James Iles

Inside Interview: An Exclusive Look at the 2.1 Million Dollar Sale of 37.com

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By James Iles, Apr 19, 2016
  1. James Iles

    James Iles NamePros Writer PRO Business Account VIP Trusted Blogger

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    In this week’s Inside Interview, we have the opportunity of learning more about one of the most high-profile seven-figure domain name sales in recent history. On March 6th 2014, DNJournal’s Ron Jackson broke the news that 37Games had spent $2.1 million to acquire the domain name 37.com, one of only 100 two-number .COM domain names in existence.

    The company originated in China as 37Wan, but as part of 37Wan's worldwide expansion and new global strategy, the company acquired 37.com and changed their name to 37Games. Below, we speak to the team at 37Games about their purchase, why they spent $2.1MM on the domain name, and how negotiations progressed to be able to close the deal successfully.

    This is a rare insight into a seven-figure domain name sale from the buyer’s point of view.


    NP: Can you tell us about the company behind 37.com?

    37.com: Sanqi Interactive Entertainment (Shanghai) Technology Co., Ltd, or 37Games in short, was established in 2011. It is one of China’s Top 30 Internet Companies and Top 10 Game Platforms. The company is registered in Shanghai and has offices in Beijing, Guangzhou, Wuhu, Chengdu, Hong Kong, Taiwan, Korea, and some western countries.

    Specialized in publishing browser-based and mobile games, we are also very active in developing our own in-house games, such as Archangel. Under the name 37Games, we have 37.com, 6711.com, and some other online game platforms we use for publishing our content.

    37Games is now one of the Top 10 game publishers in the global market with over 100 million RMB in monthly revenue, more than 7,000 servers in total, and over 42 million registered overseas users. Our gaming platforms cover North America, Europe, mainland China, Hong Kong, Taiwan, South Korea, and Southeast Asia.

    We devote ourselves not only to developing and publishing browser and mobile games, globalizing Chinese games and localizing them to specific countries, but also entertainment businesses such as film, anime, and VR. In short, we are building a worldwide leading Interactive Entertainment platform.


    NP: 37Games acquired 37.com for $2.1MM. Why did you choose to buy such a valuable name?

    37.com: We did so for several reasons.

    First, for a better user experience. A shorter domain name is easier to search for and remember. Meanwhile, the new domain name is quite similar to the original one, so our existing players won’t find it difficult to make the switch.

    Second, it’s an adjustment to fit the company’s new targeting strategy. We are entering the global market, but the original domain name is not easy to understand for players from countries other than China. Therefore, we found it necessary to adjust it.

    Also, we changed our domain name for promotional reasons. The new domain name has an advantage over the original one in many perspectives, and we think it will help us acquire new players more easily, even in the local Chinese market.


    NP: Was acquiring 37.com important in your expansion to a global market?

    37.com: Acquiring 37.com does mean a lot to the company. We are now targeting the global market, and the first step is to make ourselves known to the target customers. “Wan” in “37wan.com” means “play” or “gaming,” but for players from outside of China, the word “wan” probably wouldn’t make any sense. To break this language barrier, we decided to use numbers only, which is almost universal and is very easy to remember.


    NP: How did you find out that 37.com was available to buy? Was it offered to you, or did you seek it out?

    37.com: Having decided to acquire the new domain name 37.com, we searched for the original owner’s email address on WHOIS.net and contacted them by sending an email by ourselves as well as through a domain trade platform. The original owner was reluctant to sell the domain name, but we were determined. Our company formed a team of talents from marketing, law, financial, and technical divisions, and made negotiations with the original owner for almost half a year. Finally, they agreed after difficult negotiations and made the concession.


    NP: How did you determine that the domain was worth $2.1MM to you?

    37.com: Acquiring 37.com was of great strategic importance to 37Games. We really needed a universally accepted name that also had a perfect association with our brand name 37Games. 37.com was our best choice. Meanwhile, we did comprehensive evaluations on the price, including using the regular methods such as Google PR and Alexa, as well as some comparisons and appraisals based on the published [domain sales] prices.


    NP: Would you have paid more for this domain name if necessary? If yes, how much would you pay?

