Asian Eye For The Gaming Guy TGX Edition

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Update of the "Asian Gaming" preso for the TGX Conference in Singapore on September 2011.

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Asian Eye For The Gaming Guy TGX Edition

  1. 1. Asian  Eye   for  the   Gaming  Guy  @benjaminjoffe  |  CEO,  +8*  |  Plus  Eight  Star   TGX  |  Singapore,  September  2011  
  2. 2. Asia,  Gaming  and  Me  •  Background   •  10+  years  in  China/Japan/Korea   •  Researched  all  top  SNS  &  virtual  worlds  in  Asia   •  Advised  IMVU,  Kabam,  DeNA…   •  Organized  40  Mobile  Monday  in  Beijing   •  Now  building  a  social  startup  in  Singapore  •  Gaming   •  “SoLoMo”  startup  Newt  Games  in  2003  (JP)   •  Founding  Partner  of  Cmune  (#1  FPS  on  FB)  
  3. 3. Content  1.  What  is  Asia?  2.   China  3.   Japan  4.   South  Korea  5.   Succeeding  in  Asia  6.  New  Asian  wisdom  
  4. 4. 1.  What  is  Asia?  
  5. 5. The  Trouble  with  “Asia”   1.  Different  infrastructures   2.  Different  GDP  /  capita   3.  Different  distribuCon  channels   4.  Different  payment  soluCons   5.  And  somedmes  different  regulaCons   6.  Highly  compeCCve   (and  of  course:  language)  
  6. 6. Users   ©PlusEightStar,  2011  -­‐  www.plus8star.com   Country   USA   China   Japan   South  Korea   PopulaCon   310  mln   1,330  mln   130  mln   50  mln   Internet  Users   245  mln   485  mln   100  mln   40  mln   Mobile  Users   295  mln   900  mln   120  mln   50  mln   3G  Users   120  mln   80  mln   115  mln   30  mln  Sources:  CIA  World  Fact  Book,  MIIT,  Japan  TCA,  SKT,  March  2011.  Numbers  are  rounded  for  easier  comparisons  
  7. 7. 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  ConnecCons  Measured  >5  Mbps  (%)   Sources:  Akamai  4Q10,  Japan  TCA,  SKT,  ITU,  IDA,  Internet  World  Stats,  March  2011  
  8. 8. H   Source:  GapMinder.org  A  R   MONEY  D  
  9. 9. What  is  this?  
  10. 10. What  is  this?   Answer:  Tencent’s   new  HQ  in  Shenzhen  
  11. 11. #Gimougous  Companies  •  China   –  Tencent  made  $1B  in  1Q2011  (40%  net  profit,  50%  games)   –  10  others  listed  on  Nasdaq,  NYSE,  HKSE   –  Renren  (SNS)  listed  on  NYSE  for  $5B  in  April  2011  •  Japan   –  DeNA  $1.3B  (2010)   –  GREE  $600  million  (2010)  •  Korea   –  Nexon            $1B  (2010  est.)   –  NHN  (Naver,  Hangame)  $1.3  billion  (2010,  35%  games)   –  NC  So            $525  million  (2010)  
  12. 12. Social  Networks  in  Asia   China   Accounts   Korea   Accounts   Japan   Accounts  Facebook   n.a.   Facebook   4M   Facebook   3M   Qzone   Mobage   505M   Cyworld   25M   25M  (Tencent)   (DeNA)   51.com   178M   Naver   n.a.   GREE   25M   Renren   117M   Daum   n.a.   Mixi   25M  Pengyou   Yahoo   101M   3M  (Tencent)   Mobage  Kaixin001   100M   ©PlusEightStar,  2011  -­‐  www.plus8star.com  
  13. 13. Just  an  idea  about  staff…  •  Twiuer      500   •  Renren      1,500  •  Facebook      2,500   •  Tencent      12,000  
  14. 14. Digital  Goods  &  Currencies  in  2010  Asia:  $18  Billion   USA:  $2  Billion   Source:  Plus  Eight  Star,  2011  
  15. 15. $18  billion     Digital  Goods  &  Currencies  in  Asia   Online  Games   Social  Plavorms   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  
  16. 16. Digital  Labor  
  17. 17. 2.  China  
  18. 18. 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  
