Digital Goods, Real Billions Asia’s Digital Life & What it means for the West @benjaminjoffe  | CEO, +8* Virtual Goods Sum...
@benjaminjoffe
4 years 1 year 5 years
<ul><li>CEO, Plus Eight Star | www.plus8star.com </li></ul><ul><ul><li>Best practices from Asia’s digital space </li></ul>...
<ul><li>Speaker </li></ul><ul><ul><li>100+ talks in 16 countries </li></ul></ul><ul><li>Advisor </li></ul><ul><li>Investor...
My Interests <ul><li>Technology, Sociology and Anthropology </li></ul><ul><li>Virtual economies </li></ul><ul><li>Digital ...
All the world’s a… All the world’s a  stage … All the world’s a  game … … And one man in his time plays many  avatars . Wi...
<ul><li>Introduction Quiz! </li></ul><ul><li>Chapter 1 South Korea </li></ul><ul><li>Chapter 3 Japan </li></ul><ul><li>Cha...
Quiz!
Quiz!
Quiz
Quiz
Quiz
Quiz
Quiz
More than Facebook and USA <ul><li>Facebook </li></ul><ul><li>LinkedIn </li></ul><ul><li>QQ (Tencent) </li></ul><ul><li>Qz...
Billion Dollar Brands <ul><li>Facebook </li></ul><ul><li>LinkedIn </li></ul><ul><li>QQ (Tencent) </li></ul><ul><li>Qzone <...
Market Caps (2010.10) $780M $3.3B $43B $4.2B
ngmoco:) news $400M < 2010 Profit!
South Korea
Cyworld <ul><li>SNS/VG pioneer since 10 years ago </li></ul><ul><ul><li>Stagnant for several years </li></ul></ul><ul><ul>...
2009.10 | Nate App Store <ul><li>Leverages Nate’s reach </li></ul><ul><li>Semi-open </li></ul><ul><li>Slow rise  (2M users...
Portals join the dance <ul><li>. </li></ul><ul><li>Naver Social Apps </li></ul><ul><li>. </li></ul><ul><li>Yozm by Daum </...
Facebook Rising <ul><li>Facebook in Korea </li></ul><ul><ul><li>Usage growing </li></ul></ul><ul><ul><li>Local office </li...
Virtual Worlds <ul><li>3D virtual worlds  still early, even for Korea </li></ul><ul><ul><li>Non-gaming not working </li></...
 
PuppyRed
PuppyRed | Conversion <ul><li>225,000 MAU </li></ul><ul><ul><li>18,000 paying (8%) </li></ul></ul><ul><ul><li>Top 2,000 = ...
PuppyRed | Monetizing <ul><li>Time investment </li></ul><ul><ul><li>Since reg. </li></ul></ul><ul><ul><li>In-world </li></...
Online Games <ul><li>Online games market  $3.3 billion? </li></ul><ul><li>Leaders  Nexon, NHN, NC Soft </li></ul><ul><li>E...
Answer <ul><li>#1 in Online Gaming </li></ul><ul><li>Pioneer in virtual goods </li></ul><ul><li>First MMO in 1996! </li></...
Nexon Today <ul><li>Revenue 2009:  $561 million  (+56%) </li></ul><ul><ul><ul><li>Over half from  overseas  (first in 2009...
Foreign Players in Korea? <ul><li>Some limited successes… </li></ul>
 
And… Starcraft Cheating Scandal! <ul><li>April-May 2010 </li></ul><ul><li>Largest scandal in e-sports history in Korea </l...
Japan
Mobile SNS Make a Killing <ul><li>Revenue total > $1 billion ! </li></ul><ul><li>All 3 have a  mobile app platform </li></...
Mixi <ul><li>Inspired by </li></ul><ul><li>21 million users </li></ul><ul><ul><li>14 million MAU </li></ul></ul><ul><li>Fr...
Mixi <ul><li>Revenue 2009 $166 million </li></ul><ul><ul><li>Profit margin 20% </li></ul></ul><ul><li>2Q2010 $49M </li></u...
Mixi | Users <ul><li>Gender-Balanced </li></ul><ul><li>90% above 20 y.o. </li></ul>Total Mobile Mobile Total
Mixi | Pageviews Applications Platform 2009.08 Mobile 2009.10 PC Ad prices for mobile =  1/3  of PC price
Mixi | Apps <ul><li>Apps </li></ul><ul><ul><li>PC > 1,000 </li></ul></ul><ul><ul><li>Mobile > 600 </li></ul></ul><ul><li>A...
Answer <ul><li>CEO of DeNA </li></ul><ul><li>Operates “Mobile Game Town”, a top mobile SNS in Japan </li></ul>Tomoko Namba...
DeNA <ul><li>Revenue 2009  $517 million </li></ul><ul><ul><li>Profit 2009   $228 million (44%) </li></ul></ul><ul><li>Reve...
DeNA | Sales
Mobile Game Town| Sales Breakdown 78% 12% 9% 1% $250 million (2010.04~06)
Mobile Game Town | Users <ul><li>20 million  users </li></ul><ul><li>74%  over 20 y.o. </li></ul>
Mobile Game Town | Open Platform <ul><li>154 partners companies </li></ul><ul><li>350 titles (July 2010) </li></ul><ul><li...
DeNA | Target: Global Leader
Answer <ul><li>CEO of GREE, top mobile SNS in Japan </li></ul><ul><li>#2 youngest  self-made billionaire  in the world (af...
Gree Home Advertising Avatars & items Games Advertising & Affiliates B2C virtual goods (avatar + games)
GREE | Service Strategy Media Ad Sales VG Sales Social Games Virtual Goods SNS Diary/Notes Q&A Community/BBS Page views Me...
