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Is the local Online Gaming industry in trouble?

Just got a couple of insider info from a reliable source that might give us the impression that the Philippine Online Gaming industry is in a bit of a trouble right now. Two of the biggest online gaming companies, Level-Up & e-Games, are showing signs of it.

First stop is e-Games (IP e-Games Ventures Inc. ) which has recently finalized its initial public offering (IPO). According to a source, this was a strategic move by the company to generate fresh capital.

Apparently, the free-to-play model isn’t doing very well in the Philippines. There are a lot of subscribers but the players seemed to shy away from buying in-game items so not a lot of revenue is coming that way.

Fortunately, e-Games and PAGCOR has a partnership for online gambling (PAGCOR e-Games Cafe) which is doing well so that’s the one raking in the needed money. (Correction, the other eGames is a partnership with PhilWeb and PAGCOR, not IPVG.)

Second, Level-Up Inc. has also made some drastic “corporate restructuring” in the company that affected close to 50% of the workforce. Majority of the people affected by the recent lay-off came from the marketing department and the sales department.

Level-Up’s newer games like Hello Kitty, KOS: Secret Opertions and several others aren’t meeting the monthly quota and have to be eventually dropped from their roster.

What’s making it look worse is that in other markets like Brazil and India, Level-Up is doing good. It’s only in the Philippines that growth and sales aren’t doing well. On the other hand, the Level-Up! Live annual events still bring in a couple million pesos but that’s just a once a year affair.

Online gaming companies have shifted their revenue models from pay-to-play to free-to-play with the promise of increased user base and in-game purchases (gamers get to play for free but are enticed to buy virtual items). Looks like this model isn’t working in the Philippines.

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Abe Olandres
Abe is the founder and Editor-in-Chief of YugaTech with over 20 years of experience in the technology industry. He is one of the pioneers of blogging in the country and considered by many as the Father of Tech Blogging in the Philippines. He is also a technology consultant, a tech columnist with several national publications, resource speaker and mentor/advisor to several start-up companies.
  1. i know a startup here in singapore and free to play in PH is just eating up his resources coz nobody pays in game. i think our mindset about the internet has to change. ask people around and most of them are still afraid of using the net to pay for services.


  2. That no wonders to happen.. Specially hacks are everywhere and they almost don’t have to buy some good stuff in-game since hack has alot of advantage. In addition to that, they just produce boring and lame games so I don’t think players will get hook into it since the world has a lot of very great and fun games to offer. I guess the top 1 of all gaming services right now is GameClub because SF and I-Date which hook up most of the players.


  3. im planning to invest in egames, having second thoughts now


  4. For me this is old story. I knew it! LU’s market drop because they followed the strategy e-games has. Along with youngster gamers + no cost gaming (F2P) makes those 2 company drop.


  5. BTW, The e-Games image on the post is from PAGCOR. Can you change the image? Thanks.


  6. ibalik sna ng egames ung o2jam at topspeed online!


  7. This also means that typical gamers are becoming more mature and tired of games that are run of the mill level.

    I for one, stop playing local MMO’s then shifted to Guild Wars and it change to me what MMO is really all about. Gamers now have more options than ever because the list of Free to Play MMO’s are endless. Coming from anywhere with quality thats far off from local publishers distributing here.

    If you want quality then I suggest playing Lord of the Rings Online, Dungeons & Dragons Online, Need for Speed World, Atlantica Online or Perworld Entertainment games that wants to have Asian theme MMO. Nexon also offers best MMO’s but they only cater to NA & Canada regions only.

    I’m looking forward to Black Prophecy. \m/


  8. It was bound to happen with the boring games they have in their roster. Apart from that, the market that Level Up caters to is pretty low-end and won’t pay for load or in-game items.

    My girlfriend got laid off Level Up last month mentioned that they were going to release a new game in Level Up Live. I wonder what that is and if it can actually infuse the much needed revenue by Level Up. So far, it doesn’t look so good.


  9. @oscar
    the new game is allods online.

    levelup ph has a more boring lineup compared to egames.


  10. damn. its an ugly version of world of warcraft. what were they thinking?


