GigaMedia Limited operates as a diversified provider of digital entertainment services in Taiwan, Hong Kong, and Macau.
The company operates in the digital entertainment services, where it owns 100% of and operates FunTown, a leading digital entertainment portal in Taiwan and Hong Kong. FunTown is focused on the high-growth mobile and browser-based casual games market in Asia.
Digital Entertainment Service Business
The company’s digital entertainment service business, FunTown, has a strong tr...
GigaMedia Limited operates as a diversified provider of digital entertainment services in Taiwan, Hong Kong, and Macau.
The company operates in the digital entertainment services, where it owns 100% of and operates FunTown, a leading digital entertainment portal in Taiwan and Hong Kong. FunTown is focused on the high-growth mobile and browser-based casual games market in Asia.
Digital Entertainment Service Business
The company’s digital entertainment service business, FunTown, has a strong track record of developing and monetizing PC-based casual games in Asia. FunTown also had one of the largest online social gaming platforms in Taiwan by revenue and still maintains strong brand awareness, which the company leverages as it restructures its business and extend its offerings to mobile and browser-based games in select areas and geographies.
The company also publishes and operates PC- and mobile-based games under licensing agreements, predominantly in the territories of Taiwan, Hong Kong, and Macau. The company’s understanding of local markets enables it to introduce foreign niche products by concentrating marketing efforts on a specific and well-defined segment of the population.
Most of the company’s digital entertainment products are operated or expected to be operated under the item-billing revenue model, which it refers to as the Item-Billing model. Under the Item-Billing model, users are able to access the basic functions of a casual online game for free. Players may choose to purchase in-game value-added services, as well as in-game virtual items and premium features to enhance the game experience. This allows players to utilize more functions, improve performance and skills, and personalize the appearance of a game character. Game points are consumed as users purchase value-added services and in-game items.
To complement the company’s offerings and strengthen their appeal, it is focusing on building community-based online platforms that cater to different social networking needs of its users and provide various channels to facilitate communications among them. The company intends to continue to grow and enhance its market position in the digital entertainment industry by increasing focus on mobile and browser-based games. The company expects to drive growth both organically and through accretive transactions.
While the COVID-19 pandemic had required people to stay home more, which caused some people, especially students (one of the company’s target markets), to seek online entertainment at a higher rate, other groups became reluctant to spend on entertainment in light of the prolonged economic uncertainty resulting from the pandemic. In addition, the company’s Japanese and Korean licensors were considerably impacted by the COVID-19 pandemic, and delays in providing support, upgrades and new content had a negative impact on the ability to sustain interest in the games licensed from these licensors. As life is gradually returning to a post-COVID normal routine, the company expects there to be a slight decline of revenues from its student customers, but also better coordination with its licensors.
Digital Entertainment Products
MahJong and Other Casual Games
MahJong is a traditional and highly popular Chinese tile-based game that is widely played in Taiwan, Hong Kong, the People’s Republic of China (PRC), Japan, South Korea, and other regions throughout Asia. Similar to poker, MahJong involves skill, strategy, and calculation, as well as a certain degree of chance.
Through its FunTown-branded platform, the company develops and offers various local versions of MahJong for players in Asia, particularly in Taiwan and Hong Kong. To play the company’s online MahJong games, players install software that can be downloaded free of charge from its game websites. Players can compete with anyone on the FunTown network. The company’s MahJong games are designed for players of all levels of skill and experience. To accommodate various needs of players, the company offers different online MahJong rooms based on skill levels or stakes. The company’s online MahJong game site is one of the most popular online MahJong networks in Taiwan.
Players may play the company’s online MahJong free of charge. While a player may win virtual currency in the game without paying, an average player typically has to pay to continue playing on a regular basis or to establish a track record inside the company’s online MahJong community. Players may choose to purchase game points through various distribution channels, such as convenience stores, payment processing terminals, or online/mobile payment channels. Players may exchange purchased game points for virtual currency and deposit into their virtual bank accounts. The virtual currency may be used to play MahJong and other games on the FunTown game site or to purchase in-game virtual items, but cannot be redeemed for cash.
The company’s PC-based MahJong offering has faced strong competition in recent years from the growth of mobile and browser-based online games, driven by the popularity of social networks and high mobile device usage in its markets. The company responded by launching its MahJong game application, which uses a web or browser-based technology with no download required. This simplified user sign-in procedures and enabled tighter integration with social networking platforms by allowing users to log into the company’s game directly via their accounts at a given social networking platform.
