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Social Games in China - The New Import/Export Business!
 

Social Games in China - The New Import/Export Business!

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Slides from a GDC 2010 talk on social games in China. ...

Slides from a GDC 2010 talk on social games in China.

For years, game developers in China and the US seemed to be speaking two different languages (literally!). Top games in China were online, intensely social, based on a free-to-play micro-transaction model, and had low budgets and low production value. Top games in North America, by comparison, were single-player, often console-based, with vast budgets and awesome production values.

Enter Facebook. Which business model seems more relevant now? The tables are turned. Instead of Chinese game developers studying the US market to learn all about production values, smart western game developers are studying the Chinese market to learn as much as they can about succeeding in this new world of micro-transactions -- and some are even trying to enter China themselves, either to acquire talent or to try and tap the vast Chinese market. 1 billion social gamers?

PopCap has had an office in Shanghai for over 2 years, and has experienced both the opportunities and challenges of doing business in China firsthand. Attend this talk for a rapid fire briefing on everything you need to know about online & social gaming in China, direct from PopCap's head of Asia/Pacific operations. Topics will include what's hot in Chinese online and social games, which companies to watch, how to enter the Chinese market, how NOT to enter the Chinese market, how to leverage low-cost Chinese talent, and more.

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  • Social games seem to be the big new import/export business from China. Why is that?
  • If you look at why we haven’t seen more interest in China from western developers before, just look at the games. Here you have a typical console game on the left, and a typical MMORPG game on the right. Very different quality standards.
  • Very different play styles --- at home on the couch, vs. in an Internet cafe
  • Very different business model – buying retail on the left, vs. buying prepay cards on the right.
  • But now… the models have converged. Here is restaurant City from playfish on the left, and a clone of the game from RenRen on the right. Same basic game now appeals to both markets. So now you have the ingredients of trade!
  • In fact, China has had experience with microtransactions for much longer than the US. Here are screenshots from QQ back in 2005 showing the avatar item-sales model.
  • Here is our own rough guess at the different market sizes – it’s hard to get confirmed numbers for social since it’s so new – along with some representative company logos.
  • Here’s a screenshot from a representative RPG game in China – ZT Online is infamous since literally everything is for sale in this game
  • You can buy pets to help level up faster
  • KartRider is the canonical example of an advanced casual game, or “mid-session” game.
  • Some sample cars you can purchase using in-game currency.
  • Some balloons you can attach to your car – these have functional purpose, not just decorations.
  • Another famous advanced casual game, Audition. Like KartRider, also created in Korea and imported to China.
  • Dancing performance.
  • They made a smart decision with Audition to charge a lot of money for the clothes – as a result, they are true status symbols.
  • Here are some representative mobile games in China
  • Web Games were huge a year ago, but seem to have been overlooked recently in the rush to social. Still a large market, and still quite interesting business. Lots of interesting things going on in Web Games. Many westerners were introduced to web games by Travian and other German games from companies like gameforge.de
  • Typical web portal for accessing a web game
  • Item-buy business model.
  • And finally, that brings us to social games… and Happy Farm, one of the most famous social games in china, and reportedly the inspiration for Farmville, one of the most successful games on Facebook. If true, it’s one of the first examples I’ve ever heard of a game in China being copied in the west (vs. a game in the west being copied to China which is very common)
  • All of this experience with microtransactions explains why chinese developers are starting to move into Facebook. But another reason is that the chinese SNS market is not yet as attractive as Facebook, for a variety of reasons.
  • Here are some of those reasons…
  • It’s interesting to realize first that SNS games in China are arguably much more hard-core than comparable gamers in the US. You especially see that in the fact that SNS games in china are much more complex than games in the US.
