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What factors lead to the success of Garena ?


Both business models of Tencent and Alibaba have not implemented the viable business models in China much better than Garena.

-- Tagtoo

On March 31, a balmy sunny day, Garena, one of the most promising and Singapore-based startups, made an announcement of $170M series D funding from Malaysian government’s strategic investment fund. It’s estimated that the valuation of the internet company reaches nearly 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.

Broadly speaking, this amazing unicorn consists of several major products, Garena+, Beetalk, Shopee, Airplay respectively. More specifically, they represent future blueprint and core tactics Garena tries to achieve. 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 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. Those moves are widely associated with the new investment from Tencent, an Internet giant in China.

Moreover, from its main products alone, one can clearly notice the similarity with Tencent (QQ and WeChat) and Alibaba (Alipay and Taobao). This, 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”, Garen president Nash even boldly admitted the inference and further disclosed the internal information of decision-making (Seevideo).

Source : Tech in Asia

Although both Tencent and Alibaba’s business models are commonly imitated and adapted, the undeniable truth is nobody implements 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”) one of the hottest online-multiplayer games, whilst some hold the perspective that the perfect location and support within startups-friendly country  -- Singapore -- is the key. The truth is, when one delves deeply enough, both of the arguments are partially true. None of them are the real defining factor.

The previous failure lead to the present success .

First and foremost, let’s start with running an online platform, a difficult topic for freshman startups. Although the launch of GG, a short-lived platform created by previous team which the founder of Garena was one of the team members, failed to keep the team on the right and sustainable track, it was, from my perspective, more akin to a minimum viable product (MVP), making the founder figure out and realize where the true niche market was and how to prepare themselves to catch the waves again as soon as the right timing approached them.

Afterwards, it turned out the precious lessons from the past helped them come up with a terrific business idea -- a free game portal featuring communication and clan system --  because the founder has already known what those game players desired for. Besides that, the concept of social gaming was a new business model that hadn’t been discovered among startup firms in 2010. Hence, all of these factors contribute to the successful launch of the early stage of Garena.

Source : Official Website of Garena

Incomparable content localization strategies make Garena stand out

The highly-localized content on platforms is also a key point worth mentioning. While the alliance of Southeast Asia region shape a perfect unity following behind European Union, 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, not just language but also the content itself,  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, significantly increasing the traffic flowing into platforms and burgeoning 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 favor in VC’s eyes. While Garena’s president refused to speak publicly on the behalf of those investors, he did imply that the scalable business model of Garena -- every product comprises the huge potential to go to global stage --could be one of the reasons why these VCs are willing to invest the team.

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.  

Finally, the triumph of Garena by no means should be credited to the sheer luck or any other single factor. As long as these aforementioned factors come all together and are at play, the chemical reaction goes wild.

Despite the fact that Garena is the most valuable company, it is possible that its position could be replaced someday in the increasingly competitive environment. Whether the phenomenon is a bubble or not, time will tell everything. -
Author: Edison Chen, Business Development Manager at Tagtoo

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