Local online gaming firms to merge

Listed IP E-Games Ventures Inc., the country’s only public video game firm, has announced its merger with rival publisher Level Up Games—a move that will radically change the industry’s landscape.

IP E-Games and Level Up, as a merged entity, are expected to account for the majority of the Philippine online games market.

IP E-Games is the only listed online gaming company in the Philippines. The company is also currently expanding its reach in the country’s Internet cafe industry, which provides Internet access to millions of low-income households around the country.

“IP E-Games is developing game enhancement technologies between its Internet cafes and online game titles and is eager to extend these synergies with Level Up,” the listed firm said in a statement.

Under the agreement, most of IP E-Games’ titles and assets relating to its game-publishing business would be transferred to Level Up while publishing operations of those titles would be merged into Level Up’s online game publishing company, Playweb Games Inc.

In exchange, IP E-Games would receive equity in Level Up, a commercial interest in Playweb Games Inc. and a cash consideration. The completion of the deal is subject to closing conditions.

The company declined to say whether it would get a majority stake or settle for a minority interest.  IP E-Games chair Enrique Y. Gonzales said the group would issue a more comprehensive disclosure once the details have been firmed up.

“We will close this very soon,” Gonzales said in an interview.

Level Up pioneered the online gaming business in the Philippines, but IP E-Games introduced the “free to play” model, where users are allowed to play games for free but are asked to purchase in-game items,  that now dominates the sector.

IP E-Games has more than 15.9 million registered gamers and an average of 3.5 million active users a month. Last year, IP E-Games acquired several Internet cafe chains, including market leader Netopia. The company said it was considering the franchising of its Internet cafe brands as well as the incorporation of other services such as food-and-beverage and remittance services.

Recently, IP E-Games also acquired the rights to operate and sell advertisements for the NBA.com Philippine portal.