The gaming industry is estimated to hit USD 137 billion dollars by the end of 2018. App stores are seeing huge increase in gaming downloads.
However, the market remains tough for game developers, particularly small and independent ones. It is estimated that game developers receive profits of only up to a maximum 70 percent from an app while payouts to developers tend to delay as payments sometimes take up to six months to be processed.
Matej Michalko believes blockchain holds the solution.
ALAX aims to solve three problems - speed up transaction, reduce price and increase gaming and app purchases access to customers that have no access to traditional methods of payment
“In game distribution, we see the biggest potential in blockchain. We started DECENT - a blockchain company - in developed markets. But we realise that the technology could bring a lot more impact to emerging markets.”
Michalko is founder of the Geneva-based DECENT. In May, the startup that joined forces with China-based mobile app store Dragonfly to launch ALAX, a blockchain mobile distribution platform that, Michalko claims, will change the future of content distribution - one that is more transparent, faster and cheaper.
“We can process 2000 transactions (games sales) per second and at a very small processing fee of less than one cent,” Michalko explains, adding that blockchain’s open ledger promotes transparency as developers will now know if they are getting a fair deal.
But it is the ‘unbanked’ community that is drawing ALAX to this part of the region. Southeast Asia's unbanked population currently sits in the hundred millions.
(Globally, 1.7 billion people are without a bank account or access to a financial institution via a mobile phone, or any other device.)
What it means is that this segment do not have no access to traditional means of banking such as credit cards or in the case of gaming, PayPal accounts - traditionally used to purchase games or apps.
However, what they do have is access to smartphones and this is what ALAX hopes to capitalise on.
“In emerging markets like Indonesia, there’s a lot of unbanked people. They do not have bank accounts or Mastercard or Visa credit cards. If they want to buy credit from Google Play or Apple Store, they don’t have many methods to do so. There are SMS payments or scratch cards, but the fees are high,” Michalko explains.
It's A Mobile First, Blockchain First Generation
ALAX runs on two types of token. The first type, ALX token, is tradable and available on cryptocurrency public exchanges.
The second type, ALA token, is for the ‘ordinary’ customers who wants to make purchase without having to get involved in crypto. The ALA can be purchased via cash and used in-app to purchase games direct from developers. The tokens are also pegged to fiat currency - allowing developers to cash out.
“ALAX charge a small fee of 10 percent to content producers. So, if they sell it for one dollar, ALAX takes 10 cent” says Michalko. Traditional mobile operators can take from 30 up to 70 percent of the game price, he adds.
“The payment settlement is almost instant, compared to the usual three to six months.”
So, ALAX aims to solve three problems - speed up transaction, reduce price and increase gaming and app purchases access to customers that have no access to traditional methods of payment.
Transactions Completed Under Five Second
Southeast Asia is indeed the place to be for game distributors. The region will be home to 250 million mobile gamers by 2021 and is expected to bring in over USD 2.4 billion in revenue.
Michalko, originally from Slovakia, has set his eyes on Malaysia as base to scale up ALAX in the region.
“We want to start off in Malaysia and then scale to neighbouring countries. DECENT already has a base in Singapore but we see huge demand in the Malaysian consumer market for mobile games,” says Michalko.
ALAX, which counts investors in Malaysia as its funders, is in discussions to roll out its platform via a local telco company.
Currently, the platform comes pre-installed on Shenzhen-based Gionee smartphones. Gionee sold over 40 million handsets in 2016, largely in China and India. The company also sealed a deal with the Philippines manufacturer Torque Mobile, that will preinstall ALAX in its smartphones and tablets.
“For Malaysia, it is really more about working with distributors,” says Michalko, without elaborating on the ongoing telco deal except to say that ALAX is finalising the technical readiness for its launch in the coming months.
We Can Bring Most Value Here, Not In China