  • Another important point – most of the social networks are still “closed” which means that you can’t just download the API, build a game, then upload it using a click-through developer agreement. You need to do a custom deal with a closed portal, and some of them are not willing to even do that. Many of the SNS sites here build their own games, and see that as part of their business model. Only RenRen so far is truly open in the same way as Facebook.Another point – there it not yet a single clear winner in the SNS wars in China, which means the audience is fragmented across different sites.
  • Homepage for RenRen (see it yourself at www.renren.com)
  • Looks a lot like Facebook…
  • Unlikefacebook, which only recently added their own currency, RenRen (like all the other Chinese SNS sites) has had its own in-game currency for a long time – in fact, to put your game on RenRen, you’re not allowed to use your own ecommerce platform. You must use the RenRen currency system, and convert it into your own game’s virtual currency. Here we’re showing bank transfer.
  • And here we’re showing that you can buy virtual currency on RenRen from your mobile phone.
  • Here is a competitor to RenRen, Kaixin001. They seem to be focused on a slightly younger audience, and be a bit more game and entertainment focused.
  • Main page of Kaixin001 also looks a lot like Facebook.
  • Sohu Bai (White) society is an SNS developed by Sohu. Users can sign in directly if they already have accounts on Sohublog or Sohu email.It is targeted at white collar workers, with a few interesting features.
  • The main US again looks like facebook, but with a few differences. Not the importance of the app bar on the left.
  • They’ve added a “boss key”. While playing games, you can press F9 any time to hide the screen…
  • … like this!
  • It features games designed specially for you to give vent to your anger and stress…
  • QQ is the big 800 pound gorilla in China.. And of course they have their own SNS site.
  • Though in their case, it’s kind of like a cross between a blog,Facebook, and Myspace.
  • You can actually customize your page with all sorts of different “modules” – especially interesting to see how you can have both your “avatar” and your real photo on the same page.
  • You actually pay money for different styles for your page.
  • Note that this background is 17 Q coins, or about USD $2.5. 10 Q points = 1 Q currency. 1 RMB = 1 Q currency
  • You can also buy individual decorations for your page. This clock, for example, costs around USD $0.50.
  • More decorations – this fireworks display goes off when someone visits your page. Price – about USD $0.55
  • Again here you can charge by phone. QQ probably has one of the most robust platforms out there.
  • Charge by QQ card, you could purchase the QQ card at any convenience store and game shops.
  • Here’s a translation of the top 10 games on RenRen as of March 3, 2010 or so. Note that at least 2 of these games are developed by RenRen themselves – which brings up an interesting point. The platform is directly competing in some cases with the developer, and the platform owner always has the advantage. It would be as if Facebook had its own in-house game development team, and built their own Farming game called “Facebook Farm” and promited it heavily within Facebook. Most of these games featured here are similar to games on Facebook. Note that PopCap has launched Bejeweled Blitz on RenRen – we’re currently #41 by DAU
  • One of the hardest things for western developers to get used to in China is the hand of the government in many areas of business.
  • To operate an online game you must have a number of different permits and licenses. It’s still not quite clear what the licensing process for SNS games will be – it’s famously what we’d call a “grey area” in China.
  • In fact, it’s not even always clear which government agency is in charge! Last summer there was a big skirmish between two agencies over who had the right to oversee World of Warcraft in China. A lot is at stake here, since the online game business in China is big business.
  • One sure sign that regulation is coming in China is when you start to see a lot of negative press about a given topic. In this case, games often get a very negative rap in the press, and last fall we started to see negative articles about social games.
  • Here’s a typical editorial cartoon.
  • And then sure enough… we started to see regulation of SNS games being announced.
  • Another challenge in china – huge competition and lots of developers ready to ‘clone’ successful games. Here is Restaurant City by Playfish…
  • And here is a comparable restaurant game developed by RenRen. Lots of evident similarities, though lots of small changes and improvements too to adapt the game for China.
