Half of a GDC 2011 lecture on essential monetization strategies for any social game company looking to grow outside of North America. My presentation focused on how the Social Network wars are effectively over, and Facebook is the clear victor - except in Asia, where local social networks are still putting up a fight. This is especially true in Japan and China where large audiences (400M+ users on QQ Zone in China) and large ARPUs (>10x Facebook on Mobage in Japan) make local networks unusually attractive. This presentation looked at the social networks in Asia that matter, describe how they are different from Facebook, rate their policies and openness to third parties, and deliver an in-depth analysis of the top games on each network and how they differ from comparable games on Facebook.

1. Social Games in Asia(aka Where Facebook is Not Yet King) James Gwertzman VP Asia/Pacific james@popcap.com

3. Facebook Usage(as % of population) (source: www.nickburcher.com; visualized with OpenHeatMap)

4. Korea Japan China Taiwan India Philippines Thailand Vietnam Malaysia Indonesia Facebook Usage(as % of population) (source: www.nickburcher.com; visualized with OpenHeatMap) Australia

5. Korea India Thailand Facebook Growth(2010 vs. 2009) (source: www.nickburcher.com; visualized with OpenHeatMap)

7. China Market Overview Many competing platforms High DAU; Low ARPU Heavily regulated (esp. for foreign companies) Predominately PC focused

8. China SNS market QZone RenRen.com Sina Space 51.com Kaixin001.com Sohu Douban.com 139.com (mobile) Kaixin.com Other

9. User behaviors China’s platforms Facebook Stealing Cooperating

10. Art style China Facebook

11. Viral feeds QZone No app feeds RenRen App Feeds App Invites

12. App Discovery QZone RenRen App Directory Ads App Directory Banner Ads

13. Platform currency QZone QB RenRen RenRen Beans

14. Happy Tower“Farmville meets Cake Mania” Manage a shop Service your customers Steal from your friends DAU: 15M ARPU: $.005 / DAU Monthly revenue: $2.5M

15. Core Mechanic 1.Rent a floor to open a shop 2.Serve guests and get coins 3.Spend coins to upgrade and expand 4.Steal coins and guests from friends 5.Finish daily tasks for bonus rewards (1) (4) (2) (5)

16. Business Model Buy items to: Attract more customers Shorten service time Improve customer satisfaction

17. Viral Growth Friend invites

18. Fantasy Seabed

19. Business model Buy items to: Shorten growth time Extend harvest time Buy special fish

20. Viral Growth Friend Invites

21. Little War Grow, decorate village Make war on others Build magic powers Prank friends

22. Business Model Buy: Building materials Magic energy Special decorations Shorten growth time

23. Viral Growth Friend invites Form feeds

24. Japan Market Overview Mobile Phone (“Gala-kei”) Implementations High (US$2-$3) ARPU Limited social features: activity feeds, messaging, avatars

25. GREE vs DENA : Feature Phone As of Feb 7, 2011 As of Feb 11, 2011 1 Dragon Collection Kaitou Royale 2 100 Mannin No Sangokushi NouenHokkorina 3 Omiseyasan Kaizoku Treasure 4 Love&Job! Otona No Jijyou Hoshitsuku 5 Shirotsuku El Ark More competitive games Top 5, all from DeNA / 8 DeNA titles in Top 10 More like Nintendo More collaborative games Few titles from GREE Titles related to “love” and “boy” are popular More like Sony Computer Entertainment

26. Kaitou Royale Dragon Collection “Mafia Wars” style RPG “Mafia Wars” not popular in Japan Released as “Bandit Nation” in US; not especially successful Card collection and battle game Popular with women as men

27. 100 Mannin no sangokushi NouenHokkorina Farming game “Strategy RPG” game Reunify ancient China Simple battle mechanics; no real fight interaction

28. Kaizoku Treasure Omiseyasan Seafaring Pirates Ship Battles Treasure hunting Shopkeeper game Visit friends’ shops, etc

29. Hoshitsuku Love & Job!Otona no jijyou Life drama game Main character works in nail salon At the turning point of your life, choose between love and job! Pay per-episode model Planet-building game Develop the culture on your planet Spend energy to go to other players’ planets and find items Use found items to boost your culture

30. GREE vs DENA : SMARTPHONE In service now Flash emulation Original web browser Native apps for Gree API To be launched on April Using NG moco’s engine “ngCore”, which is Android-iPhone cross-platform capable Native App calls GREE API Web based Flash Emulator

31. GREE vs DENA : PC SOCIAL Focusing on smartphone, not PC Partnering with Yahoo (Yabage) to go after PC

32. App Discovery & Virality Discovery through promotion or charts(new, top selling, recommended) Virality limited to activity feeds & messaging Low click-through on game-related invites (25%)

33. Q4 2010 Mobile & PC trends Minutes spent Reach rate Average PV Mobile mixi mobile mobage Minutes spent Reach rate Average PV Ameba mobile SNS market in Japan PC Yabage Ameba pigg Hangame Q42010

34. Q42010 ARPU Item ARPU Ad ARPU Mobage (Unit: JPY) SNS market in Japan Q42010

35. Western Companies Competing in Asia Zynga China: purchased Beijing social game studio (XPD); developing primarily for Facebook Japan: $150M Softbank investment,; bought 120 people studio (Unoh); launched Farmville on Mixi platform (PC); working on mobile titles Crowdstar Partnership with Drecom in Japan to launch social titles on mobile EA Growing Playfish Beijing studio; opening iPhone studio in Beijing; planning to enter China market PopCap Built 80 person Shanghai studio; partnering in Japan, Korea, China Announced social-mobile “PopTower” project for Japan

37. Predictions… <$100 Android handsets Huge competition on social/mobile in China Facebook will partner to enter China

38. Questions?