![]() This hyper-local approach I believe is the key strength of Garena which has underpinned their growth. Other examples of significant customisation/localisation includes EA’s FIFA Online, where Garena helped introduce local Southeast Asian football players and icons into the game. Garena modified the content and characters to such an extent that Tencent felt like an entirely new name had to be given to the game. Garena played an important role in helping change the contents to reflect other nations’ folklore, as well blend in other themes which were popular outside of China, including Lovecraftian horror, steampunk and high fantasy. Honor of Kings is a MOBA game who’s characters and content are centered around Chinese folklore and Chinese mythology - something that may have limited appeal to audiences outside of China. Arena of Valor is a modified version of Tencent’s highly popular Chinese game called Honor of Kings. Some of their capabilities were particularly evident in their work with Arena of Valor, which they co-developed with Tencent and publish in the region. ![]() Garena, having operated in the region for over a decade, has become the preferred publishing partner for new games in the region due to its deep expertise in understanding local gamer preferences and languages, content modification, marketing, hosting, distribution and payment mechanisms, and creation of communities and ecosystems including e-sports events. Southeast Asia is a complex market due to the diverse population and uniqueness of each country in terms of culture, language, economic status of consumers, and lifestyle, making it a challenging region for global gaming companies to succeed in independently. The reason Garena has been able to forge such strong relationships with leading international game developers is because it provides a one-stop solution that helps them launch and scale games in the region. Garena+, an online game and social platform for people to discover, download and play online games Outside of Tencent, Garena also publishes some major titles of other large gaming companies including EA’s FIFA Online 3/4, and Activision’s Call of Duty Mobile. Garena provides Tencent with a high-growth distribution channel outside of China, something that is no doubt increasingly valuable to Tencent given the domestic regulatory and political situation. ![]() There is perhaps some concern that the Tencent agreement won’t be renewed in 2023, but I think the risk of this is low given their long, mutually beneficial relationship and Tencent’s significant ownership in Sea which creates an alignment of interest. Some of the Tencent titles that Garena has exclusive distribution over include the mobile MOBA game Arena of Valor, racing game Speed Drifters, its recently launched RPG Moonlight Blade, and an upcoming survival shooter Undawn. Tencent can keep producing a consistent pipeline of hit games either itself or via its various subsidiaries (such as Riot Games), which Garena can then cherry pick and distribute exclusively in the region. This gives Garena a solid foundation and a significant competitive advantage in the market. Over the next month or two I will release Part 2 on the e-commerce business Shopee, Part 3 on its fintech business SeaMoney, and Part 4 will wrap it all together.ġ. This Part 1 will focus on its gaming business Garena. There are few companies that are as broad in scope as Sea, so I will break this deep dive into four parts related to the businesses that it operates in. The stock has since grown to be by far my biggest position and the company which I follow most closely. Listening to him talk about the business and the exciting things they were doing, I sensed that there was something interesting there and I had to look into it further. I first invested in Sea shortly after I moved to Singapore in 2018 when I was introduced to the company by a friend who was working in its gaming arm Garena. Since its listing on the NYSE in 2017, the business has been in continuous hyper-growth, driven by an exceptional founder-led management team and riding on the tailwinds of mobile and internet penetration, gaming and e-commerce adoption, and rising wealth across the region and other emerging markets. Sea Limited (Sea) has become the crown jewel of Singapore’s technology scene and the leading internet company of Southeast Asia.
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