Gaming guide to big in asia

The Gaming guide to Big in Asia Misconcep3ons & Reali3es @benjaminjoﬀe ceo, +8*

@benjaminjoﬀe

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Startup Mentor!

Investor in Global Startups from Asia!

CEO of +8* | Research & Market Entry to Asia! EUROPE USA ASIA

12 years abroad – my cultural DNA!I spent most of my working life (11 years) overseas, especially in Japan, China, South Korea and USA. My cultural DNA has become rather complex.

Asia!This is Asia!

But “Asia” does not cover the diversity!

China Japan South Korea Singapore Indonesia … Russia Turkey … 48 Countries! 48 countries with major differences!

“Asia was a concept of Western CivilizaEon.” This is probably the best deﬁnition of Asia!

There is no Asia •  GDP •  GDP/capita •  Demographics •  Language(s) •  Religion(s) •  Web & Mobile Infrastructures •  Dominant Players •  Payment systems Just consider the radical differences…!

To give some perspective: view from Taiwan!

…with translation!

“Just by going to China, we could double the audience,” –  Peter Relan, CEO, Crowdstar Doubling audience is not doubling revenue!

4 Asian countries in top 10? How big are they?!

Country PopulaEon GDP/Capita (USD) China 1.3 billion 4,500 Japan 128 million 42,000 South Korea 49 million 20,000 Taiwan 23 million 20,000 Hong Kong 7 million 32,000 Singapore 5 million 57,000 Malaysia 28 million 9,500 Indonesia 240 million 3,900 Vietnam 90 million 1,500 Philippines 94 million 2,500 Thailand 65 million 5,800 North Korea 24 million 1,000 Not all markets are created equal!

Country PopulaEon GDP/Capita (USD) China 1.3 billion 4,500 Japan 128 million 42,000 South Korea 49 million 20,000 Taiwan 23 million 20,000 Hong Kong 7 million 32,000 Singapore 5 million 57,000 Malaysia 28 million 9,500 Indonesia 240 million 3,900 - 1 user in Japan is possibly worth 101,500 Vietnam 90 million inChinaPhilippines in terms of monetization  94 million 2,500   Thailand 65 million 5,800 North Korea 24 million 1,000 - HK, SG and Malaysia are smaller but quitedecent medium-sized markets!

Country PopulaEon GDP/Capita (USD) China 1.3 billion 4,500 Japan 128 million 42,000 On the contrary, the million South Korea 49 countries below are 20,000 going to be hard to monetize due 20,000 Taiwan 23 million to low Hong Kong 7 million 32,000 GDP/capita.! Singapore 5 million 57,000 Malaysia 28 million 9,500 Indonesia 240 million 3,900 Vietnam 90 million 1,500 Philippines 94 million 2,500 Thailand 65 million 5,800 North Korea 24 million 1,000 4 Asian countries in top 10? How big are they?!

Mobile Users China Japan Korea Total 1.02 billion 127 million 50 million Android ? 15 million 17 million (es3mates) iPhone <20 million <10 million 3 million (es3mates) 3G Users 10% 100% 70% - China, Japan, Korea have embraced Android.!- iPhones are for the 1% richer in China!- Very few reliable numbers are available (sendme yours!)!

Online Game Companies Market Cap China $bln Japan $bln Korea $bln Tencent 57.5 GREE 6.3 Nexon 8 Netease 7.8 DeNA 4.6 NHN (Hangame) 10.5 Renren 2.6 Mixi <1 NCso` 5.3 Shanda 2.2 Shanda Games 1.4 as of May 5, 2012 Giant 1.2 Changyou 1.2 Facebook (100) NetDragon (91) <1 Ac3vision Blizzard 13.8 Perfect World <1 Zynga 6.1 The9 <1 EA 5.0 Gaming giants dominate in each country.! Very few foreign players do well.!

Reality of China •  Local partners are preky much mandatory for foreigners to get any distribu3on and operate. •  Successes are rare, generally accidental, and mostly by dominant players –  Mobile Angry Birds, Fruit Ninja, a few more –  Web Korean companies via licensing Easiest to do in China is iOS!

Reality of China •  Social networks are… TENCENT –  Likle money on Renren –  No Facebook •  Online Game Giants –  Developing their own games –  Licensing from Korea –  Rarely from other places (WoW) –  Excep3on: League of Legends (but bought by Tencent) Web-based is almost impossible alone!

Reality of China •  iPhone is for the 1% •  Android is fragmented –  Numerous app stores –  Lots of copies –  Adver3sing don’t make much money iOS is easier, Android still hard!

