Asian Eye For The Game Guy

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Talk on Asia's gaming opportunities given at the Web Game Conference in Pairs in May 2011. Asians got game!

Talk on Asia's gaming opportunities given at the Web Game Conference in Pairs in May 2011. Asians got game!

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  • 1. Asians  Got  Game  Looking  into  Asia’s  Gaming  Opportuni4es   @benjaminjoffe  |  CEO,  Plus  Eight  Star   Web  Game  Conference  |  Paris,  May  2011  
  • 2. Survey  Do  you  play  games?  
  • 3. Survey  Have  you  been  to  Asia?  
  • 4. HELLO! MY NAME IS@benjaminjoffe! Ask me!
  • 5. “Mister  Asia”  –  Mike  Butcher,  TechCrunch  
  • 6. 4  years   1  year   5  years  
  • 7. #HowAsianAreYou?   4%   2%   2%   Chinese   8%   Japanese  8%   42%   Korean   French   American   33%   German   Singaporean  
  • 8. CEO,  Plus  Eight  Star  www.plus8star.com  
  • 9. “Innova;on  Arbitrage”  Best  Prac*ces  from  Asia’s  Digital  Space  
  • 10. Co-­‐Founder,  Mobile  Monday  Beijing  (41  events,  150  speakers,  4,000  par4cipants)  
  • 11. Angel  Investor,  Advisor,  Keynote  Speaker   •  Speaker    100+  talks  in  17  countries   •  Advisor   •  Investor  in  Asia-­‐based  global  companies  
  • 12. Quiz!  Which  Western  Gaming  Company   Succeeded  in  Asia?  
  • 13. Answer   It  depends  on  how  you  define  “success”  
  • 14. Pain-­‐au-­‐chocolat  1.   What  is  Asia?  2.   China  3.   Japan  4.   South  Korea  5.   Succeeding  in  Asia  6.   From  Asia  with  Love  
  • 15. 1.  What  is  Asia?  
  • 16. The  Trouble  with  “Asia”   1.  Different  infrastructures   2.  Different  GDP  /  capita   3.  Different  distribu;on  channels   4.  Different  payment  solu;ons   5.  And  some4mes  different  regula;ons   6.  Highly  compe;;ve   (and  of  course:  language)  
  • 17. USERS  Source:  GapMinder.org  
  • 18. H   Source:  GapMinder.org  A  R   MONEY  D  
  • 19. Users   USA   Japan   South  Korea   China  Unit:  million   ©PlusEightStar,  2011  -­‐  www.plus8star.com   2,000   1,500   1,000   500   0   Popula4on   Internet  Users   Mobile  Users   3G  Users   Sources:  CIA  World  Fact  Book,  MIIT,  Japan  TCA,  SKT,  March  2011  
  • 20. Users   ©PlusEightStar,  2011  -­‐  www.plus8star.com   Country   USA   China   Japan   South  Korea   Popula;on   310  mln   1,330  mln   130  mln   50  mln   Internet  Users   245  mln   460  mln   100  mln   40  mln   Mobile  Users   295  mln   860  mln   120  mln   50  mln   3G  Users   120  mln   50  mln   115  mln   30  mln  Sources:  CIA  World  Fact  Book,  MIIT,  Japan  TCA,  SKT,  March  2011.  Numbers  are  rounded  for  easier  comparisons  
  • 21. Networks   100% 3G:  98%   Web:  60%   Avg.  8.5  Mbps   80%3G  Users  (%)   3G:  60%  (W-­‐CDMA  only)   Web:  72%   60% Avg.  14  Mbps   C hi 3G:  40%   40% n Web:  34%   Avg.  5.0  Mbps   a   20% 3G:  5%   Web:  0.5%   ©PlusEightStar,  2011  -­‐  www.plus8star.com   Avg.  1.0  Mbps   0% 0% 20% 40% 60% 80% Internet  Connec;ons  Measured  >5  Mbps  (%)   Sources:  Akamai  4Q10,  Japan  TCA,  SKT,  ITU,  IDA,  Internet  World  Stats,  March  2011  
  • 22. What  is  this?  
