There are entrepreneurs who build successful companies, and then there are those who shape entire industries.
Thailand-born Nithinan Boonyawattanapisut was at the forefront of the gaming industry in the mid-2000s, when she launched the Chinese offshoot of US-based game developer Epic Games in Shanghai. The company, now an independent studio called Axion Games, was at the time a pioneer in the game development outsourcing industry. By taking a part of Epic’s production process to China it managed to significantly bring down the skyrocketing costs of making games. This set the stage for the gaming industry as we know it today. (Years later, Epic Games went on to produce the blockbuster hit Fortnite.)
Back in Thailand and not content to rest on her laurels, Nithinan took on a new cutting edge entrepreneurial endeavor that’s partly funded through Axion. She’s now heading a startup that combines blockchain technology with retail and gaming. It’s called HotNow and concluded a USD 27.7 million ICO in March last year.
For Nithinan, blockchain, customized retail experiences, and gaming are already converging. We get into this, a possible upcoming collaboration with Go-Jek’s offshoot in Thailand, Get, and more, in our conversation below.
KrASIA (K): Your background is in the gaming industry. When and why did you shift your attention to building HotNow, a retail rewards platform where merchants can send promotional messages and vouchers to their customers?
Nithinan Boonyawattanapisut (N): Game developers rely on publishers who pick up and pay for the rights. It’s a tedious cycle for game developers. My conclusion is that it’s better to own a platform where we control the relationship with the end user. In order to build that kind of a platform, we have to be looking at an industry with mass adoption, like a messaging app.
The issue with messaging apps is that it’s a first mover play. Latecomers have no chance. Line is a dominant messenger in Thailand, even WeChat failed to gain a foothold. We were exploring this path five to ten years ago, but most countries were already dominated by one messaging app.
This drew me to something else: the retail industry. There are three things people will always do. They talk, they socialize, they buy stuff. We tried to identify a niche where we can help solve pains in the retail space.
In Thailand, people are very aspirational, but GDP per capita is low. Still, we really want to go to Starbucks. People will try to find ways to fill the gap between their income and their aspirations. That’s where discounts and promotions come in.
Here’s where we found an angle to approach this. We were looking at Groupon, but that’s a zero-sum game.
Groupon takes too much out of the sellers. Even the customer loses in the end. The merchants lose on every sale in the Groupon model and so they end up pressuring the customer into buying something else.
With HotNow, we wanted to create a win-win solution for merchants and customers. It’s free up front, and we only collect a success fee. We don’t force the merchant into offering specific promotions, they can choose. Merchants can also use the platform to communicate marketing messages to consumers. We launched in 2017 and are now up to about a million downloads.
K: Why move to blockchain after you already launched a platform?
N: I found it makes sense to adopt blockchain to what we do. What we are is a marketing solution. In normal digital advertising, the system is very opaque. There’s no way to verify to whom Facebook or Google have really exposed your ad. Blockchain provides transparency.
Participants in the ecosystem will be rewarded with tokens. For example, if you do a transaction with a HotNow merchant, we reward this with tokens. People can come and play games, and this is also rewarded with tokens. These can be traded for deals and promotions.
We created a built-in crypto wallet in the app, starting the process of educating the community on how they can use it without feeling threatened. There’s a lot of misunderstanding and misconception around cryptocurrencies, which we need to address.
We approach this with gaming content. We fully integrated our “HoTokens” into a game we are about to launch mid-month. Virtual coins are already familiar for gamers, so this is a concept we can build on. The custom-made game we are launching is very casual and appeals to males and females. It’s a “gold mining” game where you venture out in this dreamy village, mining, crafting, using mining as a joke reference to crypto mining.
K: You still have the problem of mass adoption though. Would this type of online-to-offline marketing plus gaming solution be useful for platforms with a big daily user base and retail networks, like Grab or Go-Jek/GET in Thailand?
N: Yes, with Grab and Go-Jek or GET here in Thailand, we could have a collaboration, we are complementary. In fact, we are talking to GET, and it’s pointing towards collaboration.
People in tech don’t have the capacity to create games. We have 500 game developers in house. In Asia, we are the only group that’s doing this, bridging games to the retail space.
And there’s still much growth opportunity in advertising in games. Advertising value here is low compared to other entertainment media, even though the gaming industry is bigger than music and movies.
K: Thai regulations have been very supportive of cryptocurrencies and ICOs, whereas other countries have taken a more cautious approach. Why is that?
N: Cryptocurrencies were a hot topic everywhere. The Thai government tried to look at how other countries regulated this space, but it found that regulations weren’t comprehensive anywhere. It realized Thailand has to come out with something on its own.
The process took quite a few months, and I was one of the people in the expert committee to advise the government. The Thai SEC finally came out with pretty clear regulations on how to conduct ICOs. Thailand was trying to encourage startups and considered ICOs as a positive means to raise funds, but with oversight.
What we have now are so-called licensed ICO portals. They act a bit like an investment bank, screen all companies that want to launch an ICO, help them with the paperwork, do proper KYC, and vet their business model. They have to offer something that can justify the value of the coin. All startups have to go through these portals if they want to conduct an ICO. The portal concept is unique to Thailand—for now—but I wouldn’t be surprised if other countries adopt similar models.
K: What brought you to Shanghai more than ten years ago to start a gaming company?
N: I started my career as a business analyst and commodity trader. I did a lot of research in multiple industries. The gaming industry numbers caught my eye. They did not follow normal curves. The gaming industry is recession-proof. It doesn’t fall with the rest of the economy.
Gaming is the cheapest form of entertainment. When the economy is bad and people are stressed, you feel like if you step out of your house you are already spending money. You can’t go on vacations. In a game, you hardly spend anything. The gaming industry prospers in an economic downturn.
If you start digging deeper, and you look at what broadband is actually used for, the most bandwidth goes to pornography. The second is gaming.
That made me want to get into the industry somehow. We started to look at how to get into that space with a competitive advantage.
The cost of making games is high and it keeps getting higher. With better broadband and better devices, players start to expect even better gameplay and better graphics.
Creating games needs skilled labor and many hours from people who really know how to do this. The cost of gaming production was going up like crazy as the technical specs overall improved.
But this type of gaming production was almost non-existent in emerging markets. We needed to find a way to lower the cost of production, and at the time China made sense. We cut a deal with Epic Games and started Epic Games China. We brought their gaming engine to China, and we brought some experts to train Chinese developers in what we define as “AAA” or top-quality production. We got to one-tenth of the previous production costs.
Recently, we created the game Rising Fire with Tencent. It’s expected to be launched later this year. To this day, I’m still very much involved in this business. We made a joint venture with the Thai telco True Corporations to build a similar development studio in Thailand, where we want to train locals to be AAA game developers.
To me, the retail ecosystem and gaming are already converging.