If you click on a link and make a purchase we may receive a small commission. Read our editorial policy.

EA Looks East

Online, mobile, arcade - the sun rises on EA's Asian ambition

A resident of Hong Kong for eight years now, Jon Niermann worked for Disney in Asia until the call came from Electronic Arts two and a half years ago, and he jumped ship to head up the top publisher's fledgling Asian operation. If he was anticipating a challenge - Disney, after all, is hugely popular and successful in Asia, and while not without its own unique challenges, selling Mickey Mouse to Asian children is like selling bottled water in the Sahara - then he certainly got one.

EA's quintessentially western, console-focused strategy meant that Asia was the smallest territory on its balance sheet, year after year - and major changes would be needed to change that. GamesIndustry.biz caught up with Niermann at E3 earlier this month to find out just how much has changed at EA Asia in recent years - and how the company now emerging is quite radically different from its US parent firm.

GamesIndustry.biz: How long have you been working with Electronic Arts in Hong Kong?

Jon Niermann: About two and a half years. I started in November of 2003.

What was the status of EA in Asia at that point?

About $160 million in revenue, about 300 people in 14 offices around Asia - and we were primarily, really 100 per cent, distributing the packaged goods games. There were two groups, Asia Pacific and Japan, and they set up offices really just to distribute all of our console and PC games.

Do you oversee Japan as well, as part of the wider Asian operation?

Yes.

Two and a half years down the line, where are you now?

Now we have different pillars for the strategy. We continue to do that, in terms of distributing our core product, but we have online game development happening, we have mobile distribution and development happening, and then we have local content development happening. We've put in those three pillars to really get us to where we need to be; to lay the foundation for future growth in Asia.

That's largely for the online markets in China, Korea... Japan is a different market for local content. The way we look at it now, the way it's broken down, is that if you look at what we do there are really three different business models. Firstly, we also cover Australia, New Zealand and South Africa - yeah, I wonder how South Africa got in there! - and that is very much a western console market, similar to the UK and USA. The second one is Japan, which is a console market, but it's Japanese content and 99 of the top 100 games are Japanese.

The third is the rest of Asia, which is online, and a multitude of content coming from different places - it can be Chinese, it can be Korean, it can be Japanese, it can be American. It doesn't really matter as long as it's online or mobile.

So, we've really re-shifted our team and we've built up strengths to really address all of those areas as well, and open up some key offices - in Shanghai, we put a studio on the ground. Over the past year we've opened three studios, one in Shanghai, one in Tokyo and one in Singapore. We've also put somebody on the ground in India as well, for the first time.

So in essence, you've overseen the transition from just being a local distributor to being a fully-fledged publisher which, in a sense, just happens to have EA's support behind it.

Correct.

How much of EA's product, which we see here in the West, actually works in the East? Is there much of that which you can just bring across?

Yeah - if you look at Japan, you could probably take half the product; if you look at the other markets, you could take a majority of the product. They actually like our games - they like the Western content in the sense that it's graphically different, it's more authentic than what they're used to in the fantasy role-playing games that typically come out of Japan or in the online market.

Sure, you can't take NCAA Football, much like you can't over in the UK or Europe either. Nascar, you know, you're not going to do that. NHL isn't really big in India [smiles]... We try to stay away from the titles that we know aren't going to have mass appeal. Things like Need For Speed, The Sims, FIFA - they're all significant business for us over in Asia, so there are certain franchises that we continue to grow and that have a lot of life ahead of them.

Does EA Asia have the autonomy to be able to take those brands, like The Sims or FIFA, and create localised content that's suited to your own markets based on them?

That's what we've been building towards - trying to get to the point where we have the credibility to, I guess, earn the autonomy to really take something like The Sims, and make a Japanese Sims, or make an Indian Sims, working with a local developer. Not through our studio in the US - but actually through an expert developer on the ground. That, to me, is key.

If we go to Japan, we want to team up with someone that's actually making successful games in Japan already and say, what can you do with this? How do we do it together? That's what we're doing right now in Korea, for FIFA Online. It's the first time we've taken the FIFA product and put it online - it's a co-development with a company called NeoWiz, which is actually one of the top online game publishers there.

