April 18, 2015 – The C & D

I’ve heard this line from Nix Nolledo two times already “Content (C)  is King but Distribution (D)  is King Kong.” The first time I heard him say it was during a presentation of “Rising Stars” conference held by COL Financial but it took a second time around for me to hear it to understand it more fully.  Technology entrepreneurs usually have a different way of seeing things so I often have to keep up with them to gain clarity with their vision for their companies.

In a little less than 6 months since listing in the market, Xurpas has already acquired 4 companies (Altitude Games (21.7%) , (31.52%) MatchMe, (49%) PT Ninelives Interactive and (51%) StormFlex.)

For all four companies, Xurpas spent a total $6.7 million.

And it will still continue its regional acquisition binge.

According to this news article in Manila Bulletin released just April 15,2015


1.) It still has close to P1 billion in cash to support its expansion in Southeast Asia.

2.) Nolledo noted that, with its recent acquisitions in the Philippines and overseas, “we are also expecting the two-year horizon for expansion to be shortened.

3.) while Xurpas will remain a casual games maker in the next few years, the firm will also try to expand its reach to other markets.

4.) Its mobile content service segment continues to be the key driver of the company, accounting for 79 percent of total revenues or P309.37 million last year and the rest from its other businesses.

Let’s list them down apart from discussing the core earnings that they’ve already reached prior to acquiring new companies.

5.) Expects Storm Flex to “contribute significantly” to their revenues and earnings in the coming years since it can now have an easier time wooing clients now that it is a subsidiary of Xurpas.

a.) Altitude Games  

Key People: (Impressive credentials of the team)


Dizon leads Altitude Games with four other veterans of the Philippine game industry – Luna Cruz, Marc Polican, Paul Gadi, and Chester Ocampo – all of whom he had worked with at some point during his 11-year game development career. Together, they want to distinguish the local video game scene through the creation of “original midcore games.” (Rappler)

The rest of the team includes Luna Cruz, who was formerly senior designer at Boomzap, where she was the lead designer on Awakening: The Dreamless Castle. That game turned into one of publisher Big Fish Games’ top franchises and now includes six titles. Cruz also helped develop other Boomzap franchises like the Dana Knightstone and Otherworld series.

Other Altitude Games founders include: Paul Gadi, former production lead at Gameloft Philippines and CTO at Anino Mobile; Marc Polican, former lead programmer at Boomzap and Gameloft Philippines; and Chester Ocampo, former art director at Imaginary Friends Studio.(Tech Crunch) 


Gabby Dizon started Altitude Games in March 2014 with four other co-founders that he feels are the best developers in the Philippines. As CEO, he handles the business aspects of the company, sets the overall strategy, and makes sure the team is going in the right direction with all the resources needed to get there. He recognizes that they have a tremendous amount of talent in the company, but ultimately, it doesn’t matter how good the game they make is unless they can get people to download and pay for it.

Watch more here: https://youtu.be/ttMSTcW-0pE

More References here: http://gamesauce.org/news/2014/08/23/gabby-dizon-capitalize-on-the-next-billion-gamers-casual-connect-video/

1.) Gabby Dizon  

Dizon see a huge impact coming to the games industry as another billion mobile phone users come online during the next decade. The phones will most likely be Android, very inexpensive, and have no way to pay with a credit card. What the industry must consider is how to entertain this vast audience and how to enable them to pay for content.  When Dizon is gaming, he plays almost exclusively on mobile. He does own an Xbox 360 but rarely plays on it and has no plans to purchase any next gen consoles. He plays casual games like endless runners and puzzle games on his Android phone and more core games like Hearthstone and Battleheart Legacy on iPad. He used to be a huge PC gamer, but now plays only two or three of the best games each year.

Previous Positions :

a.) Senior producer of Singapore-based Boomzap



boomzap profile

boomzap games

b.) President of Flipgames (https://play.google.com/store/apps/developer?id=Flipgames&hl=en)

c.) President of Game Developers Association of the Philippines  http://www.gdap.org.ph/


A former employee at bigwig PC casual game creator Boomzap, Dizon and his colleagues Luna Cruz and Marc Polican formed Altitude Games with one major goal in mind: to create globally-recognizable gaming intellectual properties through mobile. “It sounds silly now, but if you think about the most recognizable mobile IP games now, it’ll be the Flappy Birds and the Hay Days. We eventually wanted to be included in that conversation. It may be with our first game, it may be with our second. But that’s what we’re shooting for: creating an IP that transcends mobile games.”

Main Vision:

Dizon wants to see a household name emerge out of the Philippines. “We have had some pockets of success here and there (notably Kuyi Mobile’s Streetfood Tycoon series), but there has been no Minecraft or Angry Birds type success to come out of the Philippines,” Dizon admitted, but added, “That will change soon.”


