside of Asia. Before the acquisition of Aeria we only focused on Europe but with the Aeria portfolio and new team, we are now on our way to a more global journey except for Asia. The truth is we do not understand the Asian markets. Furthermore the regional players in Asia have a strong position. You wouldn’t like to compete with Tencent for example. Globally we are now active in 35 countries and we have more than 39 licenses. We are active in Brazil, South America, Europe and the US. The US market is a very important market for us where we want to grow much faster and stronger.
We understand that ProSiebenSat1 Games has acquired Aeria Games Europe. So have you bought only the European part or the US part as well? What is about the US market?
That is a very good question you’re asking, as we have learned that there was a misleading perception for many people especially in Asia. Basically we bought all revenue making activities and businesses from Aeria at the time of the purchase. We bought all their International game licenses, operating business and all operational activities – online and mobile. But we did not buy the mother company located in the US. What we have done technically is carve out buying all Aeria assets relevant for us and brought these assets into the Aeria Europe entity because from a legal and financial perspective it is a much cleaner structure and way for us.
Basically we bought from the Aeria US entity, the complete business, so now the former Aeria entity has been transformed into a pure new mobile business and was renamed into Play Next. So basically the founders who are impressive serial entrepreneurs, have started their new business while we continue operating on the well performing online and mobile games
Has ProSiebenSat1 Games bought the assets of Aeria Games?
Yes. It was a very good question because that is something that is sometimes misunderstood. I am very thankful that you made the point.
What is the current status of the partnership with Sony Online Entertainment?
Recently we made a decision together with our partner SOE to combine all players under one roof. Players wanted to play PlanetSide 2, Everquest 2 and DC Universe Online seamlessly with their friends across the Atlantic. So now we are allowing everyone to play in a single system managed by SOE.
On the business side we continue our long term partnership with SOE and will help market their games in the EU region by advertising to the ProSieben community and TV audiences. Financially we participate from the SOE’s success without having the risk – which is always present in games publishing. This is in line with our strategy to bring more great games from Asia to the Western markets.
