White paper How the Top 5 Games Companies Went Global

Alpha St Andrew’s House St Andrew’s Road Every company had to start somewhere. Some were founded by a well-respected Cambridge CB4 1DL businessman or businesswoman and received a raft of initial investment. Others started United Kingdom out in somebody’s garage, and yet have still ended up dominating their market globally. @thisisalphalive In fact, there is a surprising correlation between the garage-start-up company and the names that have become global giants. That list includes Amazon, Apple, Disney and Google, and there are many more started in a one-person office. thisisalpha.com The question of how these companies have built from such small beginnings to positions of global dominance is a significant one. Other businesses at differing stages are keen to emulate them. There are, of course, many factors underlying such success. Great product is one; great business strategy another. But that isn’t enough to get you across continents. Successful global expansion comes down to effective localisation, and the top five global players can tell us a lot about undertaking the process correctly.

The Best of the Best

Let’s take the top five firms in the Games sector. It’s worth differentiating between the pure games developers or publishers and those who also provide hardware or other software, such as Sony, Nintendo and Microsoft. Much of the latter firms’ revenue comes from these other sources, so the top five games firms we will look at are the pure publishers and developers whose revenue is the highest.

At the top of the list is Activision Blizzard, the world’s largest pure games publisher formed out of a merger between Activision and Vivendi Games, who operated the Blizzard studio. The company is synonymous with record-breaking franchises, but was not successful overnight. In fact, when current CEO Bobby Kotick took over Activision in 1991, the company was failing financially. With little money, the firm could not afford for any of their games to be failures, and so each game was carefully selected, and then received full backing, including localisation into multiple languages to ensure that it was a hit in multiple territories.

We are expanding our capabilities across platforms, genres, audience demographics, and geographies — but always in the service of our players. – Bobby Kotick, CEO, Activision Blizzard

The company has now become known as a ground-breaker in localisation. When it released Starcraft II: Wings of Liberty in 2010, it featured not only voiceovers in multiple languages, but also fully localised text in each part of the game. This meant that every bottle of beer and every news ticker in the background was fully localised, and that meant full immersion for players, resulting in great reviews.

Activision Blizzard has also pioneered its own software for voice-over syncing. FaceFX allows for the movements of the onscreen characters’ faces to match the speech in every localised version. It is a development that others have since looked to replicate, thanks to the strong positive response from the gaming community.

2 How the Top 5 Games Companies Went Global thisisalpha.com From International Beginnings…

Ubisoft was the game publisher which understood the need for localisation at the earliest point in its history. The company may be one of the largest game publishers and developers in the world, but it did not begin as a creative force. It was founded in 1986 as a games distribution company, and swiftly made deals with Electronic Arts, Sierra On-Line, and MicroProse to sell their games to the French market. By 1993 it had become France’s largest games distributor.

When the company moved into game development and publishing, it did so from the perspective of a company which had existed in order to bring games to new countries. It is therefore unsurprising that the firm’s expansion was international in its direction. In 1996, Ubisoft opened offices in Annecy, Shanghai, Rennes and Montreal.

The firm now has 29 studios in 19 countries, and with subsidiaries in 26 countries, it has become one of the largest international players in the games market.

The drive to become an international presence has been reflected in the localisation of its own titles. Ubisoft has localised its games into increasing numbers of languages, and with The Division, it has become one of the first major publishers ot fully adapt one of its AAA titles into Arabic. This adaptation has included cultural alterations in order to accommodate laws on violence, sexuality and gender; as well as real modifications to the interface in order to support right-to-left lexicography. Ubisoft has also moved fully into the censorship-heavy Russian market by opening its own office in Moscow and working there on cultural adaptation alongside development.

[We wanted to] Try to understand how the Arabic people play games and try to localize the games if we can…They play games and buy games already, but localizing the products will bring us closer to the people. - Yannick Theler, Studio General Manager, Abu Dhabi

American Firms Gone Global

Given the level of revenue available once companies go international, it is not surprising that some have prioritised the move to globalise. To step away from the Games industry briefly, it is worth taking a good look at mega-company Amazon’s business plan was based, not around initial profitability, but on dominating the market. In its first five years, the company planned on achieving profits of essentially 0%.

3 How the Top 5 Games Companies Went Global thisisalpha.com Bezos’ plan was to become a household name, one that users would keep coming back to out of both habit and trust. Achieving that level of awareness, however, involved two things: the first, incentivising use, which Amazon did by offering low-cost products with absolutely reliable, quick shipping times. The second was to open its services globally, and it did this by plunging its profits into purchasing warehouses and development offices in countries across the world.