The company also offers various other casual card and table games through its FunTown-branded platform. These online games are Internet-based and developed through computer simulation and adaptation of non-computer games, which are traditionally played offline. The FunTown platform targets players in different regions, particularly Taiwan and Hong Kong.
The company’s offerings include many different online card games, which are popular in various regions in Asia. Players can select their desired table based on the level of skill or stakes. These games are designed with online multiplayer features that allow players to compete against one another. The company also offers chance-based games, including bingo, lotto, horse racing, Sic-Bo, slots, and other simple casual games.
Like online MahJong, players may play the company’s other casual games for free. They may choose to purchase virtual currency to play on a continuous and regular basis. Virtual currencies may be used to play all games on the FunTown game site or to purchase virtual items, but cannot be redeemed for cash.
Role-Playing and Sports Games
In Taiwan and Hong Kong, the company offers through its FunTown platform online games of various sub-genres besides MahJong and other card or table games.
In June 2006, the company launched the PC-based online sports game Tales Runner. Tales Runner is a PC-based multiplayer obstacle running game in which players compete by running, jumping, dashing, and using items. With its fairy-tale style and constantly changing running tracks, Tales Runner has been a popular game in Hong Kong.
Traditionally, for the company’s PC-based online games, players download and install client software from its websites. The company’s online games are offered free-of-charge to all players. Players may purchase virtual items that enhance their characters’ performance and game playing experience, or personalize their characters.
From 2015 to 2022, the company launched eleven mobile role-playing online games, or RPGs. In particular, Yume100, which was launched at the end of September 2015, outperformed other mobile role-playing games. Yume100 is a story-based game that primarily targets female players in the age range of 15 to 35 years old. In the game, which has certain romantic elements, players assume game characters and complete challenges. Leveraging the operating experience of Yume100, in mid-December 2017, the company launched Akaseka, a similarly female-oriented game. Furthermore, it launched Shinobi Master New Link, a male-oriented game, in April 2019.
For the company’s mobile games, players usually download the game software, or ‘app’, from third-party digital distribution platforms, such as ‘Google Play’ or the ‘Apple App Store.’ Like the company’s PC-based games, while its mobile games are offered free-of-charge, players may purchase virtual items to progress more quickly in the game, to enhance their characters’ performance and game playing experience, or to personalize their characters.
Game Sources
In-house development of Casual Games
The company develops the casual games offered on its FunTown game platform, including online MahJong, card games, and other simple casual games. The company’s in-house development enables it to have better control of the game features and allow for seamless integration onto its FunTown platform. In order to support product development capabilities and develop the company’s proprietary online games, it intends to expand its browser/mobile-based games development capabilities.
Sources of Role-playing and Sports Games
Historically, the company has sourced role-playing and sports games through licensing from developers in various regions where game development is well established. The company monitors markets in the United States, South Korea, the PRC, Japan, Southeast Asia, and Europe; and maintains communications with a number of leading game development studios to identify and source new online games.
In selecting games, the company evaluates the key factors that indicate the market trend and player demand and interest in the regions where it operates.
In preparing for the commercial launch of each new game, the company cooperates with the game developer to localize the game to make it suitable for the target markets where it plans to launch. Once the developer completes the localization and provides the first-built version, the company conducts closed beta testing of the game with a select group of users.
Following the commercial launch of a game, the company regularly implements improvements and upgrades to its games.
FunTown Platform and Services
The company’s FunTown platform provides many digital entertainment services for users to enhance their playing and entertainment experiences, facilitate information communication among them and support the development of a strong player community. These services include:
Player Clubs: FunTown offers online club services in its game community. FunTown players can also form their own clubs, invite other players with similar interests or skill levels to join, and organize online and offline events for club members. Player clubs complement the strong social features of online games by helping to maintain an online game community.
Tournaments: FunTown provides various tournaments for its online MahJong players. After players join a club, they can participate in biweekly online inter-club tournaments.
Avatars: To enhance players’ overall entertainment experience, FunTown offers many in-game virtual items, which may be purchased by players to customize their online personal graphic profiles, or avatars. Players use avatars to create their own unique look while participating in the online community. The virtual items for avatars include facial expressions, clothes, and different accessories. These items are particularly popular with younger players, who customize their avatars to establish unique identities and pursue distinct fashions in the online community.
Friends and Family Messenger and Online Chatting System: The FunTown platform has a unique function designed for players’ personal contacts, which is similar to the contact list of instant message programs. This enables players to see when their friends and family members are online and invite people in their personal network to play games together.