  11. It’s like those Anime convention, they’re all the same!

    They can’t get quality games because publishers can distribute it themselves; Private Servers are killing them, and Garena is eating the Multiplayer market. Plus, facebook is also killing them.

    They should change their model. You can’t just copy and paste other company’s strategy. Their, expand fast, profit later seems to had come from the dot com era, and well all know what happened to them.

    It’s hard to think a solution for these companies. Great games need good deal of bandwidth and most of them are being hosted by their own publishers. Consoles dominate the multiplayer market, so that’s gone. Online distribution seem plausible but impossible given the mindset in this country.

    I’m out of ideas for these guys.


  12. @Mr.A
    “They should change their model”
    We hope it’s for the better but…. meh.


  13. I suppose Facebook is a factor. In all my years of online gaming, I rarely purchased in-game items because the benefits they gave can always be gained by leveling up, trading with other players for items and yes, private transactions.


  14. @jhay: yes indeed!!!!! facebook is the big reason!!!

    the best thing in life is libre!!!!!!!!!!!!!


  15. Glad I’ve stopped playing local MMOs because their only objective is to earn regardless of the quality of their service. I’m patiently waiting for Guild Wars 2. :)


  16. Let’s admit it, if not all, most LU and e-Games’ MMOs are half-baked.

    That’s why bug abuses, hacks and cheats are very rampant to the point that these publishers can’t handle them anymore, and of course the majority of the players would only be sick of complaining to them.

    Also, what Mr. A said.


  17. They should target the market that actually pays and makes money.


  18. As any company that is affiliated with Manny Pangilinan’s group, it turns arrogant, inefficient and lacklustre. The only difference is, PLDT and Smart makes money, while Level Up burns money.

    +1 to what Mr. A said, all anime conventions are the same. The people that participate in them, the cosplayers, doesn’t even have the capacity for load to play any title from LU or E-Games. It’s all focused in their tacky costumes that they think makes them look like the best thing since sliced bread. Apart from the Alodia, no one can really pull it off.

    From the previous comment: “They should target the market that actually pays and makes money.”


  19. Nowadays there are a lot of options for gamers to choose from. I know a lot of the so called addict gamers gave up playing MMORPG and moved to simple web based game like facebook games. Nandyan din ang Garena for Dota and other LAN type of games. Another reasons are the availability of Global games releases and gamers are starting to have their own game console.

    I THINK two First Person Shooter like games from Gameclub are still doing good based on Game card purchases. I could be wrong though.


  20. agree coz most of their online games can only hook up a player for a couple of weeks then there’s nothing more to do on the game.


  21. What? They expect to earn lots of money from half-baked MMORPG’s with very shallow storyline that brandish grindfest as its main feature?

    Target hardcore gamers. Release quality games.


  22. kasi namn why did they franchise Hello Kitty Online failure from the start


  23. must be that the upper management of level up aren’t really gamers at all. they do not understand the current market situation. it’s expected out of a PLDT run company.


  24. Some players fear loosing items that they paid for once a particular game is shut down that is why some of them do not purchase prepaid loads.


  25. oh well, i’d like to hear what level up has to say. i guess they have a sucky PR firm or PR staff to let this go by easily.


  26. Ok here are my thoughts.

    Hacks:

    What does a programmer need in order to get motivated on keeping these hacks away?

    Answer: reward!
    reward = money
    free game = no pay for the programmers
    no pay for the programmers = bad game with hacks
    bad game with hacks = bad marketing

    Free(Good):
    Ok, free is good! everyone wants free right? You get lots of subscribers (thats fine), the name of the game is advertised well (thats fine). But it will always be-

    (-bad):
    The company doesn’t get paid, well except for the in-game items which no one wants to buy! except if they really loved the game!

    What makes WOW, Heroes of Newerth (international),or other non-free games so good? They are paid games!

    Paid games = better maintenance, better developers, and better marketing!

    Heres a simple thing to do. Make all games paid games! BUT! make the availability of buying an account easy! make it worth every peso! just make advertising good and people definitely will buy an account. advertise on TV. eventually subscribers will grow and they will love the game more.

