Posted on Tuesday, Sep 22nd 2015
There aren’t many Southeast Asian countries who have managed to reach the Billion Dollar Unicorn Club. In fact, according to market reports, there are only two players in the region — Garena from Singapore and VNG from Vietnam.
Ho Chi Minh City-based VNG was founded in 2003 by Le Hong Minh, their current CEO, who had always been passionate about computer games. Minh graduated from Australia with a finance degree and went to work as an investment banker in Vietnam. But the love for computer games was not lost. By 2003, he had joined hands with some of his friends to set-up a small game room – an Internet café. Minh soon realized that most of the popular game titles were available only in English. He soon realized that there was a market opportunity to make some of these games available in Vietnamese. After a failed attempt to convince a South Korean company to license their game to Minh, he managed to convince Kingsoft, a Chinese software company with a popular game Swordsman Online, to license the title to Vinagame. Within six months, Kingsoft’s Swordsman Online became a leading game title in Vietnam.
By 2009, Vinagame had rebranded themselves as VNG and diversified from being an Internet gaming company. While game development still remains an important business, they have now successfully adapted to the social and mobile world. Their Zing brand has diversified into several digital offerings. Zing MP3 is an online music streaming service, the Zing News channel provides access to news, Zing Chat is an online chat and gaming platform, Zuni is an online education portal that provides access to sample exams and video lectures, and Zing Me is an online social networking space.
Their other big offering is Zalo, a flagship chat app that claims to have over 15 million total downloads and has become one of the leading chat services in Vietnam. Interestingly, despite their size, VNG remains focused only on Vietnam and does not appear to be looking for international expansion. They have made very limited attempts to grow in China and Japan where they released a game, to unspectacular success.
Vietnam has experienced strong growth in the overall Internet revenues that include advertising, e-commerce, Internet content services, and online gaming services. Analysts believe that the industry has grown from revenues of VND 70 billion (~$3 million) in 2004 to VND 2.6 trillion (~$114 million) in 2009 and to VND 2.365 trillion (~$894 million) in 2013. VNG, meanwhile has seen revenues climb to VND 2.1 trillion (~$92 million) in 2013. They were expected to earn VND 2.365 trillion (~$104 million) in 2014. VNG’s detailed financials are not known, but they were already profitable back in 2005 when they released their first game in Vietnam.
VNG has been venture funded so far and has raised an undisclosed sum from Cyber Agent Ventures and IDG Ventures. Recent market valuation reports suggest that the company is valued at over $1 billion.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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