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Korean Social Game Market Trend Report (3rd Quarter 2010)-English

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Want to learn more about the social gaming landscape in Korea. This report include figures from leading social app platform, Nate.

Want to learn more about the social gaming landscape in Korea. This report include figures from leading social app platform, Nate.

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    Korean Social Game Market Trend Report (3rd Quarter 2010)-English Korean Social Game Market Trend Report (3rd Quarter 2010)-English Document Transcript

    • Korean Social Game Market Trend Report 2010 Third Quarter (Vol.1)
    • Korean SNG Market Trend Report 2010 Third Quarter (Vol. 1) By Sung-Hwan Ahn Rubicon Games Inc. Editor’s Note Unlike Facebook and other major social game platform, not too many about Korean social game industry is revealed to the public. On one hand, it may be an “Asian courtesy” for platform service providers to hide its customers’ private information from their competitors. On the other hand, it may create an entrance barrier and suppress new developers from entering the market. Nevertheless, believing in the fact that freedom of information is harmless to fair market competition, Rubicon Games Inc. suggested Nate AppStore Open Social Team to share their statistics and information as much as possible. Gratefully, Nate AppStore agreed upon revealing more information for both domestic and foreign developers who are interested in publishing their games in Korea. However, please note that stats were given in bundles of genre, due to privacy issues. To find out more about Korean social gaming industry, visit http://blog.playrubi.com or email info@playrubi.com or devsquare@nate.com. Executive Summary - Nate AppStore continues to accumulate more users. However, user increase rate has been slowly depreciating since May and fluctuates throughout third-quarter. - Nate AppStore’s revenue has been steadily increasing since its launch in September 2009, with a big leap in May 2010. In the third quarter, however, the revenue increase has been slowed down in August and bounces back in September. - The performance of game genres is still heavily dependent on few successful games. Mostly because there are not too many games in the market yet. - Very exceptionally, sports and RPG games were strongly male-dominant with gender ratio of 85 to 15. Sports and RPG’s revenue tripled and doubled respectively throughout the third quarter, covering 10% of total revenue of the market. User loyalty was also strong showing high ARPPU (Average Revenue Per Paying Users) and conversion rate from non- paying users to paying users - Simulation games (Pet, City Building, Farming, Aquarium, and Business Admin.) are still most profitable, covering more than 85% of the total profit. - More female than male users are playing simulation games with higher ARPU (Average Revenue Per User), but when it comes to ARPPU, male users are paying even more. 2
    • Market Overview Nate AppStore has grown steadily s since it took off in September 2009. Users are continuously increasing, exceeding three million users in September 2010. New user inflow rate, . however, have gradually decreased since early May, and has been fluctuating during third quarter. With the initial inflow of successful simulation games in May, the market has experienced a drastic increase in revenue. During third quarter, however, the revenue increase has become stagnant. <Line graph 1: Accumulated and New User of Nate AppStore> <Line graph 2: Total Revenue of Nate AppStore AppStore> 3
    • Dependence on few successful Games Korean social gaming market is yet heavily dependent on few successful games. The user increase rate, revenue, conversion rate, and even stickiness of a genre fluctuate in accordance with few major successful games. This is mostly due to the lack of games in the market, which makes it possible for individual games to affect the overall market trend. Stats for RPG, for example, show that user increase rate and revenue suddenly jumps during September with the introduction of Friends Fighters, which accumulated more than 60,000 mulated users in just one month. <Line graph 3: Revenue and number of installs in RPG genre> : On the contrary, Pet & Management genre experienced a drastic fall in revenue, marking approximately 200% decrease for two consecutive months Users continue to install and play pet months. games but are not spending as much as they use to. (*Please note that games filed u Please under Pet & Management genre are raising avatars or pets*) <Line graph 4 Revenue and number of installs in Pet & Management genre> 4
    • The latest management game Happy Idol, which was released in mid June, seems to be the only game in the genre that is steadily accumulating more users. FooPet”, RockYou! Super Pet, Pet Society was all released before June but is already experiencing a high churn rate, mostly due to lack of updates and management. It is also worthy of notice that with the exception of Happy Idol, all the rest of pet games are developed and published by foreign developers. Successful localization and continuous manageme is thus a key factor to keep the game alive. management <Line graph 5: Accumulated Installs of Pet & Management genre> <Source from Rubicon Games Statistic Team> City building games are also experiencing a continuous downtrend in total revenue. Again, the same problem is observed in the City Building game genre which shows heavy dependence on Happy Town. There are only two City games, Happy Town and Street Stall King but even Street Stall King went out of service as of October. <Line graph 6 Revenue and number of installs in City Building (SIM) Games> venue 5
    • Overall, the phenomenon implies that Korean social gaming market still has a big room for many new games to penetrate, which is good news for new developers who are still hesitant over entering the market. The trend also shows that users are willing to spend and quit at the same time, thus demanding developers to continuously develop and update better games regularly to maintain positive momentum. The Rise of Male Users Before few male-biased games became successful, the consensus of Korean social gaming industry strongly believed that success of a game depends on how much they can attract more female users. As a result, most of the games were female-biased, introducing cute graphics and simple game plays. However, few games seemed to have taken the road not taken: Homerun King, Baseball Wars, and Friends Fighters. These strictly male-biased games proposed an alternative business model to many developers. The user gender ratio for Sports Games is strongly male-biased. Homerun King is an arcade type sports game whereas to Baseball Wars is a team management type game. Relatively, Baseball Wars have a bigger entrance barrier since the game is statistics-based rather than visual, unlike Homerun King. <Picture 1: Homerun King game play> <Picture 2: Baseball Wars game play> 6