To what extent do you view your future participation in the Asian marketplace as being reliant on those partnerships? Here in the West, a fairly significant majority of what EA does comes from internal studios...

I think what we want to get to... Our strategy is really build to buy. We have to build the expertise, we have to build that ability to make the games locally, to publish the games ourselves, to operate the games if it's online.

Eventually, once you get that knowledge base, you start to look at opportunities for, perhaps, mergers and acquisitions, and pulling in some local experts. In the meantime, while you're building that, you have these partnerships - and whether they're JVs, or whether they're marketing partnerships or co-development type of things, that's how we're gaining the knowledge.

So yes, it is a different model, because I think one of the things that we've done is that we've admitted that we don't have the expertise necessarily to do what it takes to launch an online game in China by ourselves, or even in Korea. We realise that we can bring in great tools, great technology, great IP, great management - but we need the other half of the equation, which is somebody that has actually built a game in the local market. I think together, that makes us much more powerful.

How have you found the regulatory environment while you've been working in China? Has that been a particular challenge?

It changes - that's the issue. There's no set thing. For example, when I was at Disney, we dealt with movie quotas. Initially, they only allowed ten western movies in the market per year, and then it changed to twenty. Right now, for games, there's no quota, so to speak - but there's an unwritten rule that Chinese games get preference.

Do we qualify as a Chinese game because we have a studio on the ground and we develop it locally? Those are the questions that eventually we need to have answered, and we are putting the resources on the ground and creating that ability to do games locally - because it's very hard for a company just to try to continue to import product into China. They want to do their own thing.

We deal with it, and it's nothing that you can allow to stop your business - you have to keep going. We will do that, and you just adjust along the way.

How do you see the growth of your title output from your Asian studios or partnerships over the next few years?

I think it's really going to be more like three to five years before you get a significant ramp-up on the local content - it's just going to take a while for us. Right now, we're taking key franchises, we're localising, we're customising. We're working with local developers, in Korea in this case - we're also doing some things in China and Singapore with our current franchises. It's primarily the casual games, like Pogo - which is our casual brand here - as well as FIFA Online. That's more of an advanced casual game, as opposed to an MMORPG.

Eventually we're going to get to the point where we have a very good part of the mix being locally developed, and ideally we'll get to the point where it's half and half, but there's really no timetable as to when we'll get there. You just have to be patient to get there, because we just don't know, and we are learning.

Do you believe that there will be an opportunity to take content that you develop in Asia and see if that works in markets outside Asia as well - bringing it back to Europe and North America, for example?

Yes, absolutely. I think that's critical for us to do, and I think that will be largely in the online space and also in the mobile space. I think we could create games for handheld in Japan, and maybe even for console in that market, but we're not going to create games for console in any other market as of now.

The other markets are more about online and mobile development, and I can easily see us using that as a pipeline to fill the rest of the company on those platforms.

How has your mobile strategy in Asia been affected by the recent acquisition of Jamdat by the EA Mobile division?

It's going to be incredibly strengthened and enhanced - because we had literally two guys, one full-time guy and one part-time guy, who were going out and doing distribution deals. All of a sudden you have this big structure that you can throw at it; you've got a studio in India of about 40 people, you've got people in Japan that already have deals with some of the top carriers.

It's going to accelerate what we're doing out there, and it really worked out well for us, because it wasn't replacing anything. They just said, here you go - all of a sudden you've got a mobile team! Cool!

Looking at your involvement in Asia from a global view, has that been a learning experience for the company as a whole? In Europe and North America, EA is very much a dominant force in publishing; in Asia, you're pretty much an underdog. How does that change the thinking?

I think it's a natural evolution. I think we're at the stage - we probably reached it a few years ago, right about the time when I joined - where they realised that we've gone as far as we can, in a sense, with our core product by launching in different countries. We've launched in all these different countries in Asia, we've set up distribution, we've set up teams, and now we've got our product in the market.

