31 January 2010: Online gaming thrives in recession

Gus Hur must have felt like a spectator at his own press conference last week as reporters grilled Tánaiste Mary Coughlan on the economy and public sector pay. But as Coughlan faced questions about employment, Hur, the chief executive of gaming firm Gala Networks Europe, is heading the kind of enterprise that can come to Coughlan’s rescue. While many sectors of the economy are still struggling, the European arm of the Japanese company has announced 103 new jobs that will double its presence in Dublin.

If anything, the recession has been good for Gala, which is enjoying healthy sales in Europe. The firm’s main line of business is online games that are free to play, and Hur said people played more games during a recession as they had more time on their hands. The games themselves are free to play, but Gala makes its money through micropayments. This means that players can buy credits on the Gala games portal, which can then be used to purchase items within a game - such as a sword for a fighting character.

The low cost and discretionary nature of the revenue model makes it appealing to cash strapped gamers, leading analysts to describe the sector as ‘‘recession-proof ". Gala has set itself the challenge of becoming the number one player in the sector and is mounting an assault on the European market from its base in the Digital Hub in Dublin. The firm is taking a two pronged strategy: it will license a larger number of titles for release in Europe and will go into a wider range of European markets. The company opened its European headquarters in Dublin in 2006 and initially targeted the German market.

It has since expanded into the French, Polish, Turkish and English-speaking markets. As part of its latest expansion, it will now hire more multilingual support staff to help it break into other markets. It also plans to hire more IT staff and management. Vacancies will begin to be filled immediately and Hur said he hoped that the full complement of 103 would be at work within three years, bringing staff numbers above 200. That makes the Dublin operation a significant part of the Gala Group, which employs 480 people worldwide. It was founded in Tokyo 15 years ago and was originally focused on services for online communities.

After a strategic shift towards online gaming in 2006, it now has annual revenues of 1 billion yen (€8 million), 88 per cent of which is generated by the online gaming business. Aside from the parent company in Japan, the company owns two gaming development firms in Korea and also has a US operation. Hur would not say how much Gala Networks Europe earned for the group, but said that it was the company’s biggest subsidiary, generating more revenues than Japan or the US.

‘‘We entered the online gaming business in Europe at the right moment. In Japan and Korea, the market was already very competitive by the time we arrived," he said. The market in Europe is still maturing and Hur said it was difficult to pinpoint the company’s exact position in the market. However, he was confident enough to assert that Gala is already in the top spot in some markets and in the top three in all the others.

Hur said that one of the main reasons the company had chosen Dublin as its foothold in Europe was the ready access to bilingual staff. ‘‘It is a globalised city and we have never had trouble finding people here," according to Hur. Apart from the low rate of corporation tax, IDA Ireland had a part to play in attracting the company. ‘‘We met industrial development authorities in a lot of other countries and the IDA were significantly, better than any other," Hur said.

‘‘At the time, we barely knew about Ireland. We didn’t even know if you spoke Gaelic or English," However, as a Japanese company, there was a period of adjustment, Hur said. Dublin is not like New York in what he termed the level of services available. ‘‘We think we are flexible and that Irish people are too, so we found a meeting point there after a while," he said. As well as helping demand for Gala’s product, the recession has had other positive effects for the company. ‘‘The cost of business has fallen. The expectations in terms of salary ranges is definitely lower, which makes it easier for us recruiting," said Hur.

Source – Thepost.ie