GREE <ul><li>ARPU = $2.2 / month! </li></ul><ul><li>ARPPU > $20? </li></ul>20M $133M Users Revenue 2010.06 2010.04-06 Digi...
GREE <ul><li>Year to June 2010 </li></ul><ul><ul><li>Sales $430 million </li></ul></ul><ul><ul><li>Operating profit $240 m...
GREE | Monthly Page Views 35.7 Billion Google Images = 1 billion/day
GREE <ul><li>2010.06 | Open platform </li></ul><ul><li>2010.10 | Non-gaming apps (27 coming up) </li></ul>
2010.09 | GREE on iPhone  ( + Android soon)
Community Safety <ul><li>DeNA </li></ul><ul><ul><li>861  employees… </li></ul></ul><ul><ul><li>Many doing  content monitor...
Have you heard of…?
CyberAgent <ul><li>History </li></ul><ul><ul><li>Started as  ad network </li></ul></ul><ul><ul><li>Branched into  blogs (1...
    | Social Games <ul><li>DeNA 10 titles </li></ul><ul><li>Gree 3 titles </li></ul><ul><li>Mixi 8 titles </li></ul><ul><l...
<ul><li>$4M  in July 2010 </li></ul><ul><ul><li>Run-rate 2010 = $50M ( > ngmoco ? ) </li></ul></ul>    | Social Games
| 2D Virtual World
<ul><li>Promotion </li></ul><ul><ul><li>Leveraging Ameba’s blog platform </li></ul></ul><ul><ul><li>TV ads </li></ul></ul>...
<ul><li>April-June 2010 $10 million </li></ul>| Revenue split
| Subs & ARPU <ul><ul><ul><li>4.3 million users (2010.06) </li></ul></ul></ul><ul><ul><ul><li>monthly ARPU = $15 </li></ul...
| Fishing Game
Facebook Making Inroads <ul><li>Facebook in Japan </li></ul><ul><ul><li>Growing (1.2M) </li></ul></ul><ul><ul><li>Mobile J...
Foreign Players in Japan <ul><li>Zynga </li></ul><ul><ul><li>Acquired local company  Unoh </li></ul></ul><ul><ul><li>JV wi...
China
Social Games Growing But… <ul><li>Fragmented  market </li></ul><ul><ul><li>4 competing social networks </li></ul></ul><ul>...
…Online Games Still Dominate <ul><li>Online games  biggest money maker </li></ul><ul><ul><li>$900M in 2Q2010 </li></ul></u...
Answer <ul><li>CEO of Tencent! </li></ul><ul><li>#3 Internet company in the world </li></ul>Ma Huateng (Pony), CEO
QQ IM & QZone
Digital Goods? <ul><li>Identity  related </li></ul><ul><li>Game  related </li></ul><ul><li>Music  related </li></ul><ul><l...
Tencent Bigger Than Ever? <ul><li>Sales 2009 $1.8 billion </li></ul><ul><ul><li>Net profit 2009 42% (= $750M) </li></ul></...
PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joffe / Plus Eight Star Ltd.
PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joffe / Plus Eight Star Ltd. Hardware Innovation: “Shanzhai” ( 山寨 )
PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joffe / Plus Eight Star Ltd.
QQ Farm
Rest of Asia
Time-Shifted Markets <ul><li>Vietnam </li></ul><ul><ul><li>~$150M from online games </li></ul></ul><ul><ul><li>86 million ...
Mig33 <ul><li>“We have decided  we want to be like QQ  for  mobile  in the rest of the  emerging world .” </li></ul><ul><u...
Mig33 <ul><li>“We have decided  we want to be like QQ  for  mobile  in the rest of the  emerging world .” </li></ul><ul><u...
About Mig33 <ul><li>Nationality </li></ul><ul><ul><ul><li>Founders from  Australia </li></ul></ul></ul><ul><ul><ul><li>Mov...
Conclusions
Conclusions <ul><li>Social games  = growing fast </li></ul><ul><li>Online games  still > Social games (except Japan) </li>...
Conclusions <ul><li>CJK companies  expanding   globally </li></ul><ul><li>Transition to  digital goods  is a  tidal wave <...
Asia: $7 Billion USA: $1 Billion US market potential $35 Billion ? Digital Goods in 2009 Source:  +8* , October 2009
Digital Goods in 2010 Asia: $10 Billion USA: $2 Billion Source:  +8* , October 2010
$100 billion within the decade? <ul><li>“ The virtual goods market would likely exceed globally $100 billion within this d...
Market Potential? <ul><li>From analog to digital </li></ul><ul><ul><li>Global video game market  $35 billion </li></ul></u...
Globalization Durian Strudel (Singapore)
Ideas, Talent & Markets <ul><li>Ideas First farm game = made in China! </li></ul><ul><li>Dev. Zynga (JP, CN) Playfish (CN)...
Platform Partnership <ul><li>Cyworld, Mixi, RenRen join forces for  one-stop  “Social Application Platform” </li></ul><ul>...
Virtual Goods in Asia The US Gold Rush Begins Benjamin Joffe | CEO, Plus Eight Star Virtual Goods Summit, San Francisco | ...
Nexon <ul><li>Ndoor   M&A 2010.05 Korea </li></ul><ul><li>GameHi   M&A 2010.05  Korea </li></ul><ul><li>BoomBang  Invest. ...
DeNA <ul><li>ngmoco:) M&A USA </li></ul><ul><li>Astro Ape Invest. USA </li></ul><ul><li>Aurora Feint Invest. USA </li></ul...
Tencent <ul><li>Sanook Invest. 2010.08 Thailand </li></ul><ul><li>Comsenz M&A 2010.08 China </li></ul><ul><li>Shenzhen DN ...
