#Asia What factors lead to the success of Garena


Although both business models of Tencent and Alibaba are commonly imitated and adapted in SEA, none of them has implemented the viable business models in China much better than Garena


On March 31, a balmy sunny day, Garena, one of the most promising and Singapore-based startups, made an announcement of US$170 million Series D funding from Malaysian government’s strategic investment fund. It’s estimated that the valuation of the Internet company reaches almost US$3.80 billion, a conservative projection figure. Unsurprisingly, these continuously instilling funding help Garena squeezed out other startups to become the most valuable unicorn in Southeast Asia.

Generally speaking, this amazing unicorn consists of several major products, such as Garena+, Beetalk, Shopee, Airplay. More specifically, they represent future blueprint and core tactics to become next epochal Internet company. They are all so-called platforms internally for different purposes, game portal, social network, c2c marketplace and digital payment respectively. Each of them plays a critical role in the corporate deployment in Southeast Asia, assisting in coming up with more diverse and integrated strategies to cement its leading position.

None of the existing companies has implemented the viable business models  much better than Garena.

Currently, Garena has speeded up the product development in order to cater to more Southeast Asian customers. This phenomenon has been widely associated with the new investment from Tencent, an Internet giant in China. From its main products alone, one can clearly notice its similarity with Tencent (QQ and WeChat) and Alibaba (Alipay and Taobao). These, without a doubt, is the proof that Garena is desperately trying to build a complete ecosystem which is equivalent to the synthesis of its two big brothers, Tencent and Alibaba.

In the talk at “Tech in Asia 2015”, president Nick Nash even boldly admitted the inference and further disclosed the internal information of decision-making (See video).


Source : Tech in Asia

Although both business models of Tencent and Alibaba are commonly imitated and adapted among those new entrants in Southeast Asia, the undeniable truth is, however, none of them has implemented the viable business models in China much better than Garena. Some may claim the huge success of Garena lies only in the acquisition of exclusive license of League of Legend (publicly known as “LOL”) which is the hottest online-multiplayer game whilst some hold the perspective of perfection location and support within startups-friendly country — Singapore. The truth is, when one delves deeply enough, both of the arguments are partially right but are not the decisive factors.

The previous failure lead to the future success.

First and foremost, let’s talk about running an online platform, a difficult topic for freshman startups. Although the launch of GG, a short-lived platform created by Garnea team before Garena came to life, failed to keep the team on the right and sustainable track, it was, from my perspective, more like a minimum viable product (MVP), making them figure out where the true niche market was and how to prepare themselves to catch the waves again as soon as the right time approached to them. Afterwards, it turned out the precious lessons from the past helped them build a free game portal alongside featuring communication and clan system because Garena has already known what those game players desired for.

Source : Official Website of Garena

Besides that, this concept of social gaming was a new business model that hadn’t been discovered among startup firms in 2010. Undoubtedly, all of these factors contribute to the successful launch of the early stage of Garena.

The highly-localised content in platforms is also a key point worth mentioning. As we discussed in other Week Column (See :  Weekly Column : Five Tips For E-Commerce Players in Malaysia) before, the alliance of Southeast Asia region shapes a perfect unity following behind European Union but the drastic difference within each country is the deterrent for e-commerce entrants. Taking the notice already, Garena regarded it as a kind of differentiator from other tech firms to promote its product. The move, frankly speaking, created a locally consistent gaming environment for game players from numerous countries, plus reducing its internal efforts to modify the game content.

As a result, those published games smoothly attracted game players from different regions to become loyal users, increasing the traffic flowing into its platform significantly and the capability of focusing on the user demands.

The backup of its big brother, Tencent, is a critical assistance.

Furthermore, diversification growth strategies and specific expanding directions find favour in VC’s eyes. While the chairman refused to speak publicly on the behalf of those investors, he did imply that the scalable business model of Garena could be one of the reasons why these VCs are willing to invest in the team. This point can be further verified from its product line we mentioned above. We are surely able to infer that the ambition and potential toward future growth is truly beyond imagination.

In addition, the backup of its big brother, Tencent, is a critical assistance one cannot neglect. With the connection built by Tencent, it is much easier to leave a good impression and win the trust from other existing investors who are suspicious of Garena’s capability. The supports from Tencent reduce annoying stumbling rocks and obstacles ahead of the expanding path, pushing the unicorn to the position of top one startup in Southeast Asia eventually.

In all, as long as these decisive factors come altogether and are at play, the chemical reaction goes wild. The triumph of Garena by no means should be credited to the sheer luck or other single factor.

Despite the fact that Garena is the most valuable company, it is possible that the position would be taken over by other new and fierce startups in the following competitive periods because of the chaos in Southeast Asia and those historical lessons from Tech Company in Silicon Valley during dot-com bubble. Let’s see if the unicorn can keep progressing and keep its promise to go global!

The views expressed here are of the author’s, and e27 may not necessarily subscribe to them.e27invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your article here.


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