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Virtual Goods Summit - Global Perspectives
1. Virtual Goods – A Global Perspective
Shinichi (Shin) Takamiya
Globis Capital Partners
Tel: +81-(0)3-5275-3637
Fax: +81-(0)3-5275-3825
Email: s-takamiya@globis.co.jp
http://www.facebook.com/shin1
http://www.globiscapital.co.jp/
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2. Speakers
Speakers
Ludovic Bodin, CMUNE
Doug Bewsher, mig33
Andy Tian, XPD Media
Philip Yun, NHN USA
Moderator: Shin Takamiya, Globis Capital Partners
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3. Framework for Today’s Session
1
Agenda
Geography
1. Situation Around the Globe
RoW
• Japan
2 Layer • China
App • Other Countries
2. Going Global – Feasibility
Enabling and Key Success Factors
Service
• App Layer
Web • Enabling Service Layer
PF
• Web PF Layer
Device • Device Layer
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4. Agenda
1. Situation Around the Globe
2. Going Global – Feasibility and Key Success Factors
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5. Situation Around the Globe – Japan
Who is Making $$$?
Registered Users: 15M on Mobile
Annual Revenue: $154M
Operating Margin: 60%
Monthly ARPU2)
Registered Users Paying Users (Assuming 10%)
$1.31 $13.15
(¥105) (¥1,183)
and rising…
1)
$1 = ¥ 90
2)
Jul - Sept 2009
GLOBIS CAPITAL PARTNERS %
6. Situation Around the Globe – Japan
A Representative Example: GREE
GREE: sales $154M, operating margin 60% (08) with virtual goods
Top Monetizing App: “Fishing Stadium”
Revenue Operating
(¥ B) Margin
15 60%
10 36% 50%
13.9
5
0.3 2.9
0 0%
Jun. '07 Jun '08 Jun. '09 • Strong Engagement Factor
• Level up – fishing points, and items etc
-32% -50% • Frequent events and stage updates (in days)
• Collection
• 99% of traffic from mobile
• Moderate Viral/Social Factor
• 74% of revenue from virtual goods • Fishing w/ team (trip and competition)
(in-game items, and avatars) • Ranking board
• 3 monetizing apps + numerous free • Users Acquire Gold by
traffic generating apps • Premium membership subscription
• Closed: in-house app dev. • Avatar item purchase
• Invitation
GLOBIS CAPITAL PARTNERS • Affiliate program
&
7. Situation Around the Globe – Japan
Web PF: 3 Dominant SNSs
GREE mainly monetizing from in-game items, and Mobage
avatars. mixi on its way – just opened up their PF
DeNA:
Mobage
Revenue ¥B Operating Margin
40 40 40
36% 60% 48% 42% 37% 31% 29% 32% 43% 42%
22% 17%
9%
-14% 13.9 29.7 37.6
20
-32%
20 10.1 12.1 20
6.4 14.2
2.9 1.9 5.2 2.9
0.7
0 0.0 0.1 0.3 0 0
As of Jun 09, except for GREE 1) 06/'05 06/'06 06/'07 06/'08 06/'09 03/'05 03/'06 03/'07 03/'08 03/'09 03/'05 03/'06 03/'07 03/'08 03/'09
UU 15M 17M 14M
Mobile Traffic 99% 73% 100%
Virtual Goods 77%2) 8%2) 52%2)
Sales (Premium Subscription) (Avatars)
Virtual Goods $1.31 $0.04 $0.53
ARPU/UU (No Sales from VG Yet)
Paying% 10%+? 1.4% 5-10%?
3)
(“Guess-timate” ) (Assuming 7.5%)
ARPU/Paying U. Around $13? $3.5 Around $7?
(Premium Subscription Fee)
Source: Company IR documents, except for “guess-timate”
GLOBIS CAPITAL PARTNERS 1)
Sep 09, 2) Sales from virtual goods on SNS business only, 3) “Guess-timate”: rough guess from qualitative info. '
8. Situation Around the Globe – Japan
App: Open SNS PF
SNS PFs opening up – $ few hundred million app market emerging
Opening Up of mixi and Mobage (DeNA) App Market Size
App
PF Market Market ($ M)
Aug 09: PC PF
UU PV/Mon. Revenue
Oct 09: mobile PF
(M))) (M))) ($ M)
Approx
Face Approx
276 79,226 500?2)
book 500-1,000?