    37.com: The seller's initial asking price was $5MM. We made great efforts to convince the seller to lower the price to $3MM. The seller insisted on the $3MM price, and we didn’t have much time before March 7th, 2014, the day we planned to change and announce the new domain name. However, we were confident that we could reach a deal and the price $2.1MM was settled out of careful evaluation and in-depth negotiation.


    NP: Many Chinese companies such as yourself, JD.com, and VIP.com now use short, memorable domain names. Why are short domains so desirable for Chinese companies?

    37.com:

    1) The domain name is critical for online platforms and companies that rely on internet avenues. It is an important part of a brand. We not only needed to make our customers love our brand, but also needed to let them get used to our domain name.

    2) A shorter domain name is easy to remember, convenient to input in the address bar, which will directly increase the number of visits. Also, such domain names have a great advantage on mobile devices: visitors can just tap a few letters or numbers and visit the website easily even on a mobile-phone browser.

    3) In addition to promotion reasons and convenience to users, a short and neat domain name can make it easy for an online platform to build subdomains. For example, bbs.37.com is also easy to remember, but bbs.37wan.com would be too complicated for users.


    NP: Has changing from 37wan.com to 37.com been a successful move for your company?

    37.com: Changing from 37wan.com to 37.com was a strategic move to make 37Games more international. First of all, the new domain name made it easier for players from different parts of the world to accept our brand 37Games.

    We didn’t have to spend time or resources for players to understand or remember our domain name. We began to use 37.com just before entering the European and American market. Therefore, we were able to focus more on other critical aspects of our overseas expansion. We are also planning to enter non-English speaking countries like Spain and Poland, and the use of such a universally acceptable domain name matches our development and expansion strategy.

    Overall, the change has been crucial and helpful in making 37Games an international brand.

    --

    Thanks to 37.com for providing insights into their acquisition. I think that the power of numbers from a global branding point of view are still under used and underrated. Do you agree? Have your say in the comments below.

    Please note that whilst other statistics value this sale at $1,960,800, it was confirmed to me by the buyers to be $2.1MM.



    Inside Interviews is a blog series profiling the buyers of high-value domain names. Find out their motives, negotiation tactics, and their opinions on popular domaining topics only on the NamePros Blog.[​IMG]
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
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  4. James Iles

    About The Author — James Iles

    Writer for NamePros.com, domain name investor and broker. For all inquiries relating to stories and interviews, please email: [email protected]

    This is James Iles's 183rd blog post on NamePros. View all blog posts

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  5. Comments (41)

  6. Keith DeBoer

    Keith DeBoer BrandBucket Brand Ambassador PRO VIP

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  7. nvdomains

    nvdomains Established Member

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  8. AuctionBio

    AuctionBio Active Member VIP

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    Thanks James, good one and dream and gives motivation :)
     
  9. Silentptnr

    Silentptnr PRYCR.COM Business Account VIP

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    Great write up! Thanks!
     
  10. garptrader

    garptrader Active Member VIP

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    As a westerner, I still struggle with why a company would want to brand on a numeric domain, but this sale is a rare example of the potential for domain sales if companies were to collectively wake up to the branding power of relatively short, easy-to-remember, and meaningful domain names rather than merely finding something which is available for reg fee. End users as part of their regular operations spend thousands and thousands of dollars on marketing, IT costs, professional services, travel, etc and so it can be baffling when you see a company operating on a poor-quality domain but they see no reason to upgrade to something better. Or they consider the thought of spending more than $50 on a domain as outrageous.

    So when do the Chinese start buying keywords instead of numerics and "CHIPS?"
     
  11. sanrb

    sanrb Established Member

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    Very informative, James. Thanks. I have a serious query here though...

    Somewhere in the article it is mentioned by the buying team that - Our company formed a team of talents from marketing, law, financial, and technical divisions, and made negotiations with the original owner for almost half a year. Finally, they agreed after difficult negotiations and made the concession.

    So, my question, based on the above text in RED is that - Will a company who is willing to shell out 5M or so to acquire a super-premium DN put any kind of a LEGAL or other kind of pressures on the original DN owner? Will it be similar to a BIG land developer (please read it as a Builder / Real Estate Developer) putting pressure on a Old Man owning a premium piece of land in a BIG city? Does it happen that way in any kind?