Other Chinese Companies <ul><li>Emerging markets, Japan, US </li></ul><ul><li>Rekoo  &  Yicha  doing great with social gam...
China + Russia + South Africa 29% 10% 35% $35B $3B $18B Source:  +8* , October 2010
DST | Digital Sky Technologies <ul><li>Invested $180M in  Zynga </li></ul><ul><li>Invested ~$350M in  Facebook  (~10%) </l...
NASPERS
From Asia to the World Durian Strudel (Singapore)
Paradise Paintball  by  Cmune <ul><li>World’s first  FPS  on social networks! </li></ul><ul><li>Over  500,000 users  in op...
Paradise Paintball |  World’s First Social FPS! www.facebook.com/paradisepaintball     www.cmune.com Disclosure I am an in...
<ul><ul><li>What we do </li></ul></ul><ul><ul><ul><ul><li>Best practices from Asia </li></ul></ul></ul></ul><ul><ul><ul><u...
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  • http://www.chinadaily.com.cn/bizchina/2006-12/26/content_767613.htm
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  • http://www.insidesocialgames.com/2010/10/07/how-design-choices-impact-virtual-goods-purchases-in-games/
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  • http://news.mmosite.com/content/2010-09-25/korean_game_market_value_hits_5_9bn_in_2009.shtml
  • 넥슨 김정주 사장 http://cafe.chosun.com/club.menu.bbs.read.screen?p_club_id=y http://www.koreagamewatch.com/wp/companies-2/nexon-holdingsnxc/oung&amp;p_menu_id=2&amp;message_id=365603
  • http://www.gamepron.com/news/2010/04/12/starcraft-cheating-scandal-rocks-korea/ http://www.the-games-blog.com/bad-week-for-korean-gamers-scandals-and-curfews/
  • http://asiajin.com/blog/2009/09/21/mixi-echo-becomes-mixi-voice-to-chase-twitter/ http://japan.cnet.com/news/business/story/0,3800104746,20414363,00.htm
  • http://asiajin.com/blog/2010/09/10/mixi-launches-social-app-platform-for-smartphone-users-too/
  • http://www.dena.jp/en/ir/pdf/FY10Q1%20Operating%20Results.pdf
  • Launch | 2004 IPO | December 2008 Users | 10 million (2009.4) Under 30 y/o | 61% SNS market share | 12% Monthly PV | 121,8 billion Revenue 1Q09 | 29 MEUR - B2C | 21.6 MEUR - Advertising | 7.4 MEUR Net profit 1Q09 | 9.9 MEUR
  • Gree: please forget our PC site! http://asiajin.com/blog/2009/10/26/
  • Financials | http://eir.eol.co.jp/EIR/View.aspx?cat=yuho_pdf&amp;sid=1483363 Latest quarter | http://eir.eol.co.jp/EIR/View.aspx?template=ir_material&amp;sid=6831&amp;code=3632
  • http://247wallst.com/2010/07/21/google-images-hits-one-billion-page-views-a-day/
  • http://gree.co.jp/news/press/2010/1007.html
  • http://gree.co.jp/news/press/2010/0930.html
  • GREE | http://japan.cnet.com/mobile/story/0,3800078151,20368425,00.htm http://www.nikkeibp.co.jp/news/it08q1/563342/
  • http://ir.cyberagent.co.jp/ir_e/
  • http://ir.cyberagent.co.jp/ir_e/result/2010/pdf/2q_presentation_eng.pdf
  • http://ir.cyberagent.co.jp/ir_e/result/2010/pdf/2q_presentation_eng.pdf
  • http://venturebeat.com/2010/07/07/facebook-emerging-markets/
  • http://www.gamesbrief.com/2010/06/the-online-games-market-was-worth-15-billion-in-2009-and-will-grow-to-20-billion-in-2010/ http://news.cnet.com/8301-13846_3-10374667-62.html
  • http://www.prnewswire.com/news-releases/following-in-tencent-qqs-footsteps-mobile-community-mig33-proves-there-is-real-money-in-developing-markets-89485502.html http://mobile.venturebeat.com/2010/07/15/mig33s-virtual-gifts-business-grows-400-percent-in-second-quarter/ http://mobile.venturebeat.com/2010/03/17/mig33s-move-to-asia-puts-it-head-to-head-with-chinas-mobile-chat-king/
  • http://www.prnewswire.com/news-releases/following-in-tencent-qqs-footsteps-mobile-community-mig33-proves-there-is-real-money-in-developing-markets-89485502.html http://mobile.venturebeat.com/2010/07/15/mig33s-virtual-gifts-business-grows-400-percent-in-second-quarter/ http://mobile.venturebeat.com/2010/03/17/mig33s-move-to-asia-puts-it-head-to-head-with-chinas-mobile-chat-king/
  • http://www.insidevirtualgoods.com/us-virtual-goods/ http://www.virtualgoodsnews.com/2009/10/chinas-online-games-worth-over-900m-in-q2-alone.html
  • http://www.insidevirtualgoods.com/us-virtual-goods/ http://www.virtualgoodsnews.com/2009/10/chinas-online-games-worth-over-900m-in-q2-alone.html Virtual goods = $6B in china, $2B?? In japan, $2B? in Korea = $9B
  • http://blog.digitalchocolate.com/?p=518
  • http://www.koreaittimes.com/story/3969/global-game-hub-center-launched-note-high-hopes