  • 23. What  is  this?   Answer:  Tencent’s   new  HQ  in  Shenzhen  
  • 24. #Gimougous  Companies  •  China   –  Tencent  made  $1  billion  in  1Q2011  (40%  net  profit)   –  10  others  listed  on  Nasdaq,  NYSE,  HKSE   –  Renren  (SNS)  listed  on  NYSE  for  $5  billion  in  April  2011  •  Japan   –  DeNA    $1.3  billion  (2010)   –  GREE    $600  million  (2010)  •  Korea   –  Nexon  $1  billion  (es4mate  for  2010,  30%  from  games)   –  Naver    $1.3  billion  (2010)   –  NC  So`  $525  million  (2010)  
  • 25. Social  Networks  •  China   •  Korea   –  QQ          674M   –  Cyworld      25M   –  Q  Zone        490M   –  Daum,  Naver,  Nate   –  QQ  Microblog    160M   –  Pengyou        101M   •  SE  Asia   –  RenRen        117M   –  Mig33  (mobile)  40M   –  Sina  Microblog    100M   –  Kaixin001      178M?   –  51.com        100M?  •  Japan   –  Mobage  (mobile)    24.5M   –  GREE  (mobile)    23.8M   –  Mixi  (web+mobile)  22.6M           Numbers  are  “registered”  and  “ac4ve”  accounts  as  of  2011.05,  depending  on  sources  
  • 26. Social  Platorms  in  Asia   China   Accounts   Korea   Accounts   Japan   Accounts  Facebook   n.a.   Facebook   4M   Facebook   2.9M   Qzone   Mobage   505M   Cyworld   25M   24.5M  (Tencent)   (DeNA)   51.com   178M   Naver   n.a.   GREE   23.8M   Renren   117M   Daum   n.a.   Mixi   22.6M  Pengyou   Yahoo   101M   3M  (Tencent)   Mobage  Kaixin001   100M   ©PlusEightStar,  2011  -­‐  www.plus8star.com  
  • 27. Digital  Goods  &  Currencies  in  2010  Asia:  $18  Billion   USA:  $2  Billion   Source:  Plus  Eight  Star,  2011  
  • 28. $18  billion     Digital  Goods  &  Currencies  in  Asia   Online  Games   Social  Platorms   Social  Games   Virtual  Worlds   Tencent  IM,  etc.   Secondary  Market  10,000   Unit:  MUSD   8,000   2,000   6,000   910   200   1,000   100   4,000   5,000   4,700   2,000   2,000   ©PlusEightStar,  2011  -­‐  www.plus8star.com   1,500   0   China   Korea   Japan  
  • 29. 2.  China  
  • 30. Users  Demographics   1.1%   0.2%   7.9%   11-­‐19   35.8%   20-­‐29  19.6%   30-­‐39   40-­‐49   50-­‐59   60  and  above   35.4%   Source:  CNNIC,  2010.07  
  • 31. Educa4on   Primary  School   11.3%   9.2%   Junior  Middle  School  12.0%   27.5%   Senior  Middle  School   Professional  Training  College   40.1%   Undergraduate  Educa;on  and   The  Above   Source:  CNNIC,  2010.07  
  • 32. Income   2.8%   2.3%   without  income   8.1%   10.1%   Below  $76   $77-­‐153   20.5%   $154-­‐229  14.4%   $230-­‐306   $307-­‐458   14.4%   13.5%   $459-­‐764   13.9%   $765-­‐1222   Above  $1222   Source:  CNNIC,  2010.07  
  • 33. Online  Games  •  120  million  online  game  users  •  $5  billion  in  2010   Unit:  billion  $US   7   6.2   6.6   5.6   5   4.1   3.2   2008   2009   2010   2011   2012   2013   2014   Sources:  2008-­‐2014  Chinas  Online  Game  Market  Annual  Report  by  Ministry  of  Culture,  iResearch,  2011  
  • 34. Market  Shares   Others 16% Tencent 31% Giant 4%Changyou 7% Netease 16% Perfect World 7% Shanda Game 12% Source:  iResearch,  2010  
  • 35. Revenue  &  Profit  4,000   Unit:  million  US$   Revenue   Profit   2,966  3,000  2,000   1,228   852   866  1,000   689   LOSS   336   365   329   197   180   128   176   203   148   81   213   111   123   56   5   22   77   0   Tencent   Shanda   Shanda   Netease   Perfect   Changyou   Giant   Kingsox   NetDragon   CDC   The9   Renren   Game   World   Interac4ve   Source:  Companies,  2010  