Globalisation can seem to be an expensive gamble, but for Amazon it paid off. By opening sites in Canada, the UK, Australia, France, Spain, Italy, Germany, The Netherlands, India, Mexico, Brazil, Japan and China, the company achieved global domination within its first five years of business.

Not all businesses need to accept 0% profits in order to go global. For those companies wishing to undertake a more measured rate of growth, localisation can account for only a small element of revenue spend. Additionally, the increased revenue from initial stages of localising products and content can fund ensuing stages, making it a low-risk undertaking.

Two Companies – Worldwide Territories

For Electronic Arts, the move towards going global happened both through a series of forward-thinking partnerships and acquisitions, and through a direct link with consumer trends. EA’s starting-point was to be an entertainment-focused game developer, with its developers hired for their artistic capabilities and their stories derived from independent script-writers who submitted to EA for review.

Their model was more like Hollywood film studio than like a traditional software developer, and EA swiftly gained a reputation for player-focused, artistic games. The company retained this prioritisations of consumers by creating an in-house sales team which was able to keep in touch with consumer trends via retailers, and report back to the company directly. It was this link that made it push towards creating more new, original games from 2006 onwards, recognising that gamers were facing franchise fatigue.

Electronic Arts was also a company which moved to export at an early stage. Even by 1995, before its various large-scale international acquisitions, almost a third of EA’s revenue stemmed from international sales.

Square Enix also offers a good case study in going global via mergers. It began as two Japanese game developers, Square and Enix. Despite different working methods, with Square very much an in-house developer and Enix based on outsourcing, the two had several factors common. Each had a major title which had spawned a franchise, and was looking to build an international reputation outside their home country of Japan.

The merger gave the company a much greater weight in the international market, and allowed them to acquire, in 2013, Eidos Interactive, a UK-based games publisher which

4 How the Top 5 Games Companies Went Global thisisalpha.com released major titles such as Tomb Raider and Hitman. Eidos was to become Square Enix Europe, and with the move came a much greater distribution of the original Square and Enix games to European countries.

But the takeover was not the first step towards globalisation that either of these companies had taken. Each had been localising for the PAL and Northern US regions since the 1980s, well in advance of many of their competitors. The approaches had been different, with Enix outsourcing to Western translators who had little contact with the developers themselves, while Square set up its own translation and localisation team. After the merger, localisation moved in-house and the department grew to some 40 employees.

The extent of the firm’s English-language sales buoyed the success of their franchises, and by the time Final Fantasy VII had become a huge hit, the company took on localisation on a much more major scale, with translation from Japanese to English, and from American English to British English, French, Italian, German, and Spanish.

“The global focus is critical, because fully 65% of internet users speak a language other than English.” Sanjay Raman, Google Apps

The Future of Localisation

The global economy is experiencing an unprecedented shift in power toward emerging- market cities. A rebalancing of great scale and speed is happening from West to East and the global economic balance is shifting to emerging markets. In fact, we are observing the most significant economic transformation the world has seen. Twenty- first century China is urbanizing on a scale 100 times that seen in nineteenth century Britain, and at ten times the speed.

The Wells Fargo 2016 International Business Indicator shows that U.S. companies maintain an optimistic outlook on international business. While the increase from 2015 is not significant, this year’s score indicates that businesses remain unfazed in the face of global volatility: Six in 10 U.S. companies expect the level of their international business activity to increase in the next 12 months; 57% believe that the international component of their business will become more important. Conducting business beyond the U.S. appears to be a fundamental strategy as 87% of companies agree that international expansion is critical for long-term growth.

5 How the Top 5 Games Companies Went Global thisisalpha.com For the gaming industry, localisation is perhaps even more significant. Gamers want immersion in their titles, and poor localisation is one of the quickest ways of tripping players up in their enjoyment of the gaming experience. The swiftness of online reviews and positive or negative commentary on forums means that good localisation is now directly tied to games sales, even from first release. The days when games were only available to play in a single language are no more.

The expense of localisation remains a sticking-point, however, and independent studios often face challenges in full cultural adaptation. While a company like Blizzard can afford to have multiple language teams around the world to localise their titles, and can also invest heavily in software to get round any issues faced, others aren’t so lucky. This, however, is where external vendors that specialize in audio and visual language support are providing an answer. Even if a large portion of the world speaks and understands English, those who do not won’t have to miss out on experiencing something incredible.

Source: Wells Fargo 2016 International Business Indicator 2016.

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