TechnoDex ventures into online gaming

New Straits Times
10-30-2007
TechnoDex ventures into online gaming
Edition: Main/Lifestyle
Section: Business Times
Type: Company

MESDAQ-listed TechnoDex Bhd, an MSC-status company, has through its Hong Kong based subsidiary TDex Global Limited (TDex Global) ventured into the online gaming sector with the signing of a shareholder's agreement with Hitone Digital Interactive Technology Co Ltd of China.

TDex Global will acquire 33 per cent of Hitone for a cash consideration of RMB10 million (RM4.5 million).
Shenzhen-based Hitone, established in June 2005, evolved from an interactive creative art centre into a creative online game designer and developer. Hitone has successfully piloted "Childhood" in mid- 2007 in China and has a pipeline of innovative online games under development.

"With the equity participation, we hope to not just tap the potential of "Childhood", but also play an active role in China's lucrative online gaming market. This venture will serve to smoothen our earnings flow and create a broader base of recurrent revenue for the group, " TechnoDex's chief executive officer Nigel Lee Siew Tat said in a statement.

The acquisition of Hitone will be funded by internally generated funds.

"Our role in the immediate term will be to provide strategic planning, marketing, and infrastructure provision such as the game registration, payment system, and game hosting servers for "Childhood". Hitone, on the other hand, will continue to develop and maintain the game systems," Lee added.

"Childhood" is an online green game, in that it does not contain negative aspects such as violence. The pilot run of "Childhood" has attracted 1,000,000 players to date.

According to industry estimates, China's online gaming industry was worth about US$1.04 billion (RM4.68 billion) in 2006, and is expected to reach US$3.9 billion (RM13.03 billion) by 2010.

This rapid growth is driven by the increasing number of Internet users in China, adequate infrastructure and lower cost of playing online games compared to that of console games, the statement said.

Furthermore, China-made online games held 65 per cent of the domestic market in 2006, overtaking the previous dominance of American and Japanese games.

"In fact, the demand for online gaming is not only concentrated in China, but also across the region. Mindful of this, we are in negotiations with Hitone to secure exclusive rights to market the "Childhood" game in other markets such as Thailand, Vietnam, Indonesia and Malaysia. We foresee that the growing demand for online gaming will continue to fuel the growth of our venture," Lee said.

He said Hitone anticipates to roll out up to three games within the next year.

"Given that the lifespan of a typical online game is approximately three years, we believe that this timely venture will place us in a strategic position to capture the uptrend and effectively broaden our earnings base," he said

(Copyright 2007)