  • 36. Market  Cap   $53.5  8   Unit:  billion  US$  7   6.2  6   5  5   4.5  4  3   2.4  2   1.7   1.7   1.1  1   0.764   0.29   0.1   0.165  0   Tencent   Shanda   Shanda   Netease   Perfect   Changyou   Giant   Kingsox   NetDragon   CDC   The9   Renren   Game   World   Interac4ve   Source:  Companies,  2011.04  except  Renren,  2010.05  
  • 37. Digital  Goods  Dominate  a  Crowded  Market  New  Game  Titles  (2010)  2,000  1,500  1,000   500   0   Charged by time Charged by item others Sources:  Online  game  industry  in  2010  year-­‐end  summary  report,  CNZZ,  2011  
  • 38. Tencent   Other 21% Online Games 49% Non-gaming digital goods 30%$3B  in  2010,  $1B  in  1Q2011  
  • 39. Renren   SNS  +  Game  Dev.   Value-­‐Added  Services   Includes  Nuomi   Adver;sing   (Groupon  Clone)   -­‐  Mostly  ads  sold  “per  day”   13%   -­‐  Limited  targe4ng   42%   45%   Online  Games  Top  MMORPG  =  31%  of  game  rev.   (14%  of  total)   $76.5m  in  2010  (Loss)  
  • 40. Renren  Digital  Currency  •  “Renren  Beans”  since  2007.10  •  Sales  channels   Type   Channel   1.  Bank  cards   2.  Mobile  Payment   Online   3.  SMS   4.  Third-­‐party  (Alipay,  Yeepay)   1.  News  stands   Offline   2.  Convenience  Stores   3.  Internet  cafes  
  • 41. Walled  Garden   Item   Figure   Third-­‐party  Applica;ons   1,000   Revenue  from   $3.5  million   Plamorm  in  2010   (Renren  share)   Renren:  52%  (avg.)   Revenue  Share   Developer:  48%  Most  developers  Look  Overseas  or  at  Qzone  
  • 42. 3.  Japan  
  • 43. Online  Games  Market  in  Japan   Online  game  users  accounts   (unit:  million,  incl.  mul4ple  accounts   by  same  user)   100   89   80   75  $1.5B  in  2010   59   60   42   40   28   19   20   0   2004   2005   2006   2007   2008   2009   Source:  Japan  Internet  White  Paper  2010  –  Japan  Online  Game  Associa4on,  2010.07  
  • 44. MMOs  &  Casual  Games  Origin  of  PC  MMOs  in  2009   Origin  of  PC  casual  games  in  2009   Korea  &  China  Dominate  MMOs   Source:  Japanese  Online  Game  Associa4on,  2010.07  
  • 45. Business  Models  Shix  Online  games    and  their  revenue  model,  evolu4on  since  2005   Source:  Japanese  Online  Game  Associa4on,  2010.07   F2P  over  40%  in  2010  
  • 46. The  Real  Thing:  Mobile  Social  Gaming   Self-­‐published  +  Open  platorms              Some  ads   SNS   +   Free  games   +   Homepage   Virtual  goods  
  • 47. DENA  &  GREE  •  Self-­‐Published  Games  +  Walled  Gardens  •  Proprietary  digital  currencies  •  70/30  Revenue  share  •  $500  million  paid  to  third-­‐par4es  (GREE,  2010)   Mobile  Social  Apps  Make  Money  in  Japan  
  • 48. CyberAgent  |  $18M  in  1Q2011  CyberAgent  Subsidiaries   37  ;tles  across  6  plamorms   Source:  CyberAgent,  2011.03  
  • 49. 4.  South  Korea  
  • 50. Digital  Goods  Market  $100  mln   $10  mln   $10  mln  $1  bln   Online  Games   Secondary  Market   Social  Platorms   Social  Games   $4.7  bln   Virtual  Worlds  
  • 51. Online  Games  |  Key  Players  
  • 52. Revenue  &  Profits  (2010)   Revenue   Profit  1,400   1,310   Unit:  MUSD  1,200   1,000  1,000   800   607   600   40%?   525   427   400   251   243   200   111   47   0   Nexon   NHN   NC  Sox   Neowiz   CJ  Internet   (Hangame)   >50%  of  Nexon’s  revenue  is  overseas  
  • 53. Market  Cap  (2011.04)  14.0   13.0  12.0   Unit:  billion  USD  10.0   9.2   8.0   6.0   5.4   This  is  s;ll   4.0   $300  million!   2.0   1.1   0.3   0.0   Nexon   NHN   NC  Sox   Neowiz   CJ  Internet   (Hangame)  
