Marc van der Chijs was working at Tudou.com, the video sharing website he co-founded in 2005 with Gary Wang, when Spill Group got in touch. The Dutch firm, now Spil Games, wanted help setting up a Chinese gaming site. Since its founding in early 2006, Spil Games Asia has grown into the second-largest provider of Flash-based online games in China. In addition to his work at Spil Games, van der Chijs remains a board member at Tudou. He spoke with CHINA ECONOMIC REVIEW about Tudou, Spil Games and making money online.
Q: Youku.com CEO Victor Koo recently gave a talk about how internet companies can "survive the winter" caused by the global financial crisis. Are you pessimistic about the near-term outlook?
A: Not at all. Both Tudou and Spil Games are well capitalized and have business models that can survive the winter, possibly coming out of it even stronger. Both are very innovative, and that’s what’s needed right now. I personally think that Victor gives nice talks with interesting analogies, but I wonder if he is implementing what he says. Is he really thinking strategically or only looking at the short term? Tudou is thinking more strategically. We just started our high definition channel with original content. We’re focusing on good content now rather than mass traffic.
Q: But are you concerned about venture capital drying up?
A: For our competitors, it’s a big issue. They burn their cash more quickly than we do. We have more efficient server farms, and we have more money in the bank so it’s no big deal. And Spil Games has hardly any bandwidth built. Spil Games has about one-third of the traffic of Tudou, but the bandwidth per user is so much smaller that the cost is just nothing.
Q: What kinds of games does Spil Games focus on?
A: We do free Flash games. You can compare them to Donkey Kong. They’re simple games – you click on them and play them right away. We have both single player and multiplayer games, but currently single player is more popular. And we’re moving into the mobile gaming space. We just launched a mobile site last week.
Q: State media recently reported that China has 84.5 million mobile internet users. How do you see what’s happening in the mobile sphere?
A: Mobile is going to be huge in China. But it all depends on China Mobile. They have the key to make mobile internet successful, and they’re not using it. They introduced a 3G version that’s not compatible with the rest of the world, so people need to buy new handsets and get new mobile numbers. Who’s going to change his mobile number to go online with a 3G handset? In Japan, people use their phones for everything. China is still so far behind in mobile technology. I hope China Mobile will see that and act not like a monopolist, but as a company that wants to change the mobile sector, because they can.
Q: What advantages would 3G bring to companies like Spil Games?
A: I think a lot more people would play games if they could get them on their mobile phones. Right now, it’s almost impossible to play an online Flash game on a phone because the internet speed is not fast enough. I don’t believe in downloadable games – it should be an online experience. Go to a website, click on a game, play it; if you don’t like it, play the next game. You shouldn’t wait for a game for longer than a few seconds.
Q: There’s always the issue of making money off a free service. Is it easier to make money through a mobile platform than through a standard website?
A: Yes, for the simple reason that you know who these people are, you can find out where they go online. You have their number, so you can figure out things like their location. If they walk around Nanjing Lu, you could theoretically send them advertising based on stores in Nanjing Lu, for example. That’s the sort of thing that mobile phones are much better at. And that’s worth a lot of money to advertisers.
Q: Aside from advertising revenue, do you make any money from pay-to-play games?
A: No. Pay to play doesn’t work in China. There are very few games that can do that, like World of Warcraft, and even those are virtually free. There’s a lot more money to be made in advertising or virtual items and in-game items like avatars. We don’t really use those yet, though we’ll move in that direction as well. For Flash games, it’s more difficult than for big MMO [massive multiplayer online] games. People play those games for hours. Our games, they play for a few minutes and then they do something else. But I think there’s a lot of potential for in-game items in casual games.
Q: What is the next step for Spil Games?
A: One thing we’re going to launch is a site where people can submit their own games. There’s a lot of Chinese guys sitting in their dormitories or at home or in internet cafes programming Flash games. And they have no idea what to do with them, they just show them to their friends. We will say to them: "Okay, give it to us and you can choose one of two things. Either you put it on the site and say ‘I don’t want to have ads, just put it up and people can play it,’ or we can put ads on there and we do a revenue share. So the more people that play, the more money you can earn." We’re going to get a lot of good content, and people can learn what works well and what doesn’t. The more money you earn, the harder you work on your next game to make it even better. It’s a golden combination.