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    Asians are virtual, what about us Asians are virtual, what about us Presentation Transcript

    • Asians are virtual already How long before we are too? Benjamin Joffe | CEO, Plus Eight Star Ltd. Virtual World Conference| Second Life, 2010.09
    • The Challenges • "Who would pay for things that don't exist?" • "Asians are not like us" • "Online friends are not real"
    • “Love Plus” by Konami
    • Just Married In Guam (Nov. 2009) Fiancée
    • Gartner’s Hype Cycle Are we here?
    • Second Life’s Second Life Past the Trough of Disillusionment
    • Why me? • SL: Limited flight hours • Avatar provided • Asia? Not Asian • East time in San Francisco :-)
    • However… 4 years 1 year 5 years @benjaminjoffe
    • What I do • CEO, Plus Eight Star | www.plus8star.com • Digital Strategy & “Innovation Arbitrage” • Best practices from Asia’s web and mobile world • Partner, Cmune | www.cmune.com • Online gaming company • First 3D FPS on Facebook, MySpace and Apple.com • Founder | Mobile Monday Beijing • Monthly forum for mobile professionals • 36 events, 130 speakers, 3,000 participants • Angel Investor, Advisor, Keynote Speaker
    • The future is already here – it is just unevenly distributed William Gibson Science Fiction Writer
    • INNOVATION & DIGITAL CULTURES
    • Social Aspects of Technology “When a technology becomes boring, that's when the social effects become interesting.” Clay Shirky, Professor, NYU Author, Here Comes Everybody
    • Today • Half-way through the valley of disillusion • Nothing better than SL since 2003?! • Business issues getting sorted thanks to games
    • Understanding Online Behavior
    • 20+ years of research… Howard Rheingold Habitat (Lucasfilm, 1986)
    • Not new!
    • Plan 1. Learning from Asia 2. Semantic prisons 3. Learning from offline behavior 4. Some ideas about the future, and our role
    • Chapter 1. Learning from Asia
    • Digital Goods Market for 2009 Asia $7 bln USA $1 bln Sources: www.plus8star.com (Asia) - Inside Virtual Goods, Oct 2009 (US)
    • Virtual Worlds? • Most virtual worlds have failed • Online games make millions • Social games too, and grow fast
    • Quiz
    • Answers World’s #3 largest Internet company after Google and Amazon #2 youngest self- made billionaire in the world after Mark Zuckerberg of Facebook Pony Ma, CEO, Tencent Yoshikazu Tanaka, CEO, GREE
    • Market Caps (May 2010) $35.3B $4.2B $2.5B $900M
    • QQ IM & QZone
    • More on Tencent • Revenue 2009 $1.8B • Net Profit Margin 40% • Revenue from Digital Goods 90% – Digital currency – Multiple payment methods – Purchase, rental, subscriptions…
    • 11:30 Shin Takamiya Advertising Gree Home Advertising & Affiliates | 25% Avatars & items B2C virtual Games goods | 75% 60% avatars 40% games
    • Mobile App Platform since Oct.09 (330 apps as of February 2010) City Building Harvest Moon Shopkeeper Furauni By Liveware By Liveware By Geisha Tokyo By Konami
    • Online Games in China • 2009: $3.75B • 105 million game users – SNS games = 87.7% (92 mln) – MMOs = 22.7% (24 mln) – Single-player PC games = 36.1% (38 mln)
    • Is Asia’s success unique? Two major shifts 1. Business shift 2. Mindset shift
    • Business shift • Packaged software legacy • Online business models – Subscription – Digital goods • Obvious in Facebook and IMVU • Second Life “pivoting”
    • Chinese Online Games Companies • Listed on NASDAQ • NETEASE NTES $3.93B • SHANDA SNDA $2.65B • SHANDA GAMES GAME $1.56B • PERFECT WORLD PWRD $1.20B • CHANGYOU CYOU $1.49B • GIANT INTERACTIVE GA $1.64B • Listed on HKSE • TENCENT 0700 $30.6B • NET DRAGON 0777 $250M • KINGSOFT 3888 $595M Data as of: 21 June 2010
    • Total Market Cap • And the total is… • 8 Gaming Companies $13.3B • TENCENT $30.6B • TOTAL $43.9B • Comparables • ACTIVISION BLIZZARD $14.27B • ELECTRONICS ARTS $5.28B • TAKE TWO INTERACTIVE $853M • UBISOFT $817M • ATARI Delisted from NASDAQ • TOTAL $21.2B Data as of: 21 June 2010
    • More Comparables • Korea • NHN (Naver, Hangame) $7.6B • NC SOFT $3.8B • NEXON Private ($6B offer?) • Japan • SEGA SAMMY $4.1B • KONAMI $2.5B • SQUARE ENIX $2.3B • NAMCO BANDAI $2.2B • CAPCOM $1.2B • (NINTENDO $44.2B) Data as of: 21 June 2010
    • Virtual Worlds • Strengths – Exploration – Creativity – Online Economy • Weaknesses – No social graph – No fun! • IMVU, Second Life “pivoting”