  • http://eir.eol.co.jp/EIR/View.aspx?cat=tdnet&amp;sid=828335
  • http://webcache.googleusercontent.com/search?q=cache:J1-VknkYzToJ:www.koreatimes.co.kr/www/news/biz/2010/07/123_30556.html+nexon+holdings+ceo&amp;cd=1&amp;hl=en&amp;ct=clnk&amp;gl=us&amp;client=firefox-a http://venturebeat.com/2010/10/04/nexon-invests-in-spanish-developer-boombang-games/ http://venturebeat.com/2010/05/27/korean-online-game-firm-nexon-acquires-stake-in-gamehi-for-59m-exclusive/ http://www.industrygamers.com/news/nexon-acquires-mmo-developer-ndoors/ http://finance.yahoo.com/q?s=ERTS
  • http://techcrunch.com/2010/09/24/japanese-company-dena-expands-footprint-in-u-s-invests-in-social-game-studio-astro-ape/ http://techcrunch.com/2010/09/14/japanese-company-dena-buys-mobile-social-gaming-studio-gameview/ http://techcrunch.com/2010/04/02/aurora-feint-debuts-social-gaming-app-for-the-ipad/ http://techcrunch.com/2010/06/15/japanese-gaming-company-dena-sets-up-27-5-million-investment-fund/ http://www.icebreakgames.com/
  • http://techcrunch.com/2010/07/14/naspers-dst/ http://venturebeat.com/2009/12/15/zynga-raises-180m-from-russian-investor-digital-sky-technologies/ http://techcrunch.com/2009/05/26/facebook-takes-that-200-million-investment-from-the-russians-at-a-10-billion-valuation/ http://techcrunch.com/2010/06/20/what-valley-companies-should-know-about-tencent/ http://www.economist.com/node/16539424?story_id=16539424 http://www.thomascrampton.com/social-media/naspers-dst-tencent/ http://www.allfacebook.com/dst-now-owns-10-percent-of-facebook-2010-05 http://www.crunchbase.com/company/digital-sky-technologies http://dst-global.com/About http://eu.techcrunch.com/2010/08/31/dst-completes-purchase-of-odnoklassniki-ru-exits-nasza-klasa-pl/
  • http://www.naspers.co.za/cmsAdmin/uploads/Fact-sheet-Sept-2010_002.pdf http://www.reuters.com/finance/stocks/overview?symbol=NPNJn.J
  • Ben Joffe\'s Virtual Goods in Asia at Virtual Goods Summit West

    1. 1. Digital Goods, Real Billions Asia’s Digital Life & What it means for the West @benjaminjoffe | CEO, +8* Virtual Goods Summit, San Francisco | 2010.10
    2. 2. @benjaminjoffe
    3. 3. 4 years 1 year 5 years
    4. 4. <ul><li>CEO, Plus Eight Star | www.plus8star.com </li></ul><ul><ul><li>Best practices from Asia’s digital space </li></ul></ul><ul><ul><li>Research, Strategy & “Innovation Arbitrage” </li></ul></ul><ul><li>Clients </li></ul>
    5. 5. <ul><li>Speaker </li></ul><ul><ul><li>100+ talks in 16 countries </li></ul></ul><ul><li>Advisor </li></ul><ul><li>Investor in Asia-based global companies </li></ul>Angel Investor, Advisor, Keynote Speaker
    6. 6. My Interests <ul><li>Technology, Sociology and Anthropology </li></ul><ul><li>Virtual economies </li></ul><ul><li>Digital third places </li></ul><ul><li>Artificial artificial intelligence (AAI) </li></ul><ul><li>Online social dynamics </li></ul>
    7. 7. All the world’s a… All the world’s a stage … All the world’s a game … … And one man in his time plays many avatars . William Shakespeare Gabe Zichermann Benjamin Joffe
    8. 8. <ul><li>Introduction Quiz! </li></ul><ul><li>Chapter 1 South Korea </li></ul><ul><li>Chapter 3 Japan </li></ul><ul><li>Chapter 4 China </li></ul><ul><li>Chapter 5 Rest of Asia </li></ul><ul><li>Chapter 6 Conclusions </li></ul><ul><li>Chapter 7 Globalization </li></ul>
    9. 9. Quiz!
    10. 10. Quiz!
    11. 11. Quiz
    12. 12. Quiz
    13. 13. Quiz
    14. 14. Quiz
    15. 15. Quiz
    16. 16. More than Facebook and USA <ul><li>Facebook </li></ul><ul><li>LinkedIn </li></ul><ul><li>QQ (Tencent) </li></ul><ul><li>Qzone </li></ul><ul><li>RenRen </li></ul><ul><li>Kaixin001 </li></ul><ul><li>Xiaonei </li></ul><ul><li>51.com </li></ul><ul><li>Mixi </li></ul><ul><li>Mobile Game Town </li></ul><ul><li>Gree </li></ul><ul><li>Cyworld </li></ul><ul><li>Friendster </li></ul>And more…
    17. 17. Billion Dollar Brands <ul><li>Facebook </li></ul><ul><li>LinkedIn </li></ul><ul><li>QQ (Tencent) </li></ul><ul><li>Qzone </li></ul><ul><li>RenRen </li></ul><ul><li>Kaixin001 </li></ul><ul><li>Xiaonei </li></ul><ul><li>51.com </li></ul><ul><li>Mixi </li></ul><ul><li>Mobile Game Town </li></ul><ul><li>Gree </li></ul><ul><li>Cyworld </li></ul><ul><li>Friendster </li></ul>And more… $B $B $B $B $B $B $B
    18. 18. Market Caps (2010.10) $780M $3.3B $43B $4.2B
    19. 19. ngmoco:) news $400M < 2010 Profit!