    • <Pie graph 1: Gender ratio Sports Games> : What is more interesting is the revenue model (See line graph 5). According to the stats, . revenue of Sports genre soared in August together with the launch of Baseball Wars. However, the overall revenue slightly decrease along with the ARPU in September. decreased Nevertheless, N regarding the stats for ARPPU the average revenue continues to increase during Aug. – Sept ARPPU, period, which can be inferred that spending users are becoming even more loyal to the game and hat there were more inflow of non- -paying users during the period. <Line graph 7: Revenue & Number of Installs in Sports genre > umber 7
    • <Line graph 8: ARPU of Sports Games : Games> <Line graph 9 ARPPU of Sports Game> Sports genre revenue continues to incline, covering 9% of the total revenue of Nate by September. It is significant in the sense that ratio of total user still covers only 2%. Considering the fact that puzzle games are only earning 2% of the total revenue while covering quarter of the user pool, sports games are highly productive. (Note (No that 12 out of 20 (60%) puzzle games have payment system) 8
    • <Pie graph 2: Total Ratio of Installs and Revenue (July-Sept)> 9
    • RPG genre too, is showing a male male-biased distribution. With three to one male-dominant gender ratio, RPG revenue continue to increase over the past three months. continues se With the release of the successful game Friends Fighters in early September, the revenue increases more than 250% ncreases compared with previous month. Here again, Friends Fighters is a statistic statistic-based martial arts battle game, which is strongly male male-biased. <Line graph 10: Revenue of RPG : RPG> It is observable that more users are becoming more loyal to the genre, with ARPU increasing. In the broader perspective male users are spending more on average but taking a perspective, n closer look at the ARPPU, female users are paying just as much as male users. , Again, this phenomenon is also found in the Sports genre, thus female users general show smaller generally conversion rate from non-paying to paying user to paying user but once converted, they were paying spending just as much as male users. <Line graph 11: ARPU of RPG> 10
    • <Line graph 12: ARPPU RPG> Overall, going niche by targeting male users is partially proven successful with number of users, conversion rate, and ARPU growing steadily. . With bigger pool of male audien audience, developers will have more options to consider for their next game. Simulation Games Still Strong till Simulation games (Farming, Aquarium, City Building, Business Ad Administration, Pet & Management) still covers the majority of the market share throughout third quarter. Although the user pool is just one-third of the total users, almost 90% of the total revenue comes from third simulation games. (See pie graph 3 and 4) e Moreover, 84% (16 out of 19 of the simulation 19) games incorporated payment system whereas only 37% (26 out of 70) of non system, ) non-simulation games adopted payment. Among the simulation games, revenue of Aquarium genre soars while Pet & Pets Management drastically falls. . There are only two games filed under Aquarium genre (Aqua Story and Sunshine Deep Sea), whereas Farming and Pet & Management genre have seven and four games filed under respectively respectively. With just two successful games, Aquarium genre’s revenue in September is almost equivalent to that of Farming and Pet & Management put together. Moreover, when it comes to daily active users (DAU), Aquarium genre exceeds all the rest of the , simulation games all put together. (123,130 to 117,803). s 117,803). After taking the lead since May, Aquarium genre continues to accumulate more DAUs and revenue throughout third quarter. 11
    • <Pie graph 3: Total User ratio of Simulation and Non-simulation Games> <Pie graph 4 Total Revenue ratio of Simulation and Non-simulation Games> <Line graph 13: Revenue of Simulation Games Games> 12
    • <Line graph 14: Monthly Average DAU of Simulation Games <Line graph 15: Monthly Average DAU of all Genre Genres> Female Dominant, yet Male Users Show Strong Purchasing Power If sports and RPG genre were male dominant, simulation games are favored by female users. (See bar graph 1) Among the genres, Pet & Management and Business Administration genre were especially female-biased; most of the games filed under these two genres were -biased; female-oriented. Regarding Business Administration games, out of four games, two games were oriented. restaurant management, and others remaining were fashion boutique and public bathroom management. Revenue-wise, however, male users came much stronger in ARPPU. . Despite of the low ARPU, a segment of loyal male users were spending more than female users in most of the genres. It implies that female users have higher co conversion rate but with lower ARPPU whereas male users have a segment of loyal users with stronger purchasing power despite of the low conversion rate. 13
    • <Bar graph 1: User Increase of Simulation Games by Gender> <Bar graph 2: ARPU & ARPPU of Simulation Games Games> 14
    • Conclusion History of Korean social game industry is rather short. It was only recently that Nate AppStore celebrated its first anniversay in September, and not until 2010 3rd quarter that major Korean portal sites such as Naver and Daum jumped into the market. However, tracing back the accomplishments Nate AppStore has shown so far, the future of the Korean social game industry looks bright and promising. Nate AppStore so far grew using Cyworld as a leverage, which has 25 million user pool. However it is slowly expanding its audience from Cyworld to NateOn messenger (35 mil.) as well. Moreover, as major players are now launching their own platforms through various channels, the market size and potential user pool continues to increase. Today social games are not only established on SNS but also penetrating through Naver blogs (18 mil.), Naver Cafes (6 mil.), and even micro-blogs such as Yozm (N/A) and Me2Day (2 mil). Thus Korean social gaming industry is now holding more than 86 million potential user pool. Also taking into note that more than 15% of the Korean population is smart phone users, social games now have various channels for convergence and become more ubiquitous. Overall, the Korean social game industry is yet a blue ocean and has just entered its second phase of growth with market expansion. Also, since Korean users have been gradually educated to spend on SNS over the past 10 years, it is likely that the paying habits from SNS would trickle-down to social games without repulsion. And as the stats shows, Nate AppStore has just begun to witness this trend with revenue steadily increasing. Competing platforms like Naver and Daum are also likely to see this trend as more users accept social games. Together with more inflow of quality games and developers, the market is assured to benefit both developers and platforms. 15