  • 54. Ranking  in  Internet  Cafes     Name Category Publisher Market Share AION MMORPG NCsoft 15.6% Tera MMORPG NHN (Hangame) 14.2% Sudden attack FPS CJ Internet 10.6% WarCraft 3 RTS Blizzard (US) 5.9% StarCraft RTS Blizzard (US) 5.0% Neowiz Games + FIFA Online Sports 4.3% Electronic Arts (US) World of Warcraft MMORPG Blizzard (US) 4.0% Lineage 2 MMORPG Ncsoft 3.5% Dungeon & Fighter MMORPG Nexon 3.2% Lineage 1 MMORPG Ncsoft 2.9%MMORPG  Massively  Mul4player  Online  Role-­‐Playing  Game  RTS    Real-­‐Time  Strategy  FPS    First-­‐Person  Shooter   Source  :  Gametrix,  2011.02  
  • 55. Secondary  Markets   6M  Users     $480M   Growth  of    ItemBay  users   Unit:  million   Source  :  ItemBay  
  • 56. Social  Platorms  •  Fragmented   –  Naver  Social  Apps   –  Nate  /  Cyworld   –  Facebook  Korea   –  Daum  Yozm  •  All  early  stage   –  Limited  revenue  (<$10M  in  2010)   –  Facebook  growing  fast  but  weak  payment  solu4ons  
  • 57. Cyworld  |  Digital  Currency   Type of payment Credit card Regular credit cards Mobile billing Reported on the mobile phone bill 1588 ARS Call 1588 and bill on fixed line Rainbow point SK Telecom’s membership E-Station pointBox SK’s web-to-phone system point OK Cashbag SK Group’s loyalty points service BC Top point BC card’s point service KB Total point KB bank’s point Hyundai Card point Hyundai credit card point PointRO(KT point) KT’s point system Culture Coupon Coupon from Ministry of Culture Book & Culture Coupon Coupon from Book Organization Happy Money Coupon Independent firm’s coupon Teen Cash Independent firm’s coupon Cyworld Coupon Cyworld’s coupon
  • 58. 5.  Succeeding  in  Asia  
  • 59. Defining  Success  1.  Revenue  2.  Profit  3.  Usage  /  Brand  recogni4on  4.  Development  5.  Learning  
  • 60. Western  Companies   China   Japan   Korea   Zynga   Opera;ons   n.a.   RockYou   Blizzard  (WoW)   Gamelox   EA  (FIFA  Online)   PopCap   Zynga  (rumor)   PopCap   Kabam   Licensing   PopCap   Crowdstar   RockYou   Playfish   Cmune   PopCap   Zynga   Zynga   Playfish   Playfish   Development   Kabam   RockYou   Cmune   Gamelox   AntVoice  Ideas  too!  The  First  Farm  Game  was  made  in  China  
  • 61. Wealth  of  Plamorms:  How  much  for  you?  •  China   –  Qzone    $M  for  happy  few  (~10)   –  Renren    S4ll  small   –  Others    Unclear  •  Korea   –  S4ll  small:  total  market  was  $10M  in  2010  •  Japan   –  Mobile  mostly,  but  hundreds  of  $mln!   –  Chinese  companies  first  movers  (Rekoo,  Rakoo,  etc.)  
  • 62. Case  Studies  •  Blizzard      Korea’s  religion  •  EA          FIFA  Online  in  Korea  •  PopCap      Pragma4c  and  organic  •  Angry  Birds  Soon  big  in  China?    •  Cmune      Made  from  China  
  • 63. Case  Studies  •  Blizzard      Korea’s  religion  •  EA          FIFA  Online  in  Korea  •  PopCap      Pragma4c  and  organic  •  Angry  Birds  Soon  big  in  China?    •  Cmune      Made  from  China  
  • 64. PopCap  •  $100  million  in  revenue  (2010),  famous  games   –  Dev.  team  in  Shanghai  for  years   –  No  business  in  China  •  Partnerships   –  Japan:  with  Taito  for  mobile  social  games   –  Korea:  with  NC  Sox  for  web  games   –  China:  PvZ  on  Renren   •  First  ever  social  adapta4on   •  Exclusive  launch  announced  2  days  ago  
  • 65. Rovio  •  Angry  Birds  |  #1  smartphone  game  in  the  world   –  $20M  (1Q2011),  $100M+  in  2011   –  100M  200M  downloads  globally   –  Free  DL  +  Fake  birds  on  sale  in  China  •  Wants  China,  Japan  and  Korea!   –  Partnerships  with  mobile  carriers   –  Partnerships  with  handset  makers  (Nokia,  etc.)   –  Will  release  on  feature  phones  in  China  