    Didn’t Ragnarok used to be paid? was it successful? Yes. So as MU, RF, HoN(Though its still early its growing), WOW. Why is DotA filled with map hacks? you answer that question yourselves.


  27. Addition:

    In Game purchases:

    This is a bad move when you have a free-to-play scheme. Why? People will think its a waste afterwards. It won’t benefit them for long! it’s like ok, I spend hundreds of pesos for this thing that won’t give me crap for too long why would I even bother. Subscription Fee is definitely a good strategy.


  28. @galit sa tamad- Sige would you work your a$$ for months for free?


  29. @ Joshua M

    It’s game distributors’ responsibility to update their game servers and clients with program patches that can be purchased from game developers / programmers. Game distributors are only after for maximum profit even at the expense of gamers’ account security hence updates that keep exploiters at bay don’t come that quick because updates are not free.

    It doesn’t matter if their game is distributed via F2P model or subscription based one. They get paid either way.


  30. Questionable in game items whick can be bought through Real Money Trading plus cheats and hacks ruin the game, almost all games in PH has this problem and Providers does not care to solve…
    Its better to play international server rather than PH server even if its the same game.
    Maybe corruption might be the main cause.


  31. facebook is not of a factor IMHO.. people who spend time in online games are those who are looking for intensive game plays and animations.. very different from the almost no-brainer games of FB.

    I disagree that online gaming will be coming to an end soon.. with my almost 6 years of playing RAN online (e-games), it’s true that the numbers of players drastically decreases year after year.. but the virtual items consumptions are strong as always..

    I remember one time that there is this player who made a record by spending php 100,000 on RAN just in a year. sounds silly, but a loyal player will spend approximately 10k to reach a powerful high level character.. and there’s a lot of them..

    I think what turn-off people is the slowness of the companies in releasing updates and new features..always late compared to their foreign counterparts.


  32. @ed yeah but the pay is slow and low thats why they don’t do a good job.


  33. I kinda disagree.

    People wanted to play and play more then buy more items relies on items sold in an in-game cash shop to make profits. Use of the cash shop is optional, but some items found there can improve the player’s gameplay.

    Man, its like put your money into a ditch.

    If the game is popular more than four years, its a good sign like RO, RF, WOW, etc (and some games I haven’t tried).

    Its almost a same factor in Facebook… but its a good catch for all working or old people around 30+. Oh yes, one thing is you need… “money”

    But in online gaming, its the same. It never stops as long as the money’s flowing. Casino, Facebook, Online gaming, Betting, including the country’s culture like Pachinko (japanese)

    What can I say? Consumers or players wanted to play more, enjoy more, and pay more.


  34. @lawreas

    Thats why I hate Free to Play to have that kind of model. Those who have money can spend it and even a no brainer player can pawned anybody in the game.

    Thats why I move on with my gaming and chosen to be in triple A MMO’s.

    Reason I quit playing local mmo is when I was still playing Tantra. During this time, theres a still load to play the game. After the update, can’t remember what that is then bots came and param hacks. I reported maybe 3 bot users using fraps then after a week they got banned then after 2 weeks, nakabalik sila >.<

    Sayang lang pagiging pulis pangkalawakan natin. Told to myself, why should I be doing all these stuff when I'm suppose to be playing and enjoying the game.


  35. @Lex Go Free top play here in the Philippines won’t bloom. People aren’t that passionate about games.

    RO, RF, WOW are good and popular because they are paid and some of the pay goes to the developers.

    Free to play doesn’t have that.


  36. @Joshus M
    You are right. =)

    -Quick theory- Every peso counts, straight to their income and then… what’s their next plan? gold for greed?

    I learned something difference between free-to-play (F2P) and pay-to-play (P2P) is social status and game benefits.

    To be honest, I like pay-to-play game servers because of great benefits, avoid high cost cash-shops and avoid freeloaders or ***-**** players (attitude).

    If they want to continue F2P stable or make game fair, why can’t they implement about “cybercrime laws”? Joint with online gaming company policy? Its just a suggestion.


