The quest of the virtual warriors

Some colleagues thought investment banker Aloysius Colayco was in a career funk, or maybe entering a midlife crisis, when in 2002 he began talking in a strange language. He spoke of fantasy worlds, epic three-dimensional battles, avatars and crusaders.

At 52, "Nonoy" Colayco was widely respected for his deal-making flair which netted considerable foreign investments for the country. He was chairman of the Jardine Matheson Group-Philippines (which owns, among others, the Mandarin Oriental), managing director of Argosy Partners, and was advising major Filipino firms such as JG Summit, RFM, Aboitiz Group, and Republic Cement.

As it turned out, Nonoy’s investing taste was improbably shifting in those days from his usual brick-and-mortar fare. Among friends, he began to pitch the innovative business plan of his son, Ben. It was for a geeky little startup which they decided to call Level Up!

Transporting to 2005, a one-time amorphous idea, Level Up! is already the Philippines’ leading "publisher" and distributor of online games, with a market share of about 80 percent. It has also expanded to India and Brazil, and is responsible for hawking the phenomenal Korean-invented online game, Ragnarok, to almost seven million registered users in the Philippines.

Entrepreneur Philippines publisher Liza Gokongwei Cheng wrote in 2004 that Ragnarok "has taken our youth by storm. It is changing the way many young Filipinos are spending their leisure (and school) time. It is also single-handedly reviving the dying Internet café industry."

Today, father and son have clearly leveraged their first-mover advantage in local online games. Furthermore, they have already reaped a windfall for themselves and their co-investors by divesting a minority stake in Level Up International Holdings to Hong Kong’s First

Pacific Group. PLDT is likewise crafting the merger of Level Up! by early-2007 with the telecom giant’s own gaming subsidiary Netgames.

Ragnarok belongs to the genre called massively multiplayer online role-playing game, or MMORPG "Massive" refers to the fact that thousands of players can simultaneously occupy one vast virtual 3-D world. Online games often measure their customer base in the tens and hundreds of thousands. With roots traceable to cutting-edge PC technology, the MMORPG business actually started with an older audience. Increasingly, however, MMORPG attracted kids in the mass market.

Level Up! COO Ben Colayco sees online games as being just another way of getting Filipinos to embrace technology. "They enabled a lot more of our young people to experience the PC. Pretty soon, kids will realize and discover the many other ways in which the PC can improve their lives."

Ragnarok gives its software away for free but charges for the game service. A player can download the game from the Web or through a CD distributed in Internet cafes, through magazines, and during events.

Level Up makes money by selling pre-paid Internet card denominations for as low as P50 for eight hours and P350 for a month of unlimited play. The company is said to rake in about P100 million a month and "Ragnarok" can draw as much as 60,000 concurrent users online.

Level Up’s marketing machine has negotiated co-promotions with major consumer brands and inspired music videos, Ragnarok songs, comic strips, hot-selling merchandise and a cartoon show. Though Ragnarok was developed in South Korea, which has the world’s most fervent gaming culture, Level Up! knew right away how it would be an entertainment experience with a broad appeal.

It’s no longer a mystery why, in the mythical world of Ragnarok denizens, Nonoy is known as the "Invisible Hand" while Ben answers to the title of "Game Boss." Both Filipino entrepreneurs are going to be global players to watch, as online fantasy games become a billion-dollar entertainment phenomenon among legions of cyber-customers.

However, real competition is heating up locally this year, meeting Level Up! head-on, as Ragnarok’s lifecyle ends. The Colaycos’ current challenge is to hold on to the lead in finding a new blockbuster game.

For spearheading the online gaming world at full blast, the amazing tandem of Ben and Nonoy Colayco will be one of the recipients of the ten inspiring Technopreneurs awards, which acknowledges the Filipinos’ excellence in the technology field, at the biggest technology expo ever, the Technonegosyo, slated on Sept. 14 and 15 at the World Trade Center.