iGaming Marketing Masterclass
      Macau | 2010.02




                Lessons from
                Asian
               ...
Benjamin Joffe
   本杰明
 ベンジャミン
   벤자민
5 years

          1 year
                   4 years
Consulting | Startups | Community
| Plus Eight Star
• “Innovation Arbitrage”
     • Internet & Mobile Digital strategy
     • Best practices from China, Jap...
References

EUROPE
                    USA




             ASIA
Cmune


• 3D Social Games

• First “Social Shooter”
   – Facebook
   – Apple.com
   – Web


• Check it out!
   – www.faceb...
Asian Leaders
Common Assumptions

1. Social Networks
    1. The definition of “social network” is clear
    2. All social networks are v...
Quick Survey!
How about those?
On the Origin of SNS in Asia
Charles Darwin




“On The Origin of Species”
         (1859)
Voyage of “The Beagle”
“Diverging” from common ancestors
150 years later…
IT Infrastructure
           100%

                                                    Avg. 7 Mbps
           80%

       ...
Diverging digital species
Revenue vs. Profit (2008)
                70%
                60%
                50%
Profit Margin




                40...
Market Caps
(February 2010)
    $34.5B




     $3.3B




     $2.2B




    $800M
Evolution of Social Networks
SNS Timeline: USA




1967   1996   2002   2003    2004
Facebook

• Real-name
• Revenue models
   – Advertising (90%)
   – Some digital gifts (10%)
• Application platform
   – Le...
SNS Timeline: Korea




1967             1999
Cyworld “Mini-hompy”
                (Initial Model)

• Real-name
• Digital goods
   –   Avatars
   –   Page designs
   – ...
Cyworld Integrated Into
       SK Communications’ Ecosystem
• 20M reg. users (40% of web users)
• Revenue 2Q09:           ...
3D Evolution
Application Platforms
Source: Web20Asia.com
3D Social Networks
Converging with Games & Virtual Worlds
Conclusions for Korea

1. Convergence of SNS, gaming & virtual worlds

2. Cyworld still dominant, but young users

3. Bran...
SNS Timeline: Japan




2004    2006     2006
SNS Timeline: Japan
Mixi
                  (Initial Model)

• Nickname
• Advertising
  – Banners
  – Brand pages
• Premium services
  – Storage
PC vs. Mobile


• Registered Users       18.6M
  – Monthly UV           12.6M


• Monthly PV             27.6B
  – Monthly...
Going Mobile
Social Apps on PC + Mobile!
From PC to Mobile
Unit: 100M PV                                                              Unit: 10K Users

            ...
Demographics
                             Total

                            Mobile




Total
Mobile



         Most acti...
Mobile Platform since Oct.09
                (330 apps as of February 2010)




City Building     Harvest Moon     Shopkee...
Parenthesis
           How is this Possible?

1. 3G everywhere (>95% users)

2. Unlimited data widespread (>50%)

3. Flash...
Web Apps
• Over 500 titles
  – Tougher selection than FB
  – Farm & Pet games leading

• Usage & Monetization
  – 4.6M use...
Revenue
• Revenue 2009: 130M USD
  – 10 USD / active user / year!

• Revenue Sources
  – Advertising 89%
  – Paid Services...
Mixi
                 (New model)

• Saturation of user base
  – Need for new revenue models

• Full throttle on mobile
  ...
Mobile Game Town
Source: DeNA
3D Avatars
For Self-Expression & Gaming
National Brands on Board!
Mobile Open Platform
          • Launched January 2010
             – 40 partners
             – 92 games
             – V...
Revenue
Revenue

70 MUSD
 in Q3!
            PV x2
           With apps



35M USD
= games!
Gree
               (Initial Model)

•   Web-based
•   Real name
•   Advertising
•   Competing with Mixi!
Gree
              Model Change!