Mobage Jan 10: initial partners
(DeNA) Mar 10: full open
Few
mixi
$Hundred M
+ 32 15,360 5003)
Mobage
-
Billion4)?
1)
Mar 09
2)
Reuters, Jul 6, 2009
3)
Mar 09 SNS PF business only
GLOBIS CAPITAL PARTNERS 4)
Estimated from PF market size
(
9. Situation Around the Globe – Japan
App: App Trends Across 3SNSs
Global trends, and local trends co-exists
DeNA:
Mobage
1.Sunshine Ranch mixi
1.Helper “Gyaruo” • Fishing Stadium
Dv:Rekoo, 2.04M UU
• Farming games popular
2.Social Farm 2.Baseball Stadium • Kurinoppe • Porting of console games
RAKOO 0.95M
3.Kanji Test 3.Beans Walk • Box Garden
Drecom 0.95M DeNA: Mobage
4.Speed+Racing 4.Playing Cards • Dri Land • Light casual games
Rock You! Asia 0.55M
generating traffic, and
5.My mixi Report 5.Dep’s Summer
Soratobu 0.52M Holiday monetizing via avatars
App Category
6.Memory Sketch 6.Mah-jong
REAL 0.52M Farm Quiz GREE
7.My mixi Tetris 7.Night Campus • Fishing game and pet game
Tetrisonline 0.46M
Action Pet monetizing engine generating
8.Paper Fortune 8.Moba soritia most of the revenue
Honda 0.37M Board/
Sports
9.Monster Life 9.City Golf 2
Card • Generating traffic by
High Five 0.35M
Commu- Promo/ numerous free light casual
10.Social Face
Cybird 0.27M
10.Seat puzzle nication Coupon games
GLOBIS CAPITAL PARTNERS Source: mixi app ranking, Mobage-town app ranking, GREE web page *
10. Situation Around the Globe – Japan
Web PF: SNS vs Online Game
Rapidly growing SNS, and slowing online game. Comparable size
in 1-2 years?
SNS Market Size
(Total Sales of 3 SNSs) Online Game Market Size
YoY
¥B Growth ¥B
150 426% 234% 61% 150 24% 11% 11%
124 CAGR06-08
112 11%
102
100 100
CAGR06-08
46 131%
50 50
28
9
0 0
06 07 08 06 07 08
Source: 3 companies’ IR Source: JOGA online game market report 2009
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11. Situation Around the Globe – Japan
Web PF: Emerging Models
Emerging new models – Cookpad & Ameba Pigg
Targeted Media “Cookpad” Browser Based Virtual World “Ameba Pigg”
•PC/mobile recipe CGM - 571K recipes •Flash based PC/mobile virtual world – chat and
•6.9M MAU - 25% of the women in their 30’s mini games
•Revenue US12M, EBIT $4.6M (FY 04/09), •Virtual goods model: avatar and my room deco.
• 57% marketing solution (B2B) •1.1M UU, revenue $ a few M/mon, achieved
• 28% ad monthly breakeven (as of Nov 09)
• 16% premium membership
GLOBIS CAPITAL PARTNERS $1 = ¥ 90
"!
12. Situation Around the Globe – Japan
Enabling Service
No integrated enabling service PF since mobile carriers serving
as payment PF across mobile and PC
Enabling
App Service Web
Provider Provider PF Overview
User
Social Graph ! • Web PF – no 3rd party enabling service
vendors
Acquisition Viral Mechanism
(Invite, Review, and Ranking etc) ! • Open space in iPhone
Virtual Currency ! • App providers – no 3rd party enabling
Analytics ! service vendors
*SNS avatars: Web PFs’ proprietary
Monetization
Support
In-Game Avatar ! avatars provided by 3rd party
Payment ! • Primarily mobile carriers, plus prepaid
web money, and credit card
Ad ! • Web PF’s official ad program
Community
User Support ! ! • App provider and web PF respectively
• Mobage: available to 3rd party at a cost
Management
Community Patrol1) ! • Enabling service vendor
1)
Unique requirement in Japan
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13. Situation Around the Globe – China
Overview
•Virtual goods preferred monetization method
•App genre seeing many original innovations – farming, aquarium, hospital, tower, etc
App
•Chinese companies are brining their original games to global audience
•Market is early with many small developers, no dominant players as on Facebook
Enabling •Direct consumer payments based on virtual currencies provided by PFs
Service •No analytics and optimization support from the PFs or 3rd parties
•Most SNS platforms local – available only in Chinese.