Social Networking: The FunTown platform provides an online social networking community called FunTown Village, in which players meet each other through their online avatars. In FunTown Village, players can interact and communicate, purchase virtual items, and even get married virtually. FunTown plans to introduce more virtual items within FunTown Village to address the strong social interests of its players and to help increase FunTown’s overall appeal as a distinct online game community.
Customer Services: FunTown provides support and services to its customers primarily through walk-in customer service centers in Taipei and Hong Kong, via e-mail and through an in-game report system where players can inquire and receive responses from FunTown.
Mobile Platforms: FunTown provides a mobile platform for casual games, which works on both Google’s Android and Apple’s iOS operating systems and allows data synchronization between the two systems.
Customer Platform: FunTown provides a customer platform called Dream Village, which began as a community space constructed for players of the company’s female-oriented games. It not only runs an online shop for game-related virtual goods and character merchandise, but is also capable of intermediating as a payment gateway for third-party online and offline retailers.
Marketing
The company uses various qualitative and quantitative market research methods to analyze its target market and differentiate its product offerings from those of its competitors. The company is engaged in a variety of traditional and online marketing programs and promotional activities, including the following:
In-Game Events and Online Marketing
The company organizes in-game events for its users, which encourages the development of online communication and teamwork among its users and increases user interest in its games. Examples of in-game events include scheduled challenges or competitions for prizes. In addition, the company uses in-game events to introduce and market new features of its games to its users.
The company advertises its brands and its digital entertainment products across a variety of online media, including traditional online advertisements like YouTube, Google, and Facebook. The company also collaborates with new media channels, including micro-blogging services provided with websites and search engine services.
Offline Promotions and Advertisements
The company advertises its brand names and its digital entertainment products across a variety of offline platforms, including television and outdoor advertisements. From time to time, the company distributes game-related posters, promotional prepaid virtual points for new users and souvenirs at trade shows and other locations. The company conducts events at popular venues to stage exhibitions, distributes software and game content-related merchandise, and interacts directly with its users. For the company’s role-playing games, it also collaborates with book shops, coffee shops and similar businesses to host fan meetings, where it provides immersive customer experience to promote and strengthen customers’ emotional connections with its role-playing games.
Open Beta Testing
The company conducts its open beta testing under open market conditions. During open beta testing, the company does not charge users to play the new game. Open beta testing serves important marketing functions, including developing initial interest, establishing an initial user base, and generating word-of-mouth publicity to support the commercial launch of the game.
Distribution and Payment Channels
The company sells game points for its digital entertainment services through various channels.
Internet-Based Distribution Channels
Internet-based distribution channels consist of various websites, including the official website of FunTown. Users may purchase game points through these websites with their credit cards or computer-based payment processing terminals.
The company also uses third-party digital distribution platforms, such as ‘Google Play’ or the ‘Apple App Store,’ to provide its mobile game apps to users of various types of mobile devices.
Telecommunication Network Operators
The company also distributes game points through cooperation with telecommunication network operators and their service providers. The company’s cooperating operators and service providers charge fees to the purchasers’ phone bills, which are prepared and collected by the network operators.
Payment Aggregators
The company also works with established payment aggregators. These payment aggregators allow users to pay for a variety of products and services, such as mobile phone calls and game points of different game operators, using their pre-paid scratch cards, vouchers or codes printed on receipts.
Offline Physical Distribution Channels
Physical distribution channels mainly consist of convenience chain stores, where users may use interactive kiosk machines to purchase pre-paid game points with varying amounts.
Seasonality
The company’s business experiences seasonality in the form of slower sales of FunTown’s digital entertainment business in the second and fourth quarters (year ended December 2022). In recent years, the company’s first and third quarters have been its strongest revenue periods due to the Chinese New Year holidays, students’ winter and summer vacations, as well as anniversary promotion campaigns in the third quarter for one of its popular games. The prolonged school closures arising from the COVID-19 (coronavirus disease 2019) pandemic also had significant positive impact on the company’s revenues as students (one of its target markets) sought online entertainment at a higher rate.
Customers
In Taiwan and Hong Kong, as of December 31, 2022, the company had an aggregate of approximately 9.0 million unique registered customers of its digital entertainment services, most of which were located in Taiwan. During the year ended December 31, 2022, the company recorded approximately 43,000 active paying users.
Competition
The company’s major competitors in Taiwan include Soft-World, IGS, UserJoy, and GodGame.
Research and Development
For the year ended December 31, 2022, the company incurred U.S.$1.1 million in research and development activities.
History
GigaMedia Limited was founded in 1998. The company was incorporated in Singapore in 1999.
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