  19. 19. Educadon   Primary  School   11.3%   9.2%   Junior  Middle  School  12.0%   27.5%   Senior  Middle  School   Professional  Training  College   40.1%   Undergraduate  EducaCon  and   The  Above   Source:  CNNIC,  2010.07  
  20. 20. 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  
  21. 21. Online  Games  •  120  million  online  game  users  •  $5  billion  in  2010   Unit:  billion  $US   7   6.2   6.6   5.6   5   4.1   3.2   2008   2009   2010   2011   2012   2013   2014   Sources:  2008-­‐2014  Chinas  Online  Game  Market  Annual  Report  by  Ministry  of  Culture,  iResearch,  2011  
  22. 22. Market  Shares   Others 16% Tencent 31% Giant 4%Changyou 7% Netease 16% Perfect World 7% Shanda Game 12% Source:  iResearch,  2010  
  23. 23. Revenue  &  Profit  4,000   Unit:  million  US$   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   Kingsoy   NetDragon   CDC   The9   Renren   Game   World   Interacdve   Source:  Companies,  2010  
  24. 24. Market  Cap   $53.5B  8   Unit:  billion  US$  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   Kingsoy   NetDragon   CDC   The9   Renren   Game   World   Interacdve   Source:  Companies,  2011.04  except  Renren,  2011.05  
  25. 25. Tencent   Other 21% Online Games 49% Non-gaming digital goods 30%$3B  in  2010,  $1B  in  1Q2011  
  26. 26. Renren   SNS  +  Game  Dev.   Value-­‐Added  Services   Includes  Nuomi   AdverCsing   (Groupon  Clone)   -­‐  Mostly  ads  sold  “per  day”   13%   -­‐  Limited  targedng   42%   45%   Online  Games  Top  MMORPG  =  31%  of  game  rev.   (14%  of  total)   $76.5m  in  2010  (Loss)  
  27. 27. Walled  Garden   Item   Figure   Third-­‐party  ApplicaCons   1,000   Revenue  from   $3.5  million   Plahorm  in  2010   (Renren  share)   Renren:  52%  (avg.)   Revenue  Share   Developer:  48%  Most  developers  Look  Overseas  or  at  Qzone  
  28. 28. 3.  Japan  
  29. 29. Japan’s  Gaming  Market  •  Online  Games   –  $1.5B  in  2010   –  Casual  Games  &  MMOs  from  Korea,  China   –  Shiy  to  Free-­‐to-­‐Play  •  Mobile  &  Social  boom   –  Konami:  Mobile/Social!  ($10M/month  on  GREE)   –  Mobile  social  gaming  ecosystem  >$500M  in  2010  
  30. 30. The  Real  Thing:  Mobile  Social  Gaming   Self-­‐published  +  Open  plavorms              Some  ads   SNS   +   Free  games   +   Homepage   Virtual  goods  
  31. 31. GREE  Service   AdverCsing   -­‐   Banners  &  Ce-­‐ups  GREE  top  page   AdverCsing   20%   banner   Avatars   -­‐   CustomizaCon  with  various  items   (clothes,  accessories,  etc..)   Digital  goods   Social  Games   80%   -­‐   Integrated  with  SNS  funcCons  
  32. 32. GREE  Games   (8  self-­‐published)  
  33. 33. Revenue  of  Leading  Plavorms  Net  sales  and  profitability  (million  USD)   Adverdsing  revenue  vs.  digital  currency*   * Considering  that  there  are  no  other  source  of  revenues  
  34. 34. Not  Only  Kids  &  Housewives   Teens   20s   30s   Male   Female  
  35. 35. DENA  &  GREE  •  Self-­‐Published  Games  +  Walled  Gardens  •  Proprietary  digital  currencies  •  70/30  Revenue  share  •  $500  million  paid  to  third-­‐pardes  (GREE,  2010)   Mobile  Social  Apps  Make  Money  in  Japan  
  36. 36. Very  Local  Payment  
  37. 37. CyberAgent  |  $18M  in  1Q2011  CyberAgent  Subsidiaries   37  Ctles  across  6  plahorms   Source:  CyberAgent,  2011.03  
  38. 38. #1  Virtual  World  |  Pigg  
  39. 39. Pigg  by  CyberAgent  •  6M  reg.  users  bring  fortunes   •  $20M  in  1Q2011   •  As  much  as  Angry  Birds!   •  $100M+  in  2011?  