    20. 20. South Korea
    21. 21. Cyworld <ul><li>SNS/VG pioneer since 10 years ago </li></ul><ul><ul><li>Stagnant for several years </li></ul></ul><ul><ul><li>“The new MySpace”? </li></ul></ul>
    22. 22. 2009.10 | Nate App Store <ul><li>Leverages Nate’s reach </li></ul><ul><li>Semi-open </li></ul><ul><li>Slow rise (2M users) </li></ul><ul><li>Rev share (70/30) </li></ul>
    23. 23. Portals join the dance <ul><li>. </li></ul><ul><li>Naver Social Apps </li></ul><ul><li>. </li></ul><ul><li>Yozm by Daum </li></ul><ul><li>Results </li></ul><ul><ul><li>Just started </li></ul></ul><ul><ul><li>No social graph </li></ul></ul>
    24. 24. Facebook Rising <ul><li>Facebook in Korea </li></ul><ul><ul><li>Usage growing </li></ul></ul><ul><ul><li>Local office </li></ul></ul><ul><ul><li>Hired from Cyworld </li></ul></ul><ul><li>Why? </li></ul><ul><ul><li>Users bored of Cyworld </li></ul></ul><ul><ul><li>Virtual goods market </li></ul></ul><ul><ul><li>Games market </li></ul></ul>
    25. 25. Virtual Worlds <ul><li>3D virtual worlds still early, even for Korea </li></ul><ul><ul><li>Non-gaming not working </li></ul></ul><ul><ul><li>Nurien (3D social world) fail, revamp into social app </li></ul></ul><ul><li>Only PuppyRed seems successful </li></ul><ul><ul><li>Yet not that big… </li></ul></ul><ul><ul><li>$4M in 2008, equivalent to $40M in US? (= IMVU) </li></ul></ul>
    26. 27. PuppyRed
    27. 28. PuppyRed | Conversion <ul><li>225,000 MAU </li></ul><ul><ul><li>18,000 paying (8%) </li></ul></ul><ul><ul><li>Top 2,000 = 46% sales </li></ul></ul><ul><li>Ideas </li></ul><ul><ul><li>Ratio > Social games </li></ul></ul><ul><ul><li>1% users = 50% sales </li></ul></ul>Source: Inside Social Games, Oct 2010, PuppyRed data from Nov 2009 to Jan 2010
    28. 29. PuppyRed | Monetizing <ul><li>Time investment </li></ul><ul><ul><li>Since reg. </li></ul></ul><ul><ul><li>In-world </li></ul></ul><ul><li>Friends </li></ul><ul><ul><li>More value to items </li></ul></ul><ul><ul><li>Gifts </li></ul></ul><ul><li>Items balance </li></ul><ul><ul><li>Limit free items </li></ul></ul><ul><ul><li>Large inventory (15,000+) </li></ul></ul>Source: Inside Social Games, Oct 2010, PuppyRed data from Nov 2009 to Jan 2010
    29. 30. Online Games <ul><li>Online games market $3.3 billion? </li></ul><ul><li>Leaders Nexon, NHN, NC Soft </li></ul><ul><li>Expanding overseas China, Japan, US, Emerging markets </li></ul>Source: KOCCA
    30. 31. Answer <ul><li>#1 in Online Gaming </li></ul><ul><li>Pioneer in virtual goods </li></ul><ul><li>First MMO in 1996! </li></ul>Min Seo, CEO
    31. 32. Nexon Today <ul><li>Revenue 2009: $561 million (+56%) </li></ul><ul><ul><ul><li>Over half from overseas (first in 2009 !) </li></ul></ul></ul><ul><li>Some famous games </li></ul><ul><ul><ul><li>Kart Rider (200M reg. users) </li></ul></ul></ul><ul><ul><ul><li>Dungeon & Fighter (200M reg. users) </li></ul></ul></ul><ul><ul><ul><li>Maple Story (95M reg. users) </li></ul></ul></ul><ul><ul><ul><li>Mabinogi </li></ul></ul></ul><ul><ul><ul><li>Combat Arms (FPS) </li></ul></ul></ul><ul><ul><ul><li>Sudden Attack (FPS) </li></ul></ul></ul><ul><ul><ul><li>Etc. </li></ul></ul></ul>Source: Nexon
    32. 33. Foreign Players in Korea? <ul><li>Some limited successes… </li></ul>
    33. 35. And… Starcraft Cheating Scandal! <ul><li>April-May 2010 </li></ul><ul><li>Largest scandal in e-sports history in Korea </li></ul><ul><li>16 pro gamers involved in match set-ups & illegal betting. </li></ul>Pro Gamer sAviOr (Ja Mae-Yoon)
    34. 36. Japan
    35. 37. Mobile SNS Make a Killing <ul><li>Revenue total > $1 billion ! </li></ul><ul><li>All 3 have a mobile app platform </li></ul><ul><li>Mass promotion TV, Billboards, Posters… </li></ul><ul><li>Publish + Develop 1 st , 2 nd , 3 rd Party dev. </li></ul>
    36. 38. Mixi <ul><li>Inspired by </li></ul><ul><li>21 million users </li></ul><ul><ul><li>14 million MAU </li></ul></ul><ul><li>Friends (PC) </li></ul><ul><li>Mobile (mobile) </li></ul><ul><li>FB (apps, “like”) </li></ul><ul><li>Twitter (micro-blog) </li></ul><ul><li>Pageviews </li></ul><ul><ul><li>Mobile 28 billion PV </li></ul></ul><ul><ul><li>PC 5 billion PV </li></ul></ul>