    • (from Web 2.0 Conference, 2010.05) • Revenue 2009: $22 million (x2) – Became profitable & cash flow positive • Revenue 2010: $44 million? (x2) • Begin pivot… Virtual World to Social Entertainment – “From Dress Up to Level Up” – Game Mechanics – 2D and 3D Games
    • Pigg (by CyberAgent)
    • Pigg (by CyberAgent) • 1Q2010 Revenue >$7M – 3M+ users (2010.04) – TV ads! • Paying Users – 80% are 20 to 40y.o. – 70% female • Payment – 68% Mobile, 20% Webmoney, 12% Credit Card
    • Proven Models Spreading • Asian companies expanding – Bring online & social games overseas – Acquire IP from Japan, US, Europe? • Huge opportunities in emerging markets – “Tencents” of… Russia, Brazil, Vietnam, Indonesia… • Globalization of dev & publishing abilities
    • Remaining Barriers in the West • Semantic prisons • Payment infrastructure – Getting better, but still far off • Industry legacy – Content production & operation
    • Chapter 2. Semantic Prisons
    • Mindset Shift: Semantic Prisons
    • “There are plenty of semantic prisons which do not permit us to think straight” Aldous Huxley, The Human Situation
    • Cell 1: Virtual (Goods)
    • Virtual??? • Connotations – “Not real” – Valueless – “Who would be stupid enough to pay for that!” • Opposite of Real = Imaginary
    • The reality • It’s Digital but it’s Real • Pure symbolic value
    • Virtual Goods = Digital FMCG? • “Virtual Goods are Consumer Products” – Cary Rosenzweig, CEO, IMVU Inc. – 7 years at P&G!
    • Already buying virtual goods?
    • Field Research: Halloween (San Francisco)
    • Field Research: Santa Con (London)
    • Analog vs. Digital Experiences World Cup! Concerts, Travels, Encounters…
    • Cell 2: (Video) Games
    • Video Games • Connotations – Childish – Waste of time • Adults don’t play games! • Updated terminology – Video = Digital (is this needed?) – Games = Entertainment
    • Benefits of games • Great way to learn • Games already sell digital goods – Three quarters of digital goods sold in Asia – Main revenue maker for games on Facebook • Spending to have fun / a better experience
    • Field Research: My Aunt (Mountain View)
    • Conclusion (Get out of Jail Free Card) • “Virtual” terrible term. Call it “digital”. • “Game” is “entertainment” • “Virtual Goods are Consumer Goods” – Cary Rosenzweig, CEO, IMVU
    • Chapter 3. Offline Behavior
    • Let’s look into • Social Psychology • Zoology • Anthropology • Social Dynamics
    • Sociology (esp. Social Psychology) Stanley Milgram (1933-1984) “Small world experiment” / 6 degrees (1967) “Behavioral Study of Obedience” (1963)
    • Sociology (esp. Social Psychology) Philip Zimbardo (1933~) Stanford Prison Experiment (1971) The Lucifer Effect (2007)
    • Learning 1 People’s behavior shaped by their environment
    • Zoology Desmond Morris (1928~) “The Naked Ape” (1967) “The Human Zoo” (1969)
    • Learning 2 Behavior guided by mammal instincts
    • Anthropology Robin Dunbar (1947~) (Dunbar Number)
    • Learning 3 Socialization (“strong ties”) limited by brain structure
    • Social Dynamics Erik von Markovik “Mystery” (1971~) “Mystery Method”
    • Learning 4 Attraction mechanisms exist online just as well
    • Chapter 4. Possible Future
    • Obama Outfitted With 238 Motion Capture Sensors For 3-D Record Of Presidency
    • …or not.
    • Help fix what is broken in offline socialization • Engagement & Disengagement • Multi-tasking • Social skills & Social dynamics • Virtual worlds as additional physicality: The concept of digital third place
    • Toward the digital third place
    • The hope with games • Path of least resistance: nothing to explain! • Game = 3D world with rules, fun and targets • Games as excuses for social interactions • Games drive revenues
    • Paradise Paintball | World’s First Social FPS! www.cmune.com www.facebook.com/paradisepaintball
    • Online Socialization = Necessary skill for the future?
    • Business is online = Online identity & reputation
    • Increase awareness of the risks to avoid them
    • Celebrate the benefits
    • Thanks! www.plus8star.com benjamin@plus8star.com +81 | Japan benjamin0123 +82 | Korea +86 | China http://twitter.com/benjaminjoffe Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value * High quality www.slideshare.net/plus8star