•   Web-based > Mobile > Mobile + Web
•   Real name > Nickname
•   Advertising > Digital...
Usage & Demographics
• PageViews          • Demographics
  – 99% Mobile         – Gender parity
  – 24.7 bln/month     – 7...
Gree
Advertising

Gree Home                     Advertising &
                              Affiliates | 25%

            Avata...
4Q09
Revenue
81M USD




        Profit
      50M USD!
Results
•   Spent millions of USD on ads!

•   Users skyrocketed
    – 15 million! (15% of mobile users)
    – Mostly than...
Conclusion for Japan
1. Mobile SNS is a Business
  – Facebook makes $0 on mobile

2. Mobile SNS is a Media
  – Not only fo...
SNS Timeline: China




1996            1998
Digital Goods
Will it blend?
In 2008
• Revenue: 1bln USD
  – 90% from digital goods
     • (35% from games)
  – 10% from ads
• Net margin: 40%

• 2009:...
Facebook Influence




               Kaixin001.com
Fighting Dirty




                    Kaixin001.com



       Kaixin.com
Tencent Joins the Dance




                        Kaixin001.com



           Kaixin.com
Happy Farm!
Main Model

• Advertising is not enough!

• Social games
  – First farm game was in China!
  – Advertising in games
Demographics & Users

• Young
  – 70% of Internet users in China < 30 y.o.
  – Urban white collars (have PC)
  – Universit...
Key Numbers
• Users
  – Tencent            1B+ (485M active)
  – Qzone              310M users
  – RenRen             200M...
Conclusion for China

1. Tencent dominates with IM
  – BUT other SNS competing
  – Huge ad inventory for all


2. Social g...
Leaders Going Global?
International Expansion
• Korea
   – Cyworld early mover! China, Japan, USA, Europe, etc.
   – Most operations closed by n...
DeNA Buys TX.com.cn
    (July 2009)

          • 9M members

          • Leverage expertise in
             – Avatars
    ...
Conclusion
SNS in Asia

1. Social networks = media

2. Japan          = mobile innovation

3. Korea          = web innovation

4. Chi...
How do you think?

1. Social Networks
    1. The definition of “social network” is clear
    2. All social networks are va...
Thanks!
   More about “Innovation Arbitrage”

www.plus8star.com

benjamin@plus8star.com
                                  ...
Learning From Asian Social Networks
Learning From Asian Social Networks
Learning From Asian Social Networks
Learning From Asian Social Networks
Learning From Asian Social Networks
Learning From Asian Social Networks
Learning From Asian Social Networks
Learning From Asian Social Networks
Learning From Asian Social Networks
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Learning From Asian Social Networks

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Social apps all over the place + mobile booming and why innovation is not only in Silicon Valley.

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Learning From Asian Social Networks

