CryptoLogic buying into Asian gaming market

Great Wall of China

CryptoLogic announced yesterday it has completed an agreement to acquire a financial interest in 568 Network Inc., a developer and distributor of online casual games to the Chinese market. The deal helps CryptoLogic take another step forward into the Asian gaming market.

"Just as CryptoLogic is an e-gaming industry leader in Europe today, we aim to be a leader in Asia tomorrow," said Javaid Aziz, CryptoLogic president and CEO.

"The stakes are rising in Asia, which has a population of almost four billion, a deap-rooted gaming culture and a fast-growing rate of Internet adoption. CryptoLogic is already a player in Asia - and this investment strengthens our hand considerably for the years to come."

The agreement is valued at $1.2 million and gives CryptoLogic the option of taking a controlling position in 568 Inc. in the future.

It also allows the software developing company to establish a new China-based venture that will develop and distribute skill-based games for the local and overseas Chinese-language markets. Games they plan to develop are mahjong, poker, online pool, puzzle challenges and other poker variants.

The games will be offered in single and multi-player options.

568 Inc. already has some games out for the Chinese market including card games "Fight Landlord" and "Za Jin Hua."

"With CryptoLogic as a partner, we gain two things that are critical to success in China: the scalability to support thousands of concurrent players, and the expertise to deliver a superior entertainment experience," said George Chen, 568 Inc. CEO.

"We're seeing early signs that we're on the right track: Since June, we've generated more than 350,000 new registered players and are averaging more than 4,000 concurrent online players. Together, CryptoLogic and 568 Inc. have vast potential for profitable growth."

568 Inc. brings to the table proven experience and assets in the casual gaming sector as well as massively-multiplayer-online-role-playing games (MMORPG). Both of which are a rapidly growing segment of the online gaming market.

"Casual games represent one of the fastest-growing segments of approved online gaming in China - and in markets around the world," said Shailesh Naik, managing director of CryptoLogic Asia-Pacific.

"Experts have positioned online casual games as the major source of revenue for the next three to five years. With 568 Inc.'s proven experience in this market, and CryptoLogic's award-winning game offering, we are in a strong position to capture our share of this exciting market."

Asia has been pinpointed as the next major growth region for Internet gaming - both for casual games as well as online poker and casinos. China alone has more than 135 million Internet users, ranking only second to the United States, and with a population of more than 1.3 billion, there is even larger potential there.

CryptoLogic's strategy for expansion into Asia includes:

  • Offering game experiences and payment methods that are approved by local regulators
  • Creating Asian games that will reflect local cultures and languages, while leveraging the company's proven ability to produce highly popular, award-winning titles.
  • Using the company's exceptional capabilities in developing games of chance to benefit the company as it moves into sing- and multi-layer casual games along with MMORPGs.

Cryptologic aims to develop long-term partnerships with governments and regulatory authorities that enable citizens to enjoy online digital entertainment in a regulated environment. Along with that, the company will work with local partners to better understand players in the region and produce games they'll want to play.

"Through partnerships, acquisitions and strategic alliances, CryptoLogic will offer a complete spectrum of profitable game types (chance, skill, casual and role-playing games), across key technical platforms including PC, online, mobile and console," said the company in a press release.

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