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The purpose of this blog is for my personal use. It serves as my personal diary as I investigate Chinese internet/gaming companies for investment purpose. If you have any comments or disagreement, please give me feedbacks.

Tuesday, March 6, 2007

Netease – TX2 – My prediction

Today is March 6th, 2007. It is almost a week since the start of open beta. Netease hasn’t annouced any users statistics yet. Nor has she done much marketing promotion. All she had done is to put up some ads on gaming websites.

But overall, it pretty much matched my expectation.

I don’t necessarily agree with Netease’s marketing strategy, but I think I understand why they are doing certain things at a certain way.

Self developed games have many advantages over import games. But it does have one disadvantage, it won’t be as stable as the import games at the beginning. For all the import games, they had been operated and in commercial operation for months if not for years in their home market. By the time the import games had arrived in China, all the bugs had been stamped out, the game plays had been balanced and the servers had been stabilized.

TX2 had been in development for 3 and a half year (almost unheard of in China) and in closed beta for 1 year, the game developers had done all they could. But there are something they can’t do until open beta.

When it comes down to it, by the time of open beta, Netease’s games will look like a half completed game while import games would look like well-polished games.

There goes the rationales for the difference in marketing these different types of games. For import games, open beta doesn’t serve as open beta in conventional sense. It’s more like free trial time. Like giving candies to little kids until the kids get addicted. Therefore, the major marketing is done before open beta to build momentum.

But for Netease’s game, they can’t do that. The game is only partially completed. They did all they could. But they still have to go through the “real” open beta development period.

For Netease, the real marketing push comes a couple of weeks before the game goes to commercial operation. That is when Netease feels most of the bugs had been removed and the game is somewhat polished.

For TX2, it is a statement game. Just like Quake in the US, only a limited number of users can play. Only players with recently purchased computers can play TX2. Netease is coming out with patches so more users with less powerful PC can play. But they can only do so much.

For import games, the time of open beta is extremely important to get users interested. The 1 year mark is also important for the import games because it determine whether the game has legs.

For TX2, the first 6 months after commercial operation is extremely important. If it can get by the first 6 months and still have a sizable player with new players coming in, it will be a successful game. The reason is after 6 months, after TX2 is on a level-playing field with the import games in terms of game readiness, the advantage of a self-developed game will start to show. If TX2 can survive the first 6 months, then Netease will have the advantage over imported games of been able to provide quicker patches, more frequent and more relevant activities, and faster reaction time to users complaints/requests. In addition, as time goes by, the number of potential users with acceptable computers will increase. The potential pools of users that can play TX2 will increase with time.

Given the above reasoning, we can construct a schedule that assumes a successful TX2:

3/1/07: Open beta. PCU = 60k.

Rationale: Very little marketing done so far. Most people had no idea what is TX2.

3/4/07: First Sunday. PCU = 70k.

Rationale: Shall be a little increase. But this is the Lantern Festival weekend, and most existing games have major promotions going on. Most players will stick with whatever games they are playing and TX2 is not going to get much increase this weekend.

3/7/07: Major competitor goes open beta.

Rationale: NCTY’s Guild War went to open beta today. I predict they will have a PCU=150k to 200k because of the aggressive marketing of NCTY. Besides, Guild War seems to be a pretty good game.

3/10/07: Second Sunday. PCU = 60k

Rationale: Because of the competition from Guild War, there will be pressures.

3/31/07: After 1 month. PCU = 100k

Rationale: At this point, I predict the game is ready. I predict this is when the major marketing push starts.

4/8/07: Announce date of Commercial Operation. PCU = 140k

Rationale: PCU will start to crash after Netease announce the date of commercial operation. Many players who were only in for the free ride will start to leave.

4/15/07: Commercial Operation: PCU = 50k

Rationale: Free play is over. But I hope the major marketing includes enough promotion that many players gets to play for free for the next few months.

10/14/07: 6 months after Commercial Operation: PCU = 70k

Rationale: By this time, the major marketing push had ended. If at this point, TX2 is still growing and have a stable user base, they are home free.

4/15/09: 2 years after commercial operation: PCU = 300k

Rationale: 6 months is the do or die point. If TX2 passed 6 months without losing vast majority of the users, they will have another block buster on their hand.

The above is my prediction. I will check back from time to time to see how accurate I am.

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