  1. 1. iGaming Marketing Masterclass Macau | 2010.02 Lessons from Asian Social Networks +8* | Plus Eight Star Benjamin Joffe, CEO
  2. 2. Benjamin Joffe 本杰明 ベンジャミン 벤자민
  3. 3. 5 years 1 year 4 years
  4. 4. Consulting | Startups | Community
  5. 5. | Plus Eight Star • “Innovation Arbitrage” • Internet & Mobile Digital strategy • Best practices from China, Japan & Korea • Published reports • Inside Cyworld (2007) • Inside Tencent (2009) • Inside Alibaba (upcoming) • Contact • benjamin@plus8star.com
  6. 6. References EUROPE USA ASIA
  7. 7. Cmune • 3D Social Games • First “Social Shooter” – Facebook – Apple.com – Web • Check it out! – www.facebook.com/paradisepaintball
  8. 8. Asian Leaders
  9. 9. Common Assumptions 1. Social Networks 1. The definition of “social network” is clear 2. All social networks are variations of Facebook 2. Asia 1. Asia is homogeneous 2. Asia is all about copy 3. What happens in Asia stays in Asia
  10. 10. Quick Survey!
  11. 11. How about those?
  12. 12. On the Origin of SNS in Asia
  13. 13. Charles Darwin “On The Origin of Species” (1859)
  14. 14. Voyage of “The Beagle”
  15. 15. “Diverging” from common ancestors
  16. 16. 150 years later…
  17. 17. IT Infrastructure 100% Avg. 7 Mbps 80% Avg. 15 Mbps 60% 3G users 40% C hi n 20% a Avg. 4 Mbps www.plus8star.com 0% 0% 20% 40% 60% 80% % of Internet connections measured above 5Mbps (Source: Akamai, 4Q08)
  18. 18. Diverging digital species
  19. 19. Revenue vs. Profit (2008) 70% 60% 50% Profit Margin 40% 30% 20% 10% 0% 0 200 400 600 800 1,000 1,200 Million USD
  20. 20. Market Caps (February 2010) $34.5B $3.3B $2.2B $800M
  21. 21. Evolution of Social Networks
  22. 22. SNS Timeline: USA 1967 1996 2002 2003 2004
  23. 23. Facebook • Real-name • Revenue models – Advertising (90%) – Some digital gifts (10%) • Application platform – Leverage social graph – Mostly games • Text games • Flash games • (3D games) – All for developers!
  24. 24. SNS Timeline: Korea 1967 1999
  25. 25. Cyworld “Mini-hompy” (Initial Model) • Real-name • Digital goods – Avatars – Page designs – Music – Fonts – Many payment systems • Advertising – Brand pages
  26. 26. Cyworld Integrated Into SK Communications’ Ecosystem • 20M reg. users (40% of web users) • Revenue 2Q09: 50M USD – (Includes IM + Portal) – Community 40% – Ads 40% – Other 20% • Revenue 2009: 200M USD – (Minor loss) – 1,000 staff – 10 years! Getting old?
  27. 27. 3D Evolution
  28. 28. Application Platforms
  29. 29. Source: Web20Asia.com
  30. 30. 3D Social Networks Converging with Games & Virtual Worlds
  31. 31. Conclusions for Korea 1. Convergence of SNS, gaming & virtual worlds 2. Cyworld still dominant, but young users 3. Branded pages main way to advertise 4. Social apps growing
  32. 32. SNS Timeline: Japan 2004 2006 2006
  33. 33. SNS Timeline: Japan
  34. 34. Mixi (Initial Model) • Nickname • Advertising – Banners – Brand pages • Premium services – Storage
  35. 35. PC vs. Mobile • Registered Users 18.6M – Monthly UV 12.6M • Monthly PV 27.6B – Monthly PV / UV >2,000!
  36. 36. Going Mobile
  37. 37. Social Apps on PC + Mobile!
  38. 38. From PC to Mobile Unit: 100M PV Unit: 10K Users Application platform introduced PV (mobile) PV (PC) Users Monthly PV 27.6B – Mobile (80%) 22.5B – PC (20%) 5.1B 2007.12 2008.12 2009.12
  39. 39. Demographics Total Mobile Total Mobile Most active social life?
  40. 40. Mobile 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
  41. 41. Parenthesis How is this Possible? 1. 3G everywhere (>95% users) 2. Unlimited data widespread (>50%) 3. Flash on all mobiles
  42. 42. Web Apps • Over 500 titles – Tougher selection than FB – Farm & Pet games leading • Usage & Monetization – 4.6M users for #1 (~25%) – 800K USD in 1 month for #1 – Revenue share with Mixi • Top developers are Chinese!
  43. 43. Revenue • Revenue 2009: 130M USD – 10 USD / active user / year! • Revenue Sources – Advertising 89% – Paid Services 7% – Job Search 4% • New Sources – Applications & Payment (PC & Mobile)
