Asian I-Gaming Congress Day 1

26 February 2008's Lorien Pilling reports live from AiG 2008 in Macau.

Amidst the sumptuous surroundings of the Venetian Macau, the 2008 Asian I-Gaming congress got underway on Tuesday with a pre-conference summit that consisted of two streams of presentations that addressed the issues of "Marketing for Asia" and "Investment Insights."

Professor Desmond Lam, from the University of Macau, gave the keynote presentation in the marketing summit. He used it to explore the psychology of Chinese gamblers and what implications that might have for online operators.

Professor Lam worked from the simple but essential premise that you have to understand the Chinese before you can market your product to them successfully. In this respect, the past was the key to the present, and Lam discussed a brief history of Chinese gambling and the Confucian values that underpin China’s society.

He also introduced his audience to the genre of Chinese gambling films (a body of work consisting of more than 50 films since the 1970s). Any I-gaming operator seeking to enter the Chinese market could learn a great deal from these films about Chinese gambling superstitions, numerology and perceptions of gambling (Feng Shui and Gambling (2001), God of Gamblers (1989), Fat Choi Spirit (2002) et al.)

This key underlying theme of truly understanding the market was continued by’s Charles Gillespie. He begun by saying that you do not do business with "China as a whole" but rather with specific parts of China.

Gillespie identified four parts: coastal China (including Beijing and Shanghai), Guangdong province, the Pearl River Delta (Hong Kong/Macau), and Taiwan. Each part is a distinct market with regard to its language, demographics, consumer wealth and means of accessing and using the Internet.

He assessed the current demographics of Chinese Internet users and presented some of the challenges of operating in the country, including:

-- Two dominant state-owned telecommunication companies who compete rather than cooperate: this increases the cost of doing business because operators have to work with both

-- A general lack of industry standards in online advertising

-- Balancing the implementation of successful SEO strategies with the issue of IP blocking

Meanwhile, over in the investment summit, the no less complicated topic of IPOs was being discussed. Several online gambling companies have chosen to be listed on London’s AIM and main markets, although conditions in the equity market have been much tougher in recent months.

Nevertheless, AsianLogic is one company in the sector that has just completed its IPO and David Collins, Head of Corporate Finance at Berwin Leighton Paisner, used it as his case study in outlining IPO opportunities in the U.K. markets.

He explained that the company’s management experience, diversified revenue streams, previous track record, and already profitable status had all contributed to the IPO being a successful one.

In the following presentation, his colleague Hillary Stewart-Jones focused specifically on gaming regulatory due diligence, the importance of which has intensified since the passing of the UIGEA in the United States.

The afternoon sessions of the marketing summit looked at some of the different platforms that might be used to offer gaming services to Asian players, in particular through mobile phones and interactive television.

Gill Leivesley (Venturing Unlimited) presented several case studies of existing products in other markets, such as Gala’s bingo TV channel and the live streaming of live sports content by several major sports books.

With plans to televise the Asia Pacific Poker Tour in 2008, it could act as the impetus to spur growth in the game across the region.

Poker is one of the games that CWC Gaming now offers through its live-dealer casino services and CEO Chris Piche was able to give delegates an update on developments in the sector.

He reiterated the fact that the ability to offer live-dealer casinos is essential in the Asian markets. In addition, access to broadband and the speed of game play (halved from 120 seconds to 60 seconds) are both increasing, so the product is becoming an ever more viable option for Asian operators.

The closing presentation from Jacques Scherman in the investment seminar grappled with the issue of maximizing tax efficiency for online gaming companies. It covered what might be a typical corporate structure for a firm in this sector, which could be spread over several jurisdictions, and the factors to consider when creating a holding structure.

Pierre Wuu (World Mahjong Tour) finished the marketing summit with an assessment of the state of the affiliate marketing situation in Asia. After a brief review of the legal situation in various Asian markets, he described the prevalent online gaming revenue models in the market:

-- Subscription-based -- such as MMORPGs

-- Come-stay-play -- players play for free but are sold added "powers" or privileges

-- Real money

-- Virtual Currency -- such as the QQ coin

He said that the affiliate market in the region is currently still at an early stage in its development, which only serves to offer plenty of opportunities to those operators that are prepared to invest the time and effort to get it right.

Similarly, the fact that the region is a multi-lingual one also adds extra complications to the Asian affiliate market. But Wuu concluded that there is the chance to take advantage of being in the marketplace first and that patience was going to be needed with regards to the creation of regulation.

The main conference does not begin until Wednesday with a presentation from the key-note speaker Francis Lui, Deputy Chairman of Galaxy Entertainment Group, but delegates certainly already have a great deal to digest from this first day of papers.

One of the key themes that ran through many of the opening day sessions was that of really understanding the market. Do not be lulled into thinking that "Asia" is a single entity that can be tackled as a whole. Those operators that succeed in the region will be those that are prepared to invest in researching its culture and history. Only then can they then set about creating the right strategy for a specific part of the market.

Related Links
Asian I-Gaming Congress & Expo (AiG) 2008

Lorien is a research analyst with Global Betting and Gaming Consultants, and currently resides on the Isle of Man. Prior to this, he spent three years at a leading United Kingdom gambling firm, providing regulatory and market research for its various international e-gaming ventures.