    37. 39. Mixi <ul><li>Revenue 2009 $166 million </li></ul><ul><ul><li>Profit margin 20% </li></ul></ul><ul><li>2Q2010 $49M </li></ul><ul><ul><li>Profit margin 25% </li></ul></ul><ul><ul><li>Run rate 2010 $200M </li></ul></ul>
    38. 40. Mixi | Users <ul><li>Gender-Balanced </li></ul><ul><li>90% above 20 y.o. </li></ul>Total Mobile Mobile Total
    39. 41. Mixi | Pageviews Applications Platform 2009.08 Mobile 2009.10 PC Ad prices for mobile = 1/3 of PC price
    40. 42. Mixi | Apps <ul><li>Apps </li></ul><ul><ul><li>PC > 1,000 </li></ul></ul><ul><ul><li>Mobile > 600 </li></ul></ul><ul><li>Apps contribution </li></ul><ul><ul><li>Minor for revenue <10% </li></ul></ul><ul><ul><li>High for PV </li></ul></ul><ul><li>Smartphone UI “Mixi Touch” </li></ul>Machi Tsuku (3M MAU) by Unoh / Zynga Japan Source: Masaru Ikeda @ Asiajin
    41. 43. Answer <ul><li>CEO of DeNA </li></ul><ul><li>Operates “Mobile Game Town”, a top mobile SNS in Japan </li></ul>Tomoko Namba, CEO
    42. 44. DeNA <ul><li>Revenue 2009 $517 million </li></ul><ul><ul><li>Profit 2009 $228 million (44%) </li></ul></ul><ul><li>Revenue 2Q2010 $279 million </li></ul><ul><ul><li>Profit 2Q2010 $138 million (49%) </li></ul></ul><ul><ul><li>90% from digital goods </li></ul></ul><ul><li>On track for $1 billion in 2010 </li></ul>
    43. 45. DeNA | Sales
    44. 46. Mobile Game Town| Sales Breakdown 78% 12% 9% 1% $250 million (2010.04~06)
    45. 47. Mobile Game Town | Users <ul><li>20 million users </li></ul><ul><li>74% over 20 y.o. </li></ul>
    46. 48. Mobile Game Town | Open Platform <ul><li>154 partners companies </li></ul><ul><li>350 titles (July 2010) </li></ul><ul><li>In-house games too </li></ul><ul><li>Avatars in open platform games too </li></ul><ul><li>Common currency </li></ul>
    47. 49. DeNA | Target: Global Leader
    48. 50. Answer <ul><li>CEO of GREE, top mobile SNS in Japan </li></ul><ul><li>#2 youngest self-made billionaire in the world (after Mark Zuckerberg) </li></ul>Yoshikazu Tanaka, CEO
    49. 51. Gree Home Advertising Avatars & items Games Advertising & Affiliates B2C virtual goods (avatar + games)
    50. 52. GREE | Service Strategy Media Ad Sales VG Sales Social Games Virtual Goods SNS Diary/Notes Q&A Community/BBS Page views Members GREE
    51. 53. GREE <ul><li>ARPU = $2.2 / month! </li></ul><ul><li>ARPPU > $20? </li></ul>20M $133M Users Revenue 2010.06 2010.04-06 Digital goods (82%) Ads (18%)
    52. 54. GREE <ul><li>Year to June 2010 </li></ul><ul><ul><li>Sales $430 million </li></ul></ul><ul><ul><li>Operating profit $240 million ( 56% ) </li></ul></ul><ul><li>Year to June 2011 </li></ul><ul><ul><li>Apr-Jun 2010 $133 million </li></ul></ul><ul><ul><li>2011 revenue run rate >$600 million </li></ul></ul>
    53. 55. GREE | Monthly Page Views 35.7 Billion Google Images = 1 billion/day
    54. 56. GREE <ul><li>2010.06 | Open platform </li></ul><ul><li>2010.10 | Non-gaming apps (27 coming up) </li></ul>
    55. 57. 2010.09 | GREE on iPhone ( + Android soon)
    56. 58. Community Safety <ul><li>DeNA </li></ul><ul><ul><li>861 employees… </li></ul></ul><ul><ul><li>Many doing content monitoring </li></ul></ul><ul><ul><li>Monitoring 24/7 since 2006.11 </li></ul></ul><ul><ul><li>“Patrol Center” built in 2008.03 </li></ul></ul>Pipo-kun Tokyo Police Mascot Gree’s Patrol Center
    57. 59. Have you heard of…?
    58. 60. CyberAgent <ul><li>History </li></ul><ul><ul><li>Started as ad network </li></ul></ul><ul><ul><li>Branched into blogs (10M users) , virtual world & social games </li></ul></ul><ul><ul><li>1,900 employees </li></ul></ul><ul><li>Sales 2009 $1.1 billion </li></ul><ul><ul><li>Profit 2009 $55 million </li></ul></ul><ul><li>Sales 2010 (E) $1.1 billion </li></ul><ul><ul><li>Profit 2010 (E) $98 million </li></ul></ul>
    59. 61. | Social Games <ul><li>DeNA 10 titles </li></ul><ul><li>Gree 3 titles </li></ul><ul><li>Mixi 8 titles </li></ul><ul><li>Facebook 7 titles </li></ul>
    60. 62. <ul><li>$4M in July 2010 </li></ul><ul><ul><li>Run-rate 2010 = $50M ( > ngmoco ? ) </li></ul></ul> | Social Games
    61. 63. | 2D Virtual World
