Guidance for online game business in Vietnam

Vietnam’s online gaming is expected to post a 16% annual growth rate to US$10.1 million in 2020 in a recent study by market research company Niko Partners and Google.

Among countries in Asia, Vietnam showed the most promise with a 28% compound annual growth rate (CAGR), showed the report.

Vietnam's online game busines is promising

The promising market has attracted a large number of foreign investors following the regulations on this industry. 

Foreign investors who wish to engage in the online games distribution service must have either a contract of business cooperation or a joint venture with a Vietnamese partner who is eligible to provide online gaming business, according to Dr. Oliver Massmann, an attorney at Duane Morris LLP, a law firm with more than 800 attorneys in offices across the US and internationally. 

In case of a joint venture, the foreign investors’ capital must not exceed 49%, the legal expert said.

The joint venture can be in the form of a limited liability company or a joint stock company. Generally, there are more options to mobilize capital in a Joint Stock Company, said Dr. Oliver Massmann who can be reached under omassmann@duanemorris.com.

Only Vietnamese enterprises can apply for G1, G2, G3 and G4 gaming licence in Vietnam. A Vietnamese enterprise is defined under Law on Enterprise 2014 as an entity established or registered to establish under Vietnam laws and has headquarter in Vietnam.

The G1 includes video games that have interaction among multiple players via the game server, meanwhile the G2 is for video games that only have interaction between the players and the game server.

The G3 contains video games that have interaction among multiple players without interaction between players and the game server, and the G4 covers video games that are downloaded from the Internet without the interaction among players and between players and the game server.

Dr. Oliver Massmann said the investors should know about licensing procedures for the G1. This gaming licence expires after 10 years and the investors can only extend it once for one extra year. The Ministry of Information and Communications is seeking to reduce the licence’s validity to only 5 years, he added.

Conditions to apply for G1 gaming licence must include a headquarter and contact number; a registered domain name to use to provide the service; at least one personnel administers two servers; at least a Bachelor’s degree obtained by the business manager; sufficient financial capacity, adequate gaming systems; backup plans for equipment and connection as well as data backup plans; professional measures to manage game forum content.

The legal expert pointed out important documents of application dossier that comprises documents proving the ownership of domain name; business location rental/ownership contract; game service payment plan; list of partners providing payment assistance service; and detailed description of host devices.

After attaining G1 gaming licence, the investors would need to obtain approval for script content for each G1 game in order to operate the G1 game.

It should be noted some conditions to apply for approval of script content for each G1 game, namely game content (must be culturally appropriate);  the game’s age rating (must be suitable with the content); and measures to manage players’ account.

Game providers must manage time of gamers who are under 18 years old to ensure their playing time not to exceed 180 minutes in 24 hours. 

Online game business was regulated in Decree No. 72/2013/ND-CP on the management, provision and use of Internet services and online information; Decree No.103/2009/ND-CP promulgating the regulation on cultural activities and commercial provision of public cultural services; and Vietnam’s Specific Commitments to WTO in Services.