How iCandy’s deal with Ohayoo gives it a key advantage in the world’s largest gaming market
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The company is now positioned to accelerate the rollout of its leading Masketeers title into the Chinese market .
For mobile games development company iCandy Interactive (ASX:ICI), the market opportunity has always been global.
The success of its flagship title Masketeers: Idle Has Fallen, released last year, saw the company post a 61 per cent increase in full-year revenues to $3.6 million.
By geography, ICI has established strong traction in the huge North American market where it has generated the bulk of its revenue to date.
And earlier this year, ICI announced a key distribution deal with Asia-Pacific publishing platform Ohayoo – a subsidiary of Chinese multinational ByteDance.
But speaking with Stockhead this week, chairman Kin W Lau detailed how the deal came about, and how it opens up a new opportunity to access another major global market in China.
Kin said iCandy’s knowledge of key segments within global markets – particularly North America – is what helped it stand out in Ohayoo’s search for new partnerships.
“We got approached (by Ohayoo) about six months ago,” Kin said.
“Obviously the organisation they belong to (ByteDance) has a strong footprint across east and west. And at that time they really wanted to find international partners who could work with them on a global scale.”
Kin said negotiations progressed “very quickly” after the Ohayoo team tested the gameplay for its flagship Masketeers title.
At that point, both companies found they took a very similar approach to game development.
“What was interesting is that Ohayoo come from a background where they are very focused on user data and analytics, which is a part of our company’s DNA,” Kin said.
“So once we started discussions, the partnership came together very fast. We were impressed and we thought they’d be a great partner because of that efficiency and speed they have (on data analytics).”
While both companies found synergies in their approach to product development, Ohayoo provides ICI with a key distribution advantage via its established market footprint in China.
While the size of China’s addressable market is well known, Kin highlighted that distribution access is challenging for most companies.
“It’s now the world’s biggest game market but it’s impossible for foreign-domiciled gaming company to access the market by itself,” he said.
The nature of China’s regulatory structure means gaining market access is a process that can take “decades”, he added.
However, with Ohayoo’s existing distribution footprint, ICI can now accelerate a process that otherwise would have taken years.
“The deal we have is for Ohayoo to publish Masketeers in the Chinese market,” Kin said.
“The exciting thing for us is we know Masketeers is a great product for Chinese gamers, because of its genre and gameplay,” he said.
“The question was always how to distribute it effectively. So when Ohayoo came to us, all of a sudden it was immediately on our near-term (distribution) roadmap.”
And ICI’s access to China is an exciting development for investors, given that it already generated 61 per cent revenue growth in 2020 without a presence in the Chinese market.
“(The Ohayoo partnership) takes away the problem of how to distribute the product ourselves,” Kin said.
With an accelerated rollout underway, ICI’s plan is to take the game live into China by the end of the June quarter.
“The growth opportunity is there because we’re currently not booking revenue from the Chinese market, so that income will be incremental to our exiting revenue base,” Kin said.
This article was developed in collaboration with iCandy Interactive, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.