    Thanks in advance for all answers that will flow in, for the above query.
     
  12. James Iles

    James Iles NamePros Writer PRO Business Account VIP Trusted Blogger

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    Thanks for your comment :)
     
  13. James Iles

    James Iles NamePros Writer PRO Business Account VIP Trusted Blogger

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    I think the name was vital to their global expansion, and in the grand scheme of things, paying $2.1MM for a two number .COM was a fairly small price for them to pay for a large asset like this.

    From what I've seen of Chinese businesses, numbers seem to make more sense on a local, national and international scale. There's even a picture that Giuseppe Graziano posted from his trip to China, showing a taxi company using an 8 number domain: http://ggrg.com/wp-content/uploads/2016/04/P_20160312_153853.jpg
     
  14. James Iles

    James Iles NamePros Writer PRO Business Account VIP Trusted Blogger

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    I've never experienced anything like that in terms of pressure; I think a lot of large companies like legal input in terms of contracts, escrow, NDAs and more. However, a broker that's deals more routinely with 7+ figure sales may have a better answer on this.
     
  15. Kassey Lee

    Kassey Lee 域名世界 Business Account VIP

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    FYI, 北京市工商行政管理局 (Beijing Administration for Industry) has just announced that company name can be a number (up to 5N). Longer numbers may be possible, subject to approval from the agency. This may further encourage use of numeric domain names. Details in Chinese here: http://news.ename.cn/yumingjiaoyi_20160420_104087_1.html
     
  16. James Iles

    James Iles NamePros Writer PRO Business Account VIP Trusted Blogger

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  17. London555

    London555 Active Member VIP

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    Kassey-how would this affect pinyin names do you think? Thank you
     
  18. London555

    London555 Active Member VIP

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  19. Kassey Lee

    Kassey Lee 域名世界 Business Account VIP

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    I don't see numerics competing with Pinyin. Chinese IDN.IDNs may be the real competitors.
     
  20. sanrb

    sanrb Established Member

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    Thanks James
     
  21. Avtar629

    Avtar629 MarketDN.com Business Account VIP

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    Whoa whoa whoa back up Kassey! Lol say that again! I have a bunch of these. And always thought it was a mistake. How will idn.idns be competitors? And why? I've spoken to Chinese brokers who told me idn.idn were essentially crap. Because the Chinese don't really gravitate to them. Thats why I'm confused about what you said. Please clarify? Thanks!
     
  22. Avtar629

    Avtar629 MarketDN.com Business Account VIP

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    Thanks James for that ggrg mention of that taxicab numeric .com

    I wonder then if my long tail numerics in my signature do have resale value. As you can see they have that 888 999 set up which in chinese translates as "Lucky Forever".

    What do you think? Thanks
     
  23. loredan

    loredan Active Member VIP ★★★★★★★★★★

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    Great interview, thanks James!

    "We did comprehensive evaluations on the price, including using the regular methods such as Google PR and Alexa, as well as some comparisons and appraisals based on the published [domain sales] prices."

    If they used Alexa and Google PR to evaluate a 2M domain name, it shows their negotiation "team of talents from marketing, law, financial, and technical divisions".
     
  24. illoy

    illoy Established Member

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    woooooo!
     
  25. CamMK27

    CamMK27 Top Member VIP ★★★★★★★★★★

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    Thank you James. Great read. Although a decent sale, I believe seller could have gotten more and possible some equity.
     
  26. namerav

    namerav Active Member VIP

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    The Buyer-End user is very knowledgeable. Thanks for the interview.
     
  27. AEProgram

    AEProgram Supportive Member NamePros Supporter VIP

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    ha if that ever happens some people in this business will become trillionaires
     
  28. James Iles

    James Iles NamePros Writer PRO Business Account VIP Trusted Blogger

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    I still think long strings of numbers are risky.
     
  29. James Iles

    James Iles NamePros Writer PRO Business Account VIP Trusted Blogger

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    Thanks.

    As far as Alex and Google PR go, from speaking with them I don't think they were major factors in this, but just part of the process they went through to determine their budget, etc. Research into Alexa & Google PR would also show whether the name had been used for anything else, or had traffic/links based from other niches that aren't necessarily helpful to them.
     
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