Top Ranking Apps on iPhone Source: AppAnnie.com!Foreign games and apps do well!

Top Ranking Apps on Android Source: AppAnnie.com!Android is much harder + Competing stores!

Tencent in 2011 •  Revenue US$4.5 billion •  Mobile 10% •  Adver3sing 7% –  Net Proﬁt US$1.6 billion (35%) •  Services •  Qzone 552 million MAU •  Pengyou 202 million MAU •  Open plaqorm 40,000 apps –  More than 10 have 10m+ MAU Money: 10m MAU in China = 1m MAU in USA!

Renren in 2011 •  Revenue US$118.0 million –  ~50% from adver3sing •  Net Loss US$5 million •  Net loss does not count sale of eLong for US$50 million •  Promo3ng Nuomi, its Groupon clone (US$30 million) •  Curb your enthusiasm! Renren is not quite the “Facebook of China” yet!

Reality of Japan Smartphone games market Core Gamers 2014 PC More than $1.2 billion Overall Console market size Game About $3.6 billion growing software Smartphone games Official sites, $1 billion Mobile Social games over $1.8 billion Casual Gamers Arcade games, Card games, Edutainment Mobile / Smartphone games is going really big!

Mobile Social Games in Japan •  GREE –  Revenue $785 million –  Acquired OpenFeint ($104m) –  Acquired Funzio ($210m) •  DeNA –  Revenue $1.4 billion –  Acquired Ngmoco ($400m) •  Konami –  $360 million from social games in 2011 The platforms are making most of the money, but somethird-party do well. However, Most Western companies failed on those platform so far (including Zynga)!

Reality of Korea •  Aside from Blizzard (local opera3on), FIFA (partnership) and League of Legends (hired Blizzard staﬀ), not many successes •  On mobile, it is possible to make money, especially via iOS •  Android is big, but fragmented among several app stores + regulatory limita3ons (GRB) iOS doable, Android harder, web very hard!

Reality of Korea The market ﬁgures are including exports, butstill a big market for web, less so for mobile.!

Nexon •  Revenue –  2011 Revenue $1.1 billion Market Revenue –  Net revenue $313 million China $398m (38%) Korea $348m (33%) •  19% margin Japan $158m (15%) •  China licensing: Tencent = 85% Rest of World $105m (14%) TOTAL $1.1 billion •  Titles –  Maple Story (RPG), Mabinogi (RPG), Dungeon & Fighter (RPG), Kart Rider (fantasy kart racing), Counter Strike Online (FPS) Nexon does great in China and Japan!

NCsov •  2011 Income $540 million •  Net income $157 million Market Revenue Title Revenue Korea $360m (66%) Lineage 1 35% Japan $75m (14%) Lineage 2 18% China (royalty) $50m (10%) Aion 40% Rest of World $55m (10%) Other 5% TOTAL $540m NCsoft has few titles, mostly missed China!

Hangame •  Part of NHN Group –  Naver 65% of search market –  Hangame Casual games, #2 player •  Revenue –  NHN 2011 $1.9 billion –  Net proﬁts $400m (20%) •  Gaming brought $570m in 2011 –  Japan = $267 million Hangame is #1 in Japan, lots of casual games!

Hangame sourcing mobile games •  20-‐30 mobile games for Korea and 40 games for Japan in 2012

Game Ra3ng Board For All Users Over 12 Years Old Over 15 Years Old Over 18 Years OldRegister game Apply online Deliberation Reflect result on a social (send application form, By Game Rating Result on the game platform executable file, instructions) Board To launch in Korea, approval is needed!

Payment Methods Recharge (Purchase) Dotori 1. Credit Card 2. Mobile Payment 3. Online Banking Payment method 4. Fixed Phone 10 Dotori 5. Loyalty Points = 1,000 KRW from partnerships = USD 1 (OK Cashbag) 6. Prepaid Giv Coupons 7. Prepaid Cards In all 3 countries, payment methods are mostly local. No way around it.!

Reality of “Rest of Asia” •  Rich & English-‐friendly –  Singapore (English) –  Hong Kong (cantonese, mandarin, English) •  Somewhat wealthy & somewhat English-‐friendly –  Malaysia (some – most revenue from Chinese popula3on) –  Taiwan (Taiwanese = tradi3onal Chinese script) •  Not there yet –  Vietnam –  Indonesia –  Philippines –  Thailand… Some markets can provide decent revenue!

Coming soon: $50 Android Phones Android booming with cheap phones!

benjamin@plus8star.com  @benjaminjoffe Questions & Comments are welcome!!

Gaming guide to big in asia

by Benjamin Joffe

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