  37. Pay to play is definitely excellent. You get quality support. The availability here is just the problem.


  38. I would just like to clarify on the statement regarding KOS and Hello Kitty Online of Level Up being “dropped from their roster”. Hello Kitty Online was temporarily closed by the said company due to major updates that ordinary patching cannot do, that is why they have requested for ample time. Also, they have provided information of the said cause of the shutdown through the link below:

    http://hellokittyonline.levelupgames.ph/ – kindly read the latest news with the title “Hello Kitty Online Temporary Shutdown”

    Meanwhile, if KOS will indeed be “dropped from the roster”, then Level Up shouldn’t be promoting the said game with their various tournaments and promos as provided here: http://kos.levelupgames.ph/index.php

    Bottomline is, please be minful in checking the games’ local or official websites and forum boards before jumping the gun. You might be doing more harm than good for the game and the company.

    Also, it is normal to presume that the said company is having a great loss due to the “corporate restructuring”. But then again, who knows why the said company removed some of their employees. As if they want to remove them in he first place. Just because they laid off some of their men doesn’t mean that the company can no longer maintain them – it is a part that we call “change”. The company knows what is best for them, so if laying off is their only option left, so be it.

    As for the F2P versus P2P issue, IT DOESN’T matter where you play – either pay for it or play for free, its basically all the same. Sure, there are trash talkers who can pay to play or pay for premium and at the same time use hacks or hex programs to get stronger. And there are those who play decently in free to play servers. Its the players that makes the game environment, not if its P2P or F2P. If you don’t want to play the game its fine. If you want to play for the sake of bullying others whether it costs you your debit card or your pesos, its basically up to you. Its the thing we call as “netiquette” – let your conscience guide you on what you want to do online.


  39. Ah, the naysayers, the doom sayers and the purveyors of “death will become them.” Seriously, to the people telling everyone that F2P is dead on the water, I completely disagree. Almost all of the local MMOs have adapted it. While publishers can’t afford the triple A titles like WOW or AION, they do try to bring titles that are almost as good as above mentioned games (take for instance Runes of Magic, RF Online, etc).

    @Lezuric

    “In addition to that, they just produce boring and lame games so I don’t think players will get hook into it since the world has a lot of very great and fun games to offer.”

    First, they don’t produce games, they publish it. They don’t develop, they get the rights to operate it in the country.

    @Dante – “I knew it! LU’s market drop because they followed the strategy e-games has. Along with youngster gamers + no cost gaming (F2P) makes those 2 company drop.”

    Because e-Games adopted the F2P model and made it their own, they took a big chunk of the market share from Level Up in less than a year. It’s a viable business model in a country that loves anything free and buys stuff in sachets. Sure they had better years but put into the equation that there was a world economic crisis two years back that hurt businesses, including local publishers.

    @Digest,
    Not everyone can afford the games that you mentioned, much less have a credit or debit card to purchase these paid game services

    which is why the F2P titles work here because it’s free. Yes, it isn’t as good as the titles you just mentioned but in letting them play these games, you’re bringing their “gaming awareness” up a notch. They will eventually mature and check out these triple A titles. But you have to start somewhere.

    @Oscar,

    If you’ve played Local MMOs, you know that with 20 pesos, you can get a really decent in-game item to help you level up faster? Their 20pesos cards and these items are the biggest sellers.

    @Mr A – “Consoles dominate the multiplayer market, so that’s gone. Online distribution seem plausible but impossible given the mindset in this country.”

    The console market in the Philippine is pretty small compared to the millions playing online using their PCs. If the console market is big here then Sony, Microsoft and Nintendo should have set up gaming officers here. But they haven’t.

    @Jhay – “In all my years of online gaming, I rarely purchased in-game items because the benefits they gave can always be gained by leveling up, trading with other players for items and yes, private transactions.”

    Then you’ve missed the really good stuff about local gaming here. the in-game items do add more flavor, more MMO goodness than just not mindless grinding. I believe that online games that are F2P are built that you really can’t level up or gain special items without in-game items.

    @Elly – Let’s admit it, if not all, most LU and e-Games’ MMOs are half-baked.

    Actually, they aren’t. They’ve spent a considerable fortune (probably more than you get in a dozen lifetimes) to bring out games that they have. the features these game may not be as good as triple A titles but they do offer something unique to the market as well.