1.) Run Run Super V

Speaking of their first game, the company’s upcoming project is called Run Run Super V, which combines the endless runner mechanic with the 70s Japanese sentai genre as its settings and aesthetics. e27 listed the game as one of the more promising titles that cropped up from this year’s Casual Connect Asia.

Download and read game reviews here by TechniAsia 

downloadable in android googleplay store


What a lot of game companies and publishers do is that they soft launch their games in the Philippines so that they can tweak their engagement metrics before moving it to countries with higher average revenue per user (ARPU) like in North America. Still, it’s always been a challenge to monetise that traffic,”

“America is very competitive and the best-polished games are out there. But I think there’s a lot of untapped potential in Asia because the typical strategy that you use to make money in America will not necessarily work in Southeast Asia. There’s the usual problems, like low credit card penetration, but I think  it’s also because of the region’s alternative business models that work.” In this case, he’s referring to credit services like MOL and Cherry Credits.

“There are things you can control because we’re from the region. I think it’s something we can experiment by ourselves. We’re looking at a self-distributing strategy in Southeast Asia. For territories like Japan and China, we’d want to work with strong partners to ingrain our games to fit those cultures, not just localise them.” Dizon stressed that by releasing its game in Asia first, the studio can improve and polish the game further to prep it for North American release.

Megatrend : Consoles and PCs —> slowly shifting into Mobile Games

market for long-term games that used to be on consoles and PCs are slowly shifting. “If you look at tablets now, there are now rich game experiences that used to just belong on high-end PCs.” He cited Witching Hour’s strategy games as an example of deep experiences on mobile devices. “Those are the type of experiences that we’re interested in.”

Accomplishments (apart from actually being one of the best selling product in casual games of Xurpas):

1.) RunRunSuper V – Special Mention in Casual Connect 2014


Check out all the other games worth mentioning in this article here:


2.) Techni Asia’s Best Indie Mobile Games Asia 2014  (https://www.techinasia.com/2014-best-indie-mobile-games-asia/)


1.) https://www.techinasia.com/tag/altitude-games/

2.) http://e27.co/breaking-into-the-philippines-is-challenging-altitude-games-20140530/

MEGATREND: Mobile Free To Play Games (with in app purchases)

casual connect 2014

Casual Connect Asia takes the humble approach in entertaining and educating, though you have to understand that it’s catering to the current gaming landscape that’s relevant to the majority. Mobile and free-to-play games, like it or not, are the future of the games industry and that mandate is established in Southeast Asia. Games like Puzzle & Dragons and Brave Frontier, Japanese puzzlers and RPGs mind you, are on the top of every mobile gaming chart you’ve seen and heard on a small number of news sites and aggregate blogs.

A majority of game developers in Asia are making games for the iOS and Android, sometimes with the free-to-play design in mind. Why? Because it’s economical in the long run and Apple/Google’s outreach with their App Store and Google Play online stores span worldwide. Its reach and outlook is even further and more open-minded than Microsoft and Nintendo, and most third-party publishers. (http://e27.co/casual-connect-asia-2014-e3-southeast-asia-needs-20140527/)

Going into the free-to-play space requires more studying on economics and terms like ARPU (average revenue per user) and MAU (monthly active users). “It’s not about game mechanics,” Gregory said. “There are far larger parts of business and game economics that’s involved. You also have to design your game ahead to implement in-app purchases and ads. Screen space, timing, when are you going to haggle with the player — these are things you need to think about way early rather than tack them on at the last minute.” (http://e27.co/premium-vs-freemium-words-wisdom-witching-hour-studios-20140522/)

Learn more watching these videos:

Read More games here:


Relevant News Timeline:

Dec 12, 2014 – days after the December 2 listing of the IPO, the company acquires a 21.7% stake in Altitude Games for Php32.97 mil


March 6, 2014 – Manila-Based Altitude Games Raises $275,000 To Develop Midcore Titles (Tech Crunch)

Altitude Games, a Manila-based mobile game studio, has raised $275,000 in seed funding from investors Nix Nolledo, Level Up! Games co-founder Philip Cahiwat, an undisclosed angel investor, and members of its founding team. The startup will use the capital to “jumpstart its creation of original intellectual property in the midcore game space.” Altitude Games plans to announce its first title in May during Casual Connect Asia, an annual industry event in Singapore.

Southeast Asian has previously been known as a great place to outsource game development, but we’re 100% focused on creating original intellectual property for mobile games. We want to combine midcore themes and casual accessibility to make games that are easy to pick up but contain deep gameplay that you can enjoy with your friends, he said.


