• Media

Game time in Vietnam

HO CHI MINH CITY, Vietnam – The singing begins Saturday for employees at the online gaming start-up VinaGame. Instead of beer-bash Fridays, the company hosts cafeteria karaoke contests.

“It’s a Silicon Valley trend here. We do that so people will stay in the office,” joked chief executive officer and Santa Cruz native Bryan Pelz.

Pelz, who with several others co-founded Vietnam’s biggest online gaming company, is helping usher in the Internet era. His start-up symbolizes the swift changes occurring in the country of 84 million people, which just joined the World Trade Organization.

Vietnam’s economy is roaring at about an 8 percent rate of growth a year. Young people pack electronics stores, buying everything from digital music players to expensive mobile phones. High-tech giants, from Intel to Canon, are setting up operations. The government estimates about 20 percent of the country is now online.

“From an American perspective, the last thing you think about is an Internet culture in Vietnam,” said Henry Nguyen, managing general partner of IDG Ventures Vietnam in Ho Chi Minh City, which invests in tech companies, including VinaGame. “This illustrates what modern Vietnam is like.”

VinaGame’s headquarters is in a seven-story building on Nguyen Dinh Chieu street, next door to a beauty salon and lingerie store, in the city’s up-and-coming District 3. The street is abuzz with shoppers, motorbikes and fruit vendors.

Serial entrepreneur Pelz quickly sensed new opportunities in the country after he moved to Hanoi several years ago. More than half of Vietnam’s increasingly tech-savvy population is under age 30. Signs of new wealth are everywhere in the urban centers — from rocketing real estate prices to Mercedes-driving residents.

So it wasn’t long before Pelz’s thoughts turned to a new business plan for online gaming, and he teamed up with a small group of Vietnamese tech professionals to launch VinaGame in September 2004.

“Two years ago, nobody believed you could make money online here,” Pelz said.

Now, VinaGame employs about 450 office workers, dominates the nascent — and legal — online gaming market and has become a part of the pop culture. Its games incorporate community-building features that allow players to form online friendships with others in Vietnam, an aspect that is more important in Asia than in the United States, he said.

“We are helping a lot of people in Vietnam to branch out into having an online life,” he said. “The fact we are operating commercial games is a victory for intellectual property in Vietnam.”

The company, which does not release revenue information, has about 8 million accounts, said Pelz. Its popular game Volam Truyen Ky, or Swordsman Online, based on a Chinese game created by Kingsoft and adapted to the Vietnam market, uses ancient Vietnamese dialect. Teen characters in popular TV sitcoms now use Swordsman phrases when talking to adults, an inside joke for young people.

“Some people have tremendously increased their use of archaic Vietnamese vocabulary, thanks to this game,” said Pelz, who previously co-founded an Internet search infrastructure company in Manhattan Beach and a leading French Web site portal. “It’s the Vietnamese equivalent of Shakespearean English.”

Vietnamese filmmakers are also making an action comedy based on the game, in which a player’s real and virtual personas merge.

Because most people in Vietnam still do not use credit cards, VinaGame had to create its own payment system. It copied the phone card model, in which consumers are provided scratch off account numbers. Gamers buy the cards in cafes, where most Vietnamese access the Internet, for 60,000 Vietnamese dong, or about $4, which covers a month of play time. That does not include fees to use an Internet cafe PC, which can cost about $8 a month for moderately active users.

The recent explosion of online gaming in Vietnam has not gone unnoticed by the authorities or parents, worried their children will spend all their time tethered to keyboards in smoky Internet cafes.

The Communist government recently enacted regulations that require game makers to limit playing time to five hours a day by making the games less appealing after the cutoff time.

Pelz said his company works closely with government officials, who license each game to “make sure it does not incite things that are not acceptable to the Vietnamese culture.” The games in Vietnam are “G-rated,” in line with the conservative culture and significantly more tame than what is found in the United States and other places, he added.

“It’s well-meaning, but sometimes it’s impractical,” said IDG’s Nguyen. “You are trying to regulate an individual’s habits which, for the most part, is very, very hard to do.”

Vietnam’s online game industry is in the “teething” stage, observed Lam Nguyen, an analyst for IDC based in Vietnam. VinaGame, he added, owns about two-thirds of the market.

“This is a new frontier related to e-commerce and online content in Vietnam,” Nguyen said over a sinh to, or Vietnamese smoothie, in a WiFi cafe. “If you are the pioneer, you will challenge the legal system. The legal framework is not in place in Vietnam. So it’s trial-and-error.”

Pelz would not detail VinaGame’s next move, though he said he sees a business model emerging in online community building. The Vietnamese government estimates there will be 40 million Internet users by 2010, half of whom will be broadband subscribers.

“Vietnam is a fast-following culture,” Pelz said. “The adoption curves you see in other countries — something that might take five or six years — will happen in Vietnam in two years.”