  44. 44. Mixi (New model) • Saturation of user base – Need for new revenue models • Full throttle on mobile – Mobile 4 times more active than web! • Tapping into digital goods revenue – Mobile & Web social apps – Revenue share on apps
  45. 45. Mobile Game Town
  46. 46. Source: DeNA
  47. 47. 3D Avatars For Self-Expression & Gaming
  48. 48. National Brands on Board!
  49. 49. Mobile Open Platform • Launched January 2010 – 40 partners – 92 games – Virtual goods, ads, avatars – Leverage expertise from in- house games – Some games also released on Mixi Mobile! • Target: Become the #1 Social Entertainment Platform
  50. 50. Revenue
  51. 51. Revenue 70 MUSD in Q3! PV x2 With apps 35M USD = games!
  52. 52. Gree (Initial Model) • Web-based • Real name • Advertising • Competing with Mixi!
  53. 53. Gree Model Change! • Web-based > Mobile > Mobile + Web • Real name > Nickname • Advertising > Digital goods • Competing with Mixi! > With MBGT!
  54. 54. Usage & Demographics • PageViews • Demographics – 99% Mobile – Gender parity – 24.7 bln/month – 75% users 20+ y.o.
  55. 55. Gree
  56. 56. Advertising Gree Home Advertising & Affiliates | 25% Avatars & items B2C virtual Games goods | 75% 60% avatars 40% games
  57. 57. 4Q09 Revenue 81M USD Profit 50M USD!
  58. 58. Results • Spent millions of USD on ads! • Users skyrocketed – 15 million! (15% of mobile users) – Mostly thanks to 2 games titles! (fishing & pet games) • Opening mobile platform too
  59. 59. Conclusion for Japan 1. Mobile SNS is a Business – Facebook makes $0 on mobile 2. Mobile SNS is a Media – Not only for kids! – Various FMCG already on it 3. Mobile Social Games – In-house vs. Third-party – Ecosystem getting more complex
  60. 60. SNS Timeline: China 1996 1998
  61. 61. Digital Goods
  62. 62. Will it blend?
  63. 63. In 2008 • Revenue: 1bln USD – 90% from digital goods • (35% from games) – 10% from ads • Net margin: 40% • 2009: >1.5 bln USD
  64. 64. Facebook Influence Kaixin001.com
  65. 65. Fighting Dirty Kaixin001.com Kaixin.com
  66. 66. Tencent Joins the Dance Kaixin001.com Kaixin.com
  67. 67. Happy Farm!
  68. 68. Main Model • Advertising is not enough! • Social games – First farm game was in China! – Advertising in games
  69. 69. Demographics & Users • Young – 70% of Internet users in China < 30 y.o. – Urban white collars (have PC) – University students – Many women! • Average income – Avg. salary 500 USD / month
  70. 70. Key Numbers • Users – Tencent 1B+ (485M active) – Qzone 310M users – RenRen 200M (50M also mobile) – Kaixin001 75M – 51.com 160M (38M MAU) • Multiple accounts!
  71. 71. Conclusion for China 1. Tencent dominates with IM – BUT other SNS competing – Huge ad inventory for all 2. Social games = major revenue model – Social games are media too!
  72. 72. Leaders Going Global?
  73. 73. International Expansion • Korea – Cyworld early mover! China, Japan, USA, Europe, etc. – Most operations closed by now. – Online game companies growing globally. • Japan – DeNA (Mobile Game Town) acquisition in China, subsidiary in US. – Gree at home. – Mixi office in Shanghai but no traction so far. • China – Tencent: partnerships & investments (including US). – Kaixin001, RenRen, 51.com busy at home. Social networks are cultural products!
  74. 74. DeNA Buys TX.com.cn (July 2009) • 9M members • Leverage expertise in – Avatars – Games – Content
  75. 75. Conclusion
  76. 76. SNS in Asia 1. Social networks = media 2. Japan = mobile innovation 3. Korea = web innovation 4. China = leads by all numbers
  77. 77. How do you think? 1. Social Networks 1. The definition of “social network” is clear 2. All social networks are variations of Facebook 2. Asia 1. Asia is homogeneous 2. Asia is all about copy 3. What happens in Asia stays in Asia
  78. 78. Thanks! More about “Innovation Arbitrage” www.plus8star.com benjamin@plus8star.com +81 | Japan benjamin0123 +82 | Korea +86 | China http://twitter.com/plus8star Telecom & Internet www.linkedin.com/in/benjaminjoffe + Added Value * High quality www.slideshare.net/plus8star

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