    Bugs,cheats and hacks do happen but it’s prevalent in most games, that includes WOW and AION. the local publishers do their best and these cases haven’t inundated them at all. if these did happen on a major scale, then you would have a full scale riot – city wide. but it hasn’t happened.

    @Ian – dude, I don’t even know what you’re talking about so I won’t get into your discussion.

    @Nerbie – there are a lot of players on Garena and DOTA but the thing is they’re just playing with a bunch of others. there’s no real interaction like planning a raid, or boss hunt with a bunch of players in Davao and Cebu, building up a guild and going against other guilds for server or map dominance. there’s a whole bunch of things that MMO give that LAN games can never dole out. you haven’t played local MMOs like the way these “low paying” players have.

    @Jox – “agree coz most of their online games can only hook up a player for a couple of weeks then there’s nothing more to do on the game.”

    Dude, if this is true, then Ragnarok Online, RAN Online, CABAL Online,, wouldn’t have the kind of gaming community that they have. they’ve operated for years and they still have an incredible number of players. Just visit their annual gaming conventions, and it is just staggering to see all these gamers, from 50 year olds to 6 year old playing together.

    @Galit sa tamad – these guys actually work their butts off 24 hours a day. but you’re just trying to be funny

    @Joshua M – “Heres a simple thing to do. Make all games paid games! BUT! make the availability of buying an account easy! make it worth every peso! just make advertising good and people definitely will buy an account. advertise on TV. eventually subscribers will grow and they will love the game more.”

    Dude, you’re alienating almost half of the people playing games if they shifted to paid games. F2P actually works but what these companies need to do is make their games better by providing monthly content, great service, etc. advertising on TV doesn’t really work that well since most of these gamers are online most of the time.

    @Jed Yang – “Questionable in game items whick can be bought through Real Money Trading plus cheats and hacks ruin the game, almost all games in PH has this problem and Providers does not care to solve…”

    There is RMT happening but not on the scale you’re thinking of. it does ruin the game but the publishers do they notice and they act on these issues immediately. those that don’t, eventually close shop.

    @Joshua M – “Free top play here in the Philippines won’t bloom. People aren’t that passionate about games.”

    That’s where you are wrong. There are millions of passionate Filipino players. Some are so passionate, they attend gaming events, regular and big ones, load their accounts so they can play all week, spend a lot in online gaming company-authorized online auctions, paying hundreds of thousands of pesos to get exclusive in-game items. You need to get out and play more online games.

    “RO, RF, WOW are good and popular because they are paid and some of the pay goes to the developers. Free to play doesn’t have that. ”

    Actually, publishers pay the developers as well to operate these games. they pay it through royalties, licensing fees, etc.

    I hope I’ve helped in demystifying and shattering misconceptions about online gaming here in the Philippines.


  40. @bigegoplayer “companies need to do is make their games better by providing monthly content, great service, etc.”

    how do you suppose that will happen if they don’t get paid well? If you were on the developers’ shoes would you work your a$$ for a small pay? If you’re not a game developer then you have no idea how hard it is to fix bugs.

    “advertising on TV doesn’t really work that well since most of these gamers are online most of the time.”

    No… does it mean that once you are an online gamer you will never watch TV ever again?! advertising would even give a better market to the game companies.

    “There are millions of passionate Filipino players. Some are so passionate”

    Yeah some of that millions are passionate enough to hack the game.

    “paying hundreds of thousands of pesos to get exclusive in-game items.” Give me a stat on that.


  41. @Joshua M

    Actually I work for a gaming company. :) I have a pretty good idea on how fast we deal with bugs. normally takes a day to a few days to fix it, but the repercussions last weeks, even months for really bad bugs. fortunately, we haven’t had a bug that we couldn’t fix on the fly and hasn’t hurt us that bad.

    Our guys are pretty well paid.

    As for TV advertising, I won’t even go there. the market isn’t there.