  • It’s very hard to get a clear economic picture on SNS games in China right now, but here is our best guess based on what we’ve heard from others. In general, it’s not a great picture. Few users spend money, and the ones who do don’t spend a lot. As a result, it’s much less attractive then Facebook or Japanese sites, which explains why Chinese developers are so eager to tap into the Facebook market.
  • So if entering the Chinese SNS space is hard and the economics aren’t great, why are many western developers opening shop in China? One reason is to develop games in China for their own western markets! So far there are at least 3 companies in China – Playfish, Slide, and PopCap, and rumors are that more are coming (Playdom? Zynga?)
  • To help out all those developers looking to enter China, here is a handy guide for how to set up your Chinese office in 9 easy steps.
  • Just follow these clear steps, and you too can have a Chinese WOFE (“Wholly owned foreign enterprise”) and start building games in China.
  • Finally, some general comments and observations about the SNS space
  • You’re starting to see crossover between genres. Here is a web game embedded within RenRen
  • And here is a social farming game embedded within a web game. On this farm, you could plant any seeds then pick the raw materials when mature. They are used to improve your gear or tailor your cloth.
  • Main UI
  • House shopping.
  • Note the use here of dual currencies… coins are earned, gems are bought.
  • Item shop
  • Draw a lucky card to get special bonus at work. The lucky draw mechanic is very popular in chinese games.
  • It’s fun to appreciate the meta-game levels here. This is a social game that you’re presumably playing at work, where you can play a mini-game, instead of working.
  • Hospital games are on facebook too
  • Main UI
  • What’s interesting here is that, like other Chinese SNS games, you can visit your friend’s hospital and do good or bad things.
  • There’s a whole set of negative things you can do to your friend’s business to sabotage it!
  • Item Shop. The role for most of the items is to accelerate game progress.
  • This is an item collection game from QQ. It’s quite interesting – you collect a full set of cards, and then you can turn them into items which you can either wear yourself or give them to your friends as gifts.
  • Magic card furnace – use your low level magic cards to get higher level ones. Need one hour to process.
  • And of course, happy farm. The big difference between this and Farmville is that here, stealing crops from your friends is a major part of the game.
  • Buy the dogs to guard your farm. Your friends can’t steal your plants if the dogs are guarding. It’s a nice business model! Note that all of these dogs are only for sale if you spend real money!
  • Most of the fertlizers, which speed up the game, cost real money too.
  • Here’s another genre of game, the city decoration game – fancier cities pay you more rent.
  • Quests – you could get rewards by complete this quests Successfully. You need to reach to certain level to do the quest. Quests in grey means that you are not applicable to do those quests yet.Examples of quests: Set up 10 lights on your land – and you get this house as a reward collect 30 mushrooms (also on your friend’s land)
  • Collecting the rent by clicking the house.
  • You could invest in your friends buildings. You could pick up money by clicking on your friends’ houses when it’s ready.
  • Increase the population of this town, so you could get more tax income.
  • Here is a real-time multiplayer social game – fishing.
  • Here is an interesting feature in a web game – warbetween two countries. It’s interesting because it’s large-scale multiplayer. It’s essentially capture the flag. If the attacking country kills the leader of the defending country within 30 minutes, they will win the game and everyone on the winning team gets a unique reward. The date of the battle is set in advance… it involves real players at the same time. The king needs to get his subjects to play at the same time. The more players who show up the better the player will do
  • Show how king / subjects / voting works. Only the player with money in their account is eligible for the voting once a week.
  • It’s also interesting to see traditional client/server games moving into the web social space. Here is the QQ game multiplayer client from QQ.
  • And here now is a similar game on their QQ Zone web SNS site.
  • Here is the UI of the QQ game client…
  • And the UI of a card game on their web platform.
  • Overall it’s been a very exciting time setting up PopCap’s operation in China. We’re having a lot of fun.
  • Pleasantly surprised dealing with Internet companies. Very different than traditional SOE’sCompared to Chinese companies, we’re the slow onesYounger, more international, increasingly familiar dealing with western companies, willing to hire western lawyers to help them
  • Thanks!!!