  40. 40. Mini-­‐Games  for  $1M  •  Each  game  generated  $1.2M  in  December  2010  
  41. 41. On  Android  
  42. 42. 4.  South  Korea  
  43. 43. Digital  Goods  Market  $100  mln   $10  mln   $10  mln  $1  bln   Online  Games   Secondary  Market   Social  Plavorms   Social  Games   $4.7  bln   Virtual  Worlds  
  44. 44. Online  Games  |  Key  Players  
  45. 45. Revenue  &  Profits  (2010)   Revenue   Profit  1,400   1,310   Unit:  MUSD  1,200  1,000   935   800   607   600   525   427   376   400   251   243   200   111   47   0   Nexon   NHN   NC  Soy   Neowiz   CJ  Internet   (Hangame)   >50%  of  Nexon’s  revenue  is  overseas  
  46. 46. 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  sCll   4.0   $300  million!   2.0   1.1   0.3   0.0   Nexon   NHN   NC  Soy   Neowiz   CJ  Internet   (Hangame)  
  47. 47. 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  Muldplayer  Online  Role-­‐Playing  Game  RTS    Real-­‐Time  Strategy  FPS    First-­‐Person  Shooter   Source  :  Gametrix,  2011.02  
  48. 48. Secondary  Markets   6M  Users     $480M   Growth  of    ItemBay  users   Unit:  million   Source  :  ItemBay  
  49. 49. Social  Plavorms  •  Fragmented   –  Naver  Social  Apps   –  Nate  /  Cyworld   –  Facebook  Korea   –  Daum  Yozm  •  All  early  stage   –  Limited  revenue  (<$10M  in  2010)   –  Facebook  growing  fast  but  weak  payment  soludons  
  50. 50. 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
  51. 51. 5.  Succeeding  in  Asia  
  52. 52. Defining  Success  1.  Revenue  2.  Profit  3.  Usage  /  Brand  recognidon  4.  Development  5.  Learning  
  53. 53. Western  Companies   China   Japan   Korea   Zynga  (w/  Tencent)   Zynga   OperaCons   WoW   PopCap  (w/  Renren)   RockYou   EA  (FIFA  Online)   PopCap   WoW  (+Netease)   PopCap   Kabam  Licensing  /  Partners   Crossfire  (+Tencent)   Crowdstar   RockYou   Angry  Birds   Playfish   Cmune   Ubisoy   PopCap   Zynga   Zynga   Development   Playfish   Playfish   RockYou   Kabam   Cmune  Ideas  too!  The  First  Farm  Game  was  made  in  China  
  54. 54. Wealth  of  Plahorms:  How  much  for  you?  •  China   –  Qzone    $M  for  happy  few  (~10)   –  Renren    Sdll  small   –  Others    Unclear  •  Korea   –  Sdll  small:  total  market  was  $10M  in  2010  •  Japan   –  Mobile  mostly,  but  hundreds  of  $mln!   –  Chinese  companies  first  movers  (Rekoo,  Rakoo,  etc.)  