    62. 64. <ul><li>Promotion </li></ul><ul><ul><li>Leveraging Ameba’s blog platform </li></ul></ul><ul><ul><li>TV ads </li></ul></ul><ul><li>Paying Users </li></ul><ul><ul><li>80% are 20 to 40 y.o. </li></ul></ul><ul><ul><li>70% female </li></ul></ul><ul><li>Payment </li></ul><ul><ul><li>68% Mobile, 20% Webmoney, 12% Credit Card </li></ul></ul>| 2D Virtual World
    63. 65. <ul><li>April-June 2010 $10 million </li></ul>| Revenue split
    64. 66. | Subs & ARPU <ul><ul><ul><li>4.3 million users (2010.06) </li></ul></ul></ul><ul><ul><ul><li>monthly ARPU = $15 </li></ul></ul></ul>
    65. 67. | Fishing Game
    66. 68. Facebook Making Inroads <ul><li>Facebook in Japan </li></ul><ul><ul><li>Growing (1.2M) </li></ul></ul><ul><ul><li>Mobile JP version </li></ul></ul><ul><li>Why? </li></ul><ul><ul><li>GDP </li></ul></ul><ul><ul><li>Online advertising </li></ul></ul><ul><ul><li>Virtual goods </li></ul></ul><ul><ul><li>Mobile! </li></ul></ul>KDDI’s Summer Line-Up
    67. 69. Foreign Players in Japan <ul><li>Zynga </li></ul><ul><ul><li>Acquired local company Unoh </li></ul></ul><ul><ul><li>JV with Yahoo! Japan (#1 portal) for games </li></ul></ul><ul><li>Chinese social games doing well </li></ul><ul><ul><li>Rekoo , Rakoo , Elex </li></ul></ul><ul><ul><li>… but for how long? </li></ul></ul><ul><li>Online games growing too </li></ul><ul><ul><li>Perfect World (China) acquired local licensee </li></ul></ul>
    68. 70. China
    69. 71. Social Games Growing But… <ul><li>Fragmented market </li></ul><ul><ul><li>4 competing social networks </li></ul></ul><ul><ul><li>Facebook still blocked </li></ul></ul><ul><li>SNS revenue not great (esp. for third parties) </li></ul><ul><ul><li>Low advertising </li></ul></ul><ul><ul><li>Platforms develop games in-house </li></ul></ul><ul><ul><li>Rev share variable & often unattractive </li></ul></ul>
    70. 72. …Online Games Still Dominate <ul><li>Online games biggest money maker </li></ul><ul><ul><li>$900M in 2Q2010 </li></ul></ul><ul><ul><li>Tencent (20%), Shanda (20%), Netease (13%) </li></ul></ul><ul><li>Social networks channel users to MMOs </li></ul><ul><li>China = 30% of global online games market </li></ul><ul><ul><li>$4 billion in 2010? </li></ul></ul>Source: iResearch, Lazard Capital Markets
    71. 73. Answer <ul><li>CEO of Tencent! </li></ul><ul><li>#3 Internet company in the world </li></ul>Ma Huateng (Pony), CEO
    72. 74. QQ IM & QZone
    73. 75. Digital Goods? <ul><li>Identity related </li></ul><ul><li>Game related </li></ul><ul><li>Music related </li></ul><ul><li>And more… </li></ul>
    74. 76. Tencent Bigger Than Ever? <ul><li>Sales 2009 $1.8 billion </li></ul><ul><ul><li>Net profit 2009 42% (= $750M) </li></ul></ul><ul><li>Sales 1H2010 $1.3 billion </li></ul><ul><ul><li>Run rate 2010 (E) $2.5 billion (1/3 games) </li></ul></ul><ul><ul><li>Profit 2010 (E) $1 billion </li></ul></ul><ul><li>Internet penetration still only 30%! </li></ul>
    75. 77. PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joffe / Plus Eight Star Ltd.
    76. 78. PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joffe / Plus Eight Star Ltd. Hardware Innovation: “Shanzhai” ( 山寨 )
    77. 79. PHOTO: MOBILE PHONE, BEIJING, APRIL 2010 © Benjamin Joffe / Plus Eight Star Ltd.
    78. 80. QQ Farm
    79. 81. Rest of Asia
    80. 82. Time-Shifted Markets <ul><li>Vietnam </li></ul><ul><ul><li>~$150M from online games </li></ul></ul><ul><ul><li>86 million people </li></ul></ul><ul><ul><li>4-5 years behind china </li></ul></ul><ul><li>Indonesia </li></ul><ul><ul><li>#3 on Facebook! </li></ul></ul><ul><ul><li>238 million people! </li></ul></ul><ul><ul><li>Behind Vietnam </li></ul></ul><ul><li>Other places: Thailand (66M), Philippines (92M), etc. </li></ul><ul><li>Biggest potential: online games & mobile SNS </li></ul>Virtual Goods Time Machine
    81. 83. Mig33 <ul><li>“We have decided we want to be like QQ for mobile in the rest of the emerging world .” </li></ul><ul><ul><li>Steven Goh, CEO </li></ul></ul>Source: VentureBeat , March 2010
    82. 84. Mig33 <ul><li>“We have decided we want to be like QQ for mobile in the rest of the emerging world .” </li></ul><ul><ul><li>Steven Goh, CEO </li></ul></ul>Source: VentureBeat , March 2010 Made in China Not iPhone! Not rich countries!
