operating as a distributor for third party game developers through the Garena

Operating as a distributor for third party game

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operating as a distributor for third-party game developers through the Garena platform has allowed the company to scale its game development expertise and market knowledge. In terms of market knowledge, Sea Limited possesses detailed knowledge pertaining to the digital entertainment content desired by local customer segments and local regulatory rules in the region. With Sea Limited’s operational expertise in the region, the company is able to effectively assist third-party game developers in the marketing; modification; and distribution of the latter’s developed game and ensure that the game is tailored to the tastes of the local consumers in the region. Additionally, Sea Limited is also able to assist third-party game developers in navigating the often-complex regulatory rules in the region, such as the application of the requisite regulatory licenses and intellectual property laws applicable for the copyright of the game. Sea Limited’s role as a distributor partner with third-party game developers has allowed the company to build up its game-development capabilities over time. In 2017, Sea Limited completed the development of the game Free Fire and Free Fire was the first game to be fully self-developed by Sea Limited. No external game developers were involved in the development of Free Fire. Free Fire was launched in the same year and achieved resounding success – as evidenced by the game’s ranking as the fourth most downloaded game across the App Store and Google Play Store combined in 2018 (Sea Limited, 2018). The success of Free Fire represents Sea Limited’s successful penetration into the game development industry and going forward, Sea Limited will likely be leveraging on its game distribution and development expertise to self-develop and self-distribute game releases. The self-development and self-distribution provide Sea Limited with greater control over the quality of the game’s content and targeted geographic/consumer segments as partnerships with third-party game developers entails the development of the game’s content and identification of the game’s targeted segments by the latter while former handles marketing and distribution of the game. Furthermore, with self-developed and self-distributed games, Sea Limited will earn a larger share of revenue derived on the games hosted on the Garena platform as the company no longer has to pay royalties to third-party game developers.
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