  • 66. Uberstrike      by  Cmune   #1  First-­‐Person  Shooter  on  Facebook   •  Made  from  China  +  Global  reach   •  Combines  East  &  West  exper4se   •  500,000  MAU  =  Top  3D  MMO  on  Facebook   •  Also  on  Mac  App  Store!  Disclosure:  I  am  an  investor  in  Cmune  |  www.facebook.com/uberstrike  
  • 67. “You  can  learn  more  about  someone   in  an  hour  of  FPS  PvP     than  in  years  of  Farmville”   –  Sun  Tzu  
  • 68. 6.  From  Asia  with  Love  
  • 69. Interes4ng  New  Things  1.   Nano-­‐transac4ons  2.   SNS  as  MMO  funnels  3.   New  social  platorms  4.   Fourth  Genera;on  Digital  Goods  Model  5.   Smartphone  opportunity  6.   Various  deals  &  partnerships  
  • 70. 1.  Nano-­‐Transac4ons  •  Tencent  had   –  1  Q  Coin  =  1  RMB  =  0.1  EUR  •  They  introduced   –  1  Q  Point  =  0.1  RMB  =  0.01  EUR  •  …To  allow  items  and  4me  “nano-­‐transac;ons”  
  • 71. 2.  SNS  as  MMO  funnels  •  Renren  revenue  more  from  games  than  ads  •  Mone;za;on  much  higher  in  MMOs  •  Reten;on  is  be•er  too  •  What’s  your  ROI?  
  • 72. 3.  New  Social  Platorms  •  Naver,  Nate,  Daum      Portals  •  QQ,  NateOn          IM  •  Ameba              Blog  plamorm  •  DeNA,  GREE          Mobiles  +  Smartphones  
  • 73. 4.  Fourth  Genera4on  Model?  •  1G    Box  game  /  Pay-­‐per-­‐download    (e.g.  COD)  •  2G    Time-­‐based  (1  hour  to  1  year)  (e.g.  WoW)  •  3G    Digital  goods:  permanent        (e.g.  IMVU)  •  3.5G  Digital  goods:  rental          (e.g.  QQ)  •  4G?  Digital  goods:  trading      (e.g.  ZT  Online  2)  
  • 74. e.g.  ZT  Online  2  •  Giant  Interac4ve  no  longer  sells  items  in  ZTO2!   –  Trading  is  main  revenue  model   –  Reward  ac4ve  users  with  items   –  Let  users  decide  on  the  right  price   –  5%  commission  on  transac;ons  •  Benefits   –  Capture  secondary  market   –  Avoid  “one-­‐price  for  all”  for  digital  goods   –  Ensure  fairness   –  Mo;vate  users  
  • 75. 5.  Smartphone  Opportunity  •  Smartphones  booming  in  Japan  &  Korea   –  Japan:  50%  of  new  phones  in  2011,  already  5M+  iPhones   –  Korea  >  10M  smartphones  •  China  has  lots  of  smartphones  &  feature  phones   –  Beijing  Apple  store  is  #1  worldwide  (>Times  Square)   –  Making  money  with  apps  in  China  s4ll  tough   –  Android  spreading  but  app  stores  fragmented   –  Building  apps  from  China  is  totally  fine  •  Localize  apps!   –  Angry  Birds  #1  iOS  App  in  China   –  Akinator  (France)  is  a  top  paid  app  in  Japan   –  Do  it  quick  with  MyGengo     Disclosure:  I  am  an  investor  in  MyGengo  
  • 76. 6.  Deals  &  Partnerships  •  China   –  Funds  by  Tencent,  Giant,  Shanda  (>$1B)  •  Japan   –  Funds  by  DeNA,  GREE,  Mixi  (>$1B?)   –  GREE  acquires  OpenFeint  (US)   –  GREE  partners  with  Tencent  (CN)   –  DeNA  acquires  NGMOCO  (US)   –  So`bank  invests  in  Japan,  China,  Korea  •  Korea   –  Various  M&As   –  Some  investments  by  Nexon  in  US  
  • 77. To  look  further…  •  We  helped  Kabam  with  market  entry  •  We  helped  IMVU            with  best  prac4ces  •  We  helped  Ci;bank  with  ecosystem  mapping  
  • 78. Merci!  -­‐  Thanks!   More  about  “Innova4on  Arbitrage”  www.plus8star.com  benjamin@plus8star.com     +81  |  Japan  benjaminjoffe   +82  |  Korea   +86  |  China  @benjaminjoffe   Telecom  &  Internet  www.linkedin.com/in/benjaminjoffe     +  Added  Value   *  High  quality  www.slideshare.net/plus8star