Then they sat back, and they looked at markets like Korea, and said - here's Korea online, which is a $1.1 billion market. Korea packaged games is $50 million. Alright, we've got 15 people servicing a $50 million business and we don't have anybody working on this $1.1 billion business. We're fishing in the wrong pond!

So, we had to move some resources over to start to take a share. Now we're at the stage where we're actually trying to take share away, which is a whole different thing to launching, when you had no share or really not a lot of competition for what you're doing in these new markets. You're going out against established players, but we feel that we can do it now, in terms of the type of product that we have.

The company has learned a lot in terms of putting resources where they need to, and they also, I believe, are very good about putting those resources where we can get the best learning - for example, on the ground in China. That's where a lot of the online stuff is happening now, that's where we're putting our resources, so we'll get good learning out of it.

We'll make some mistakes, and we'll have some successes along the way. At the end of the day, we should get a really good business out of it.

Is there a lot of pressure on you to get that online knowledge base into the company fast? You've got competitors like NCsoft, like Webzen, like some of the Chinese firms, who dominate their home markets, do very well around Asia, and are now moving into North America and Europe. Those guys look set to become the top dogs of the online market; is there a pressure then on you, from the rest of the company, to come up with the knowledge and product that you need to compete?

There are a couple of things there. The biggest pressure comes from ourselves, in the sense that we're surrounded by all of these people, and we want to be ahead of them tomorrow, but we realise that there's a certain amount of patience that we have to take along the way.

For the company, it is very important that we start to progress in these markets in Asia. Everybody is certainly supporting what we're doing; they're encouraging us to make investments and take some chances. I think it's more supportive, in the sense of a nurturing way - we need to make this happen, here are the resources, now is the time to focus on it, now go do it. We have to do it, and figure out a way to do it, and here are some tools to help you do it.

So, there's certainly an expectation that we have to get it done. The pressure relates to timing, in the sense of how fast we have to do it. There's really no Asian player, so to speak; you've mentioned some big ones, such as NCsoft, which is big in Korea, they're also big in the West, but not necessarily across Asia. You have a couple of Chinese companies that do well in China. You don't have anybody that really connects all of Asia - so that's who we want to be. We want to be that company that really is providing interactive entertainment across Asia.

We have very high aspiration in that sense, and in order to get there we're going to have to provide the games - online, mobile, and local.

In terms simply of where you are now, what is EA's most successful product in Asia?

Need for Speed - and FIFA. They're neck and neck, especially in World Cup year. Actually, FIFA will come out number one this year, because of the World Cup; Need for Speed last year, but now we're right in the heart of selling for the World Cup, and that's always good for us. We get a great spike every four years.

The Sims is another one. Those three are the ones that have sold the most historically and are continuing to have the most growth, which is great - so it's getting traction. In a country like India, Need for Speed just got the most popular PC game award at their entertainment show in March. It has wide appeal out there, and we do the brand research in China, and these games come up as well.

If you keep doing down the list, Tiger Woods has a lot of appeal, Burnout has a lot -some of the shooters too. Surprisingly, Medal of Honor. Battlefield is very popular because it's PC-based, so in markets like Korea and Asia overall, because it's a PC market, that does well.

When we met NCsoft CEO TJ Kim last November, he was raving about Burnout Legends...

Burnout is one of those great arcade type games that plays well in Asia. That's something that we're anxious to get an online version of, to try to make that happen out there as well.

Do you ever look at doing business in the arcades in Asia, since that's a much more vibrant market there than it is in the West?

Yeah, we do. We're always looking and exploring through the Internet game rooms and also in the arcades, seeing how we can get involved in everything from the Pachinko rooms in Japan to all the various arcade settings. People do go out and they play, and they're a viable part of the business.

It's something again that we haven't done in the past, so we can get learning in there. We've got a few tests that we're cooking up right now.

Thank you for taking the time to talk to us.

Not at all, thank you.

Jon Niermann is head of EA Asia. Interview by Rob Fahey.

Author
Rob Fahey avatar

Rob Fahey

Contributing Editor

Rob Fahey is a former editor of GamesIndustry.biz who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.