    83. 85. About Mig33 <ul><li>Nationality </li></ul><ul><ul><ul><li>Founders from Australia </li></ul></ul></ul><ul><ul><ul><li>Moved to Silicon Valley </li></ul></ul></ul><ul><ul><ul><li>Relocated to Singapore </li></ul></ul></ul><ul><li>Users </li></ul><ul><ul><ul><li>India, Indonesia, Bangladesh, Vietnam, South Africa… </li></ul></ul></ul>
    84. 86. Conclusions
    85. 87. Conclusions <ul><li>Social games = growing fast </li></ul><ul><li>Online games still > Social games (except Japan) </li></ul><ul><li>Massive ads (TV, billboards, etc.) if ROI is good! </li></ul><ul><li>Media properties entering social (portals, blogs) </li></ul><ul><li>SNS can channel users to MMOs with better ROI </li></ul><ul><li>Mobile great in emerging & advanced markets </li></ul>
    86. 88. Conclusions <ul><li>CJK companies expanding globally </li></ul><ul><li>Transition to digital goods is a tidal wave </li></ul><ul><li>Epiphanies in the West like Korea 10 years ago </li></ul>
    87. 89. Asia: $7 Billion USA: $1 Billion US market potential $35 Billion ? Digital Goods in 2009 Source: +8* , October 2009
    88. 90. Digital Goods in 2010 Asia: $10 Billion USA: $2 Billion Source: +8* , October 2010
    89. 91. $100 billion within the decade? <ul><li>“ The virtual goods market would likely exceed globally $100 billion within this decade .” </li></ul>Trip Hawkins CEO, Digital Chocolate Founder, Electronic Arts Source: Trip’s OMG Blog , April 2010
    90. 92. Market Potential? <ul><li>From analog to digital </li></ul><ul><ul><li>Global video game market $35 billion </li></ul></ul><ul><ul><li>In Korea >50% of ALL GAMES = online games </li></ul></ul><ul><li>Potential = all games in the world </li></ul><ul><ul><li>Global game market $120 billion </li></ul></ul><ul><ul><li>With digital goods dominant model? </li></ul></ul>
    91. 93. Globalization Durian Strudel (Singapore)
    92. 94. Ideas, Talent & Markets <ul><li>Ideas First farm game = made in China! </li></ul><ul><li>Dev. Zynga (JP, CN) Playfish (CN) Kabam (CN) </li></ul><ul><li>Market Facebook (JP, KR, SG, SEA w/ MOL) Zynga (JV with Softbank for JP) Rockyou (JP), Others? </li></ul>
    93. 95. Platform Partnership <ul><li>Cyworld, Mixi, RenRen join forces for one-stop “Social Application Platform” </li></ul><ul><li>Catching up on analytics to leapfrog Facebook? </li></ul><ul><li>For reference </li></ul><ul><ul><ul><li>Cyword 25M users (1999, Korea) </li></ul></ul></ul><ul><ul><ul><li>Mixi 21M users (2004, Japan) </li></ul></ul></ul><ul><ul><ul><li>RenRen 150M users (2005, China) </li></ul></ul></ul>Source: Mixi , September 2010
    94. 96. Virtual Goods in Asia The US Gold Rush Begins Benjamin Joffe | CEO, Plus Eight Star Virtual Goods Summit, San Francisco | 2009.10 Chinese family in Oregon during the Gold Rush
    95. 97. Nexon <ul><li>Ndoor M&A 2010.05 Korea </li></ul><ul><li>GameHi M&A 2010.05 Korea </li></ul><ul><li>BoomBang Invest. 2010.10 Spain </li></ul><ul><li>Disney offering $6 billion ? (rumor) </li></ul><ul><ul><ul><li>EA’s market cap is $5.8 billion… (2010.10) </li></ul></ul></ul>Source: +8*, Nexon
    96. 98. DeNA <ul><li>ngmoco:) M&A USA </li></ul><ul><li>Astro Ape Invest. USA </li></ul><ul><li>Aurora Feint Invest. USA </li></ul><ul><li>GameView M&A USA </li></ul><ul><li>Icebreak M&A USA </li></ul><ul><li>TX.com.cn M&A China </li></ul><ul><li>Social Gaming Fund of $27.5 million </li></ul>
    97. 99. Tencent <ul><li>Sanook Invest. 2010.08 Thailand </li></ul><ul><li>Comsenz M&A 2010.08 China </li></ul><ul><li>Shenzhen DN M&A 2010.04 China </li></ul><ul><li>DST Invest. 2010.04 Russia </li></ul><ul><li>Riot Games Invest. 2009.09 USA </li></ul><ul><li>Outspark Invest. 2008.01 USA </li></ul>
    98. 100. Other Chinese Companies <ul><li>Emerging markets, Japan, US </li></ul><ul><li>Rekoo & Yicha doing great with social games </li></ul><ul><li>Shanda buys Mochi Media (2010.01, $80M) </li></ul>
    99. 101. China + Russia + South Africa 29% 10% 35% $35B $3B $18B Source: +8* , October 2010
    100. 102. DST | Digital Sky Technologies <ul><li>Invested $180M in Zynga </li></ul><ul><li>Invested ~$350M in Facebook (~10%) </li></ul><ul><li>Invested $135M in Groupon </li></ul><ul><li>Acquired ICQ for $188M </li></ul><ul><li>Mail.ru (portal), Astrum (games) </li></ul><ul><ul><li>70% of all PV in the Russian speaking Internet </li></ul></ul>
    101. 103. NASPERS
    102. 104. From Asia to the World Durian Strudel (Singapore)
    103. 105. Paradise Paintball by Cmune <ul><li>World’s first FPS on social networks! </li></ul><ul><li>Over 500,000 users in open beta </li></ul><ul><ul><li>“ Paradise Paintball – you feel like you’re playing a console game.” - Gareth Davis, Games Platform Manager, Facebook </li></ul></ul><ul><ul><li>“ Abandoned my clan, crops have withered and my cafe has gone bankrupt. Thank you for creating the first real game on Facebook!” – Facebook user </li></ul></ul>
    104. 106. Paradise Paintball | World’s First Social FPS! www.facebook.com/paradisepaintball www.cmune.com Disclosure I am an investor in Cmune
    105. 107. <ul><ul><li>What we do </li></ul></ul><ul><ul><ul><ul><li>Best practices from Asia </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Digital Research & Strategy </li></ul></ul></ul></ul><ul><ul><li>Clients sample </li></ul></ul><ul><ul><li>Contacts </li></ul></ul><ul><ul><ul><ul><li>[email_address] </li></ul></ul></ul></ul><ul><ul><ul><ul><li>@benjaminjoffe </li></ul></ul></ul></ul><ul><ul><ul><ul><li>www.slideshare.net/plus8star </li></ul></ul></ul></ul>Asia is part of your world too! +81 | Japan +82 | Korea +86 | China Telecom & Internet + Added Value * High quality
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