Feb 27, 2014 – Deal with Storm Flex allows Xurpas to expand from digital distribution to delivery of goods

Xurpas acquired a 51% interest in Storm Flex Systems, Inc., for P190.89 million.

The “flex benefits system” is currently used by some of the country’s leading local conglomerates, business process outsourcing firms, and fast-moving consumer goods companies in Metro Manila and Cebu.

“Until today, we have been distributing digital products to users on mobile telcos’ networks,” said Xurpas President and Chief Executive Officer Nico Jose S. Nolledo, who is also a minority shareholder and director of Storm prior to the acquisition.

“The acquisition of Storm signals our expansion into an entirely new distribution network, and into the selling of physical goods and services.”

After the buy-in, the listed firm expects to double the total number of client employees served by Storm to 30,000 this year.

“The business has been running successfully for the past two years, and can boast of a truly astounding growth trajectory. It has a sound revenue generation model which is both unique and exportable to other markets. So we consider it as one of the great inroads to regional expansion,” Mr. Nolledo said, noting that Storm’s revenue rose five-fold from 2013 to 2014.

“We feel this partnership will allow us to achieve the next stages of growth and development in the region. There is a tremendous opportunity ahead of us,” Storm CEO Paul V. Cauton said.

To know more about Storm Benefits, go to the website – https://stormbenefits.com/


Key People:

1.) Paulo dela Fuente – Founder and COO. Paolo is a veteran web developer – turned entrepreneur. Paolo is the main designer of all of STORM’s systems and main driver for technical innovation. Aside from his work in STORM, also the co-founder and board member of STRATA.

2.) Peter Cauton – Founder and CEO. Peter is a veteran HR practitioner-turned entrepreneur. STORM was his first project and what he considers his startup baby. He is also the founder of the Filipino startup movement and blog, Juan Great Leap as well as STRATA.


It is the first that I know of its kind.  I find the business model ingenious since this acquisition makes Xurpas more than just selling digital content.  They can now tangibly sell anything from shoes to coffee to anything inside the store for Storm Benefit clients.  They currently have a little less than 20,000 employees signed up inside the Storm benefits system and will grow it to at least 50% by 2015.  This is a scalable business which has relatively high margins as the only cost will be shipping the products to the employees saving on rental and marketing expenses usually accompanied with retailers.  The more companies partner with Storm, the higher the revenues stream and the faster the growth and earnings accompanied to it will be.


I talked with the owner if the idea of Storm Benefits was copied anywhere else and I found it astonishing that it came straight and original here in the Philippines.  It was perfect since any normal retail store would usually need to “acquire” a customer.  Using this model of turning employees’ company benefits (sick leaves, vacation leaves) and to allow them to have the option to convert it into flex points, you have these employees turned into an automatic customer to your online benefit store thereby seamlessly transitioning your business not just into selling digital goods but outright tangible services.

For instance a sample of their benefits would be converting your flex points into a Gopro camera , a Nike shoe, anything inside Toby sports, a Travel Buddy luggage, even an Apple watch or Apple iPhone or any Apple product. You could also convert your points to Axalife, Sunlife or Manulife insurance funds, heck you can even get yourself an appointment with Belo clinic or buy a Zara or Lacoste or Superdry apparel inside their stores using your Storm flex benefits.

Check out at least 100 partners that they have in their benefits store and over 15,000 company employees already converted inside the StormFlex benefits system.


gopro as an experience

Pretty smart investment indeed.  It’s HR benefits redefined.

3.) MatchMe


Xurpas bought 31.52 percent of Singapore-based MatchMe for US$1.4 million, it said in a disclosure to the Philippine Stock Exchange.

MatchMe runs a real-time, multiplayer platform for games. It’s also open to third-party game content integration. This means casual gamers can play in real-time versus other people regardless of data connection speed. It also allows customers to duel with friends or take part in competitive tournaments locally or on a national, regional, or even global level.

Under the terms of the agreement, Xurpas will be granted the license and right to use the MatchMe platform and its related game content. It also gives Xurpas exclusive rights to use MatchMe for telco deployment in the Philippines, Indonesia, and Thailand.

“MatchMe is a truly unique offering, potentially allowing millions of players to play against each other on any device, anytime, anywhere. The platform allows us to provide a unique game playing experience to consumers in the Philippines, the rest of Southeast Asia, and worldwide,” said Xurpas president and CEO Nix Nolledo.


The beauty of this acquisition is the fact that most of Xurpas’ current 4 million gaming users are using Android and data connection speeds in the Philippines can affect the business of gaming if it frequently hangs.  This acquisition is going to be a complement to Altitude Games and other future game studios that Xurpas might own or already own to provide a worldwide friendly gaming experience.