    Dude, there will be bad seeds that will try to hack a game, but the thing is, it hasn’t happened on the scale that you’re talking about. if it did, then you’d hear about it in online gaming circles, or in the newspapers. but the thing is, publishers, together with developers, work on addressing hacks immediately. those who perpetuate the hack, get banned immediately or are taken to court.

    As for stats, I don’t have that. But I’ve attended a number of them and have actually bid on these items (kaya ko lang hanggang P10,000). The people who outbid me are so passionate to get those in-game items.


  42. @bigegoplayer “there’s a whole bunch of things that MMO give that LAN games can never dole out. you haven’t played local MMOs like the way these “low paying” players have. ”

    I agree that MMO community is much different compare to LAN group.

    If staying at World Trade Center and waiting for the actual event of the yearly Level Up Live the following day just to be in the circle of the so called 100 early birds just to get the unique in-game item gift ain’t serious, then those guys you mentioned are way beyond serious players than most of us.

    The only point I was saying previously was that the attention of gamers in the Philippines are not just on these MMORPGs. The popping out of newer titles divide gamers time in playing and sticking to one game and the effect would be a little gamers in one title and some scattered on other games. So, basically it will decrease the number of players on some existing games. And lastly I still think the gaming industry in the Philippines will still be here and I want them to be here :):).


  43. @bigegoplayer
    What about the games that I suggested like Lord of the Rings Online, Dungeon & Dragons Online, Everquest II, Need for Speed World, and just now Pirates of the Burning Sea. Just read this noon at Massively.com.

    Players here need the information just like you said, they need to start somewhere, but by just limiting their options, like local online publishers cater then its still the same circling in one band wagon.

    They need to try other services because some players when they’d given up playing Online Games. They do really see ALL online games just as one. A one sided money milking scheme by a company. Not a two way beneficiary for both parties.


  44. @Digest,

    I’m all up for bringing these games into the country, but the fact of the matter is that these triple A titles need a lot of money. serious money as in the millions of dollars (balita pa nga, Level UP was interested in getting WOW but decided not get it because the cost was too prohibitive. think a billion pesos.) that’s how much these titles cost. who has that kind of money right now? not even PLDT-backed Level Up can’t cough up that kind of money (much less the other gaming publishers).

    There are other factors as well that figure in. broadband Internet and PC penetration haven’t even reached critical mass yet. most of the gamers today access their games through Internet cafes. and not everyone can afford to have a credit or debit card.

    gaming publishers are doing what they can to bring good titles but everything is still business. companies need to make a profit. if they make a lot of money, then they start thinking big like getting these triple A titles.


  45. Sumakit ang Ulo ko sa Ibang Post/Comment, not because of their argument but because I cannot understand what they are trying to express.. :)


  46. No. Here is the true status now. For online gamer you must this. Why government had a project to open a first online gambling games? Last March 2010 a one closed door meeting of President Arroyo and PAGCOR President other 2 foreign investment had plans to expand the PAGCOR gamble system by using new technology like computer and internet but the problem there not enough facility to open there project but President Arroyo say not buy out large gaming online company like LEVELUP, Mobuis, Gameclub, E Games and many other company to mentions at the bidding worth of $2.5 Billion. Then government there get money and will it corrupt again for self use. This was original plan last 3 years ago.


  47. @bigegoplayer

    They are available now po for you to play. No need for local publishers to get them. Thats why some of our gamers are in different games right now. Yun po maganda, wala ng 3rd party company to cater the game. Kahit nga Atlantica Online Ndoors lang, kaya ng mag load through load central then yun na. No need for these egames & LU anymore. Mas lag pa nga kuminsan sa mga local servers.

    As for what you are saying that people are still relying in internet cafes to play. 50/50 po tayo dito. I’m operating an internet cafe and sa 3 years po, eh 6 of 10 adik players now has their own pc’s. So malaking kawalan sila sa sales ko. Yan po yung opening till closing naglalaro.


  48. I used to play RO, but stopped when they stopped doing something about the bots.

    I recently tried playing it again, and discovered that maps were infested with bots that you couldn’t hunt anything and every town had people trading in-game items/money for php.

    They even have a rule in the message boards of not creating “why I quit” threads, and never mentioning the existence of said bots and php traders.


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