27 February 2020

How Snail Game is preempting the competition

How big a deal is a mobile virtual network operator (MVNO) license?

For mature players such as GOME Electrical Appliances (00493.HK) and Suning Commerce (002024.CN), it’s probably as big as it gets.

But for a relative newcomer like Suzhou Snail Electronics Co. Ltd., it’s bigger than anything it can imagine.

Suzhou Snail, also known as Snail Game, is the first game developer to win an MVNO license, one of only 19 companies to receive approval so far.

But the field is expected to get crowded as more licenses are awarded given that the government has set no limit on the number of players it will allow.

Snail Game is wasting no time securing its place in the market while avoiding an early showdown with big players that could potentially hurt is future prospects.

Chief executive Shi Hai {石海} wants Snail Game to be the country’s best mobile-game MVNO service before potential rivals can even come up with a business model.

Although details are sketchy about how exactly the company plans to roll out its virtual service, its first mobile internet game plan has emerged.

Last year, the company launched Snail Shop, a platform in which players can download games. Once the MVNO service is up and running, they can download and play games without having to pay data charges.

Its flagship games include role-playing adventure Voyage Century on which the company can leverage its MVNO debut.

Also, Snail Game and China Unicom (00762.HK) have started to offer a special data package called Snail Wo in certain regions. Subscribers enjoy faster connection speeds and lower data charges both of which are likely to be further enhanced when Snail’s MVNO business becomes operational.

With TCL Communication Technology (02618.HK), Snail is offering a smartphone tailor-made for mobile games such as idol X+. The smartphone has eight core processors and five-inch screen that promise improved user experience. More than 5,000 handsets, priced at 1,888 yuan (US$311) each, were sold before the Lunar New Year.

The whole idea of Snail’s strategy is to increase user stickiness, with services focused on its core online gaming business, and build on some impressive user numbers.

Last year, there were more than 300 million mobile game players in the mainland. Sales were a staggering 11 billion yuan (US$1.81 billion), according to media reports.

There’s ample room for future growth, with players more than willing to pay for games. That puts a first mover like Snail Game in the forefront of the action.

Still, that is only part of Snail’s challenges. Getting the pricing and content right will determine the future of its MVNO venture.

Disney relaunched its entertainment-oriented MVNO service in December after a failed attempt due to unattractive content, inadequate phone choices bundled with the service and overpriced charges.

For all it’s worth, the Disney experience is something Snail Game can learn from.

– Contact the writer at [email protected]



EJ Insight writer