Social Games in China - The New Import/Export Business! Social Games in China - The New Import/Export Business! Presentation Transcript

  • Insert picture of big-budget console game vs. low-budget Chinese online game
  • Micro-transactions onQQ Games in 2005
  • 2009 China Market Overview
  • ZT Online
    Insert screenshot of ZT Online item shop
    “ZT Online”
    Giant Interactive
    F2P MMORPG
  • Pets in ZT Online
    (help players level up faster)
  • “KartRider”
    Nexon
    Advanced Casual
  • “Audition”
    T3 Online
    Advanced Casual
  • ShenQi Online
    Western Journey Online
    QQ “card & board” games
    Sailing Online
    Various Games
    Mobile free-to-play
  • “9ZWar”
    The9
    Web Game
  • “Happy Farm”
    5 Minutes
    SNS Game
  • 6 Facebook apps developed by Chinese developers in top 40
  • How is Chinese social game market different?
    More sophisticated players
    Closed vs. open
    SNS sites competing with developers
    Government regulation
    Poor economics
    IP enforcement issues
    Greater complexity of games
  • Who is playing?
    ONLY play online games via social networking sites
    Do not play games via SNS at all
    started on SNS and have graduated to other online games as well
    started as online gamers and have added games via SNS to their gaming behavior
    Source: NIKO PARTNERS, Chinese gamers survey in Feb. 2010 of 500 gamers in 10 cities. Niko will publish this in their upcoming 2010 Chinese Video Game Industry Annual Review & Five-Year Forecast, due in April.
  • China SNS market
    QQ Alumni
    RenRen.com
    Sina Space
    51.com
    Kaixin001.com
    Sohu White Society
    Douban.com
    139.com (mobile SNS)
    Kaixin.com
    Other
  • Cannot charge; my account is not high enough level (reduces fraud)
  • QQ Show Avatar
    Wall history
    Gifts received
    Real-life Profile
    Blog entries
    Favorite songs
    Photo Slideshow
    Games
    Friends
  • Top Games on RenRen
  • Game companies must work with:
    General Administration of Press and Publications (GAPP)
    Ministry of Culture (MoC)
    Ministry of Information Industry (MII)
    State Copyright Bureau
    Ministry of Public Security
    Bureau of State Secrecy
    State-owned Assets Supervision and Administration (SASAC)
    State Administration of Radio, Film and Television (SARFT)
    State Administration of Foreign Exchange (SAFE)
    Regulatory Issues
  • Foreign game Permit Checklist
    MOC Internet Content Provider Permit
    MOC Permit for Online Cultural Operations
    MOC Online Censorship Approval
    GAPP Permit for Online Publishing
    GAPP Online Importation Approval
    MII Product Registration Certificate
  • MOC
    GAPP
  • Someone said he got fired because he stole crops from the boss.
  • SNS Economics in China
    Analysis for top-20 game on RenRen:
    Monthly Active Users: 10,000,000
    Conversion rate: 0.2%
    ARPPU: RMB 7.5 (USD $1.1)
    Monthly Revenue: RMB 150K (USD $22K)
    Top grossing games:
    Anywhere from USD $50K-$100K per month
  • How to set up a WFOE in 9 easy steps
  • Company set-up process
    Buy one-way ticket to china
    Find a lawyer
    Find an office
    File a lot of paperwork
    Hire an english speaking assistant
    Open bank account
    Transfer in a lot of money as registered capital
    Wait for licenses
    Start hiring employees!
  • Observations…
  • 升职记 (office promotion)
    Total users:750128
    Daily active users:208765
    Launch date:2010.01.27
    Game play:
    Train your different career skills, complete more works to earn money. Expand your own company to get more money, and invest in houses, buy cars to speed up work progress.
    What is special:
    Do bad things to a friend while he is working;
  • 荣光医院(Rong Guang Hospital)
    Total users:15696078
    Daily active users:245845
    Launch date:2009.05.06
    Game play:
    Manage your hospital, upgrade patient rooms, get more patients and expand your hospital.
    What is special:
    Visit a friend hospital, do good/bad things to impact friend hospital growth.
  • 胡莱旅馆(Hu Lai Inn)
    Total users:4270139
    Daily active users:144713
    Launch date:2009.06.04
    Game play:
    Decorate you own Inn, to get friends stay and pay rent. And expand Inn bigger and bigger.
    What is special:
    Visit friend Inn, invite friend to stay. Steal rent that is not collected by the friend (like Happy Farm).
  • The main UI. The Inn is pretty empty in the beginning
  • The main UI. Decorate to be fancy.
  • Avatar
  • Furniture shop.
  • Choose an Inn, and buy bigger Inns.
  • Reprinted with permission of the author
  • Looking ahead…
    First products launch end of this year
    Modest expectations…
    Validate our thinking, team, etc
    Gain experience
    “real” products launch next year
    The real test…
    That’s when we know if we are on the right track