•PF fragmentation: 10+ SNS, major Internet companies launching their own SNS’s
Web
•Non-SNS sites such as forums and portals actively launching social games
Platform
•50:50 rev share model between PF and app, with PF actively promoting and
distribution apps
•Access dominantly via PC
•Social gaming early and rapidly growing on mobile Internet
Device – Mostly text/image games in large mobile communities
– iPhone to be launched in end of 09 from China Unicom
– Android based OPhone launched in Jul 09 from China Mobile
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14. Agenda
1. Situation Around the Globe
2. Going Global – Feasibility and Key Success Factors
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15. Going Global
App Layer
Global common trends and some developers global across PFs
1.Sunshine Ranch 1. Farm Ville 1. Happy Farm
Rekoo 2.04UU Zynga 61.1M MAU Five Minutes 3.60M DAU
2.Social Farm 2.Causes 2. Sunshine Ranch
RAKOO 0.95M Causes 33.6M Rekoo 2.3M
3.Kanji Test 3.Mafia Wars 3. Fishpool
Drecom 0.95M Zynga 25.9M Fishpool 1.1M
4.Speed+Racing 4.Café World 4. Sole Tower
Rock You! Asia 0.55M Zynga 22.1M Kingnet 0.9M
5.My mixi Report 5.We’re Related 5. Aquarium App Category
Soratobu 0.52M Familylink.com 21.3M Two-fish 0.9M
6.Memory Sketch 6.Pet Society 6. Renren Restaurant Farm Quiz
REAL0.52M Playfish 20.5M Renren 0.7M
7.My mixi Tetris 7.Yo Ville 7. RonHospital Action Pet
Tetrisonline 0.46M Zynga 19.9M RongTian 0.7M
8.Farm Town 8.Animal Paradise Board/
8.Paper Fortune Sports
Honda 0.37M Slashkey 18.7M Rekoo 0.5M Card
9.Monster Life 9.Texas Holdem Poker 9. Cute Pig Commu- Promo/
High Five 0.35M. Zynga 18.5M Yibo 0.5M nication Coupon
10. Social Face 10.Birthday Cards 10. Hoolai Hotel Virtual management
Cybird 0.27M RockYou! 18.1M Hoolai 0.4M
GLOBIS CAPITAL PARTNERS Source: mixi:mixi app ranking as of 23 Oct 09, Facebook: all Facebook app ranking as of 23 Oct 09,
Renren: becommedia app ranking as of 22 oct 09 "%
16. Going Global
App Layer
What it take to become a “global contents” – reflecting
fundamental human needs into the game system?
Fundamental Needs
(Maslow’s Hierarchy of Needs) Game System
Game Element
Self Actualization • Game Design: game world/story,
graphics/BGM, and characters etc
• Growth: level up, skills and items etc
Self Esteem
• Battle/Competition
• Item Production/Trading
Social Needs • Community Management: events,
quests, and updates etc
Social Element
Safety Needs
• Reach of Community Involvement
• Strength of Community Involvement
Physiological Needs • Interaction Among Users:
help/competition
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17. Going Global
Web PF
Global business or accumulation of countries?
SNS Ranking by Traffic
South
North America America Europe North America
US Canada Brazil Mexico UK Germany China Japan
1
2
3
Source
- US: Hitwise 9/09
- Canada: Hitwise 9/09
- Germany: Nielsen Online~8/09 /Unique Audience
- UK: Hitwise 9/09
- Brazil: Neilsen Online 12/08
- Mexico :Alexa ~8/09
- China: Nielsen Online 12/08
GLOBIS CAPITAL PARTNERS - Japan: mixi/DeNA/GREE IR report/Unique Users "'
18. Going Global
Enabling Service
In general enabling service highly reliant on the local situation.
The key to globalization cross boarder payment system?
Global/Local Nature of the Function
Global Local
Social Graph • Based on real social community
User
Acquisition Viral Mechanism • Reliant on web PF and social graph – if the PF is
(Invite, Review, and Ranking etc) global potential to become global
Virtual Currency
• Technology and process universal and basis for
virtual goods monetization
Analytics
Monetization • Technology universal, but taste of the avatars
In-Game Avatar
Support highly local
• Hugely reliant on local regulations and historical
Payment
industry evolution
Ad • Technology universal, but ad sales local business
User Support • Process universal, but language issue
Community
Management
Community Patrol • Regulatory issue only in some countries
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