“Casual games is one of Xurpas’ biggest growth drivers. As consumers move from feature phones to smart phones, new platforms like Matchme enable us to deliver amazing experiences to the next wave of mobile gamers,” he added.

4.) PT Ninelives Interactive – Access to Indonesia


Xurpas said it bought 49 percent of PT Sembilan Digital Investama, parent of Ninelives Interactive, for US$245,000.

The Indonesian companies are engaged in mobile content development and distribution, the same business as Xurpas’. They have existing contracts with top carriers such as Telkomsel, as well as XL Axiata and Indosat.

The investment in Indonesia forms part of Xurpas’ strategy of expanding distribution channels for its products in Southeast Asia. It gives Xurpas access to a huge market for its games and other services.

“Indonesia is one of the most exciting mobile markets in the world with close to 300 million subscribers, making it the fourth largest mobile market in the world. Just like the Philippines, majority of users are still on pre-paid but they are rapidly moving away from fixed connections in favor of smartphones and mobile data. The striking similarity between the Indonesian market and ours makes it an ideal location to establish another stronghold,” said Xurpas president and CEO Nix Nolledo in a statement.


Xurpas Other Relevant Meeting Notes:

1.) “no name” brands will be disrupted – note the increasing number of companies (we won’t name here) that essentially private label products manufactured in China.  What is at risk are intermediaries if they don’t adjust.

The people are loyal to the brands, not the intermediaries.

Manufacturer to Consumer (M2C) model will be the new trend

Often, Retailers 31-37% of revenues on marketing and operating expenses (rent, labor et al)

while Online retailers have  17-21% of revenues as expense (mostly shipping, labor)

2.) Assess the customer lifetime value (CLTV) instead of just the Gross Merchandise Value (GMV)

3.) Only 5% of the population or 5 Mil people in the Philippines have a credit card.  Our games are catered to the C&D market.  We don’t want to compete in the A,B markets which is a small number with lot of competitors (US,Japan et al)

4.) Smartphone gaming is all about multiplayer gaming formats (hence MatchMe)

5.) Again Content is King but Distribution is King Kong.  Storm’s business model is a distribution platform of goods and services.  Grow those ~20,000 employees; with the leverage now with Ninelives Interactive- we can tap companies in Indonesia to sell original games (Altitude Games-developed, other than those developed in house by Xurpas)

Out of the 4mil Android phone gamers of Xurpas, average top-up is P12/month.  That alone is different from the Apple model of 99 cents for their lowest in-app purchases.



Recent acquisitions of Xurpas has undoubtedly transformed the company in not only enhancing their content (Altitude Games), expanding presence (Ninelives interactive), expand into new platforms (Storm flex) and enhance the user experience (MatchMe, you cannot play a good Altitude game with a significant time lag.)  The company knows what it’s doing and is growing the business in the right places.

I only now realized that Xurpas is more than a simple casual gaming company.  It is ran by a very good management team who knows how to spend and carefully addresses markets with a ready business model.  I am excited personally of the Storm flex business out of all the acquisitions (though I wouldn’t say the rest weren’t impressive) since they all complemented each other.  Altitude Games will allow Xurpas to develop games it would have exclusive rights to distribute to Indonesia, Philippines and all other telecom networks in other countries (when they already have a license.)

We definitely have to watch out for all the rest of the acquisitions but notice that PLATFORMS are more important than CONTENT.  Hence Distribution Platforms (The Ds) which Xurpas is actively engaging in buying are the right strategies.  With Stormflex being a DISTRIBUTION platform for goods, with Ninelives being a DISTRIBUTION platform in Indonesia , we definitely have a lot of things being disrupted by Xurpas (traditional retailers must beware.)

Great company.

It would be hard to value the company so I simply placed field meeting notes and laid out the basic growth strategy but to me, it’s worth having in the portfolio.  Perhaps, better to get when it falls down to around a P10Bil or less market cap

Currently, it’s trading at a P16 Bil market cap at 9.02 (last traded price April 17, 2015) but I would think that the company could one day increase its current 2014 revenues of 392 Mil with a net income of P190 Mil to at least double by 2015 with their acquisitions.

To pay for a forward growth P/E of 40X at P9.02 assuming the company can double its income still seems a high price even if the growth plans and management can execute well, or maybe I’m just waiting really for a really low 20X P/E.  While that may not happen, a company that can grow 100%-200% its income stream in the next 2-3 years is widely expected to enjoy trading ranges between 20-80X multiples.  It’s but the nature of the game.  Here’s to hoping we can grab it nearer to the 20-30X end 🙂

– Faceless Trader


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