  55. 55. iOS  Mobile  Rankings  |  China   (games  &  udlides)   Nubee   PvZ   FHM  
  56. 56. iOS  Mobile  Rankings  |  Japan   (RPGs,  Adventure)   (Book)   (Adv.  Game)   BioHazard   (RTS,  SEGA)   (Photo)   (Social  RPG)   (Slot)   (Slot)   (AR  Game)   (Adv.  Game)   (Racing  Game)   (Pokemon)   (Music)   (Pirate  RPG,  by  GREE)   (Book)   (Hostess  SIM)   (BioHazard)   (RPG)   (RPG)  
  57. 57. iOS  Mobile  Rankings  |  Korea   (English,  Tools,  Games)   (English)   (Tool)   (Tool)   (Xvid  player)   (English)  
  58. 58. Case  Studies  •  PopCap      Pragmadc  and  organic  •  Angry  Birds  Soon  big  in  China?    •  Cmune      Made  from  China  
  59. 59. Uberstrike      by  Cmune  •  #1  FPS  on  Facebook  •  Made  from  China  +  Global  reach  •  We’re  hiring!  •  www.facebook.com/uberstrike   Disclosure:  I  am  an  investor  in  Cmune  
  60. 60. Mac  App  Store  Uberstrike.com   Facebook  Cyworld  (Korea)  
  61. 61. 6.  New  Asian  Wisdom  
  62. 62. Interesdng  New  Things  1.   Nano-­‐transacdons  2.   SNS  as  MMO  funnels  3.   New  social  plavorms  4.   Fourth  GeneraCon  Digital  Goods  Model  5.   Smartphone  opportunity  6.   Various  deals  &  partnerships  
  63. 63. 1.  Nano-­‐Transacdons  •  Tencent  had   –  1  Q  Coin  =  1  RMB  =  0.1  EUR  •  They  introduced   –  1  Q  Point  =  0.1  RMB  =  0.01  EUR  •  …for  goods  &  dme-­‐based  “nano-­‐transacCons”  
  64. 64. 2.  SNS  as  MMO  funnels  •  Renren  revenue  more  from  games  than  ads  •  MoneCzaCon  much  higher  in  MMOs  •  RetenCon  is  beuer  too  •  What’s  your  ROI?  
  65. 65. 3.  New  Social  Plavorms  •  Naver,  Nate,  Daum      Portals  •  QQ,  NateOn          IM  •  Ameba              Blog  plahorm  •  DeNA,  GREE          Mobiles  +  Smartphones  
  66. 66. 4.  Fourth  Generadon  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)  
  67. 67. e.g.  ZT  Online  2  •  Giant  Interacdve  no  longer  sells  items  in  ZTO2!   –  Trading  is  main  revenue  model   –  Reward  acdve  users  with  items   –  Let  users  decide  on  the  right  price   –  5%  commission  on  transacCons  •  Benefits   –  Capture  secondary  market   –  Avoid  “one-­‐price  for  all”  for  digital  goods   –  Ensure  fairness   –  MoCvate  users  
  68. 68. 5.  Smartphone  Opportunity  •  Smartphones  booming  in  Japan  &  Korea   •  Japan:  50%  of  new  phones  in  2011  (today:  5M+  iPhones)   •  Korea  >  10M  smartphones  •  China  has  lots  of  smartphones  &  feature  phones   •  Beijing  Apple  store  is  #1  worldwide  (>Times  Square)   •  Android  spreading  but  app  stores  fragmented   •  Building  apps  from  China  works   Disclosure:  I  am  an  investor  in  MyGengo  
  69. 69. 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)  and  Mig33  (SE  Asia)   –  DeNA  acquires  NGMOCO  (US)  •  Korea   –  Various  M&As   –  Some  investments  by  Nexon  in  US  
  70. 70. Thanks!   More  about  “Innovadon  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    

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