Asia	  and	  Gaming	  @benjaminjoffe	  |	  CEO,	  +8*	  |	  Plus	  Eight	  Star	     YeAZen	  |	  San	  Francisco,	  July	 ...
#HowAsianAreYou?	           4%	   2%	   2%	                                            Chinese	     8%	                   ...
What	  do	  I	  know	  about	  Games?	  •  Asia	      –  In	  Asia	  2000-­‐2010	  (Japan,	  Korea,	  China)	      –  Rese...
CDMA	  1x	  Handset	  (KDDI,	  Japan,	  2003)	                                   Other	  user’s     	                     ...
Mac	  App	  Store	  Uberstrike.com	                              Facebook	  Cyworld	  (Korea)	  
Content	  1.    	  What	  is	  Asia?	  2.    	  China	  3.    	  Japan	  4.    	  South	  Korea	  5.    	  Succeeding	  in...
1.	  What	  is	  Asia?	  
The	  Trouble	  with	  “Asia”	     1.  Different	  infrastructures	     2.  Different	  GDP	  /	  capita	     3.  Different	 ...
Users	                                        USA	        Japan	          South	  Korea	               China	  Unit:	  mil...
Users	                                                                                                                    ...
Networks	                           100%                                                                                  ...
H	                      Source:	  GapMinder.org	  A	  R	     MONEY	  D	  
What	  is	  this?	  
What	  is	  this?	                             Answer:	  Tencent’s	                            new	  HQ	  in	  Shenzhen	  
#Gimougous	  Companies	  •  China	      –  Tencent	  made	  $1B	  in	  1Q2011	  (40%	  net	  profit,	  50%	  games)	      –...
Social	  Networks	  in	  Asia	    China	       Accounts	       Korea	      Accounts	              Japan	                Ac...
More	  Social	  Plavorms	                      (note:	  Facebook:	  750M,	  Twiwer:	  200M)	  •  China	                   ...
Just	  an	  idea	  about	  staff…	  •  Twiwer	   	      	  500	       •  Renren	   	      	  1,500	  •  Facebook	  	     	 ...
Digital	  Goods	  &	  Currencies	  in	  2010	  Asia:	  $18	  Billion	       USA:	  $2	  Billion	                          ...
$18	  billion	  	        Digital	  Goods	  &	  Currencies	  in	  Asia	                    Online	  Games	              Soc...
Digital	  Labor	  
2.	  China	  
Users	  Demographics	              1.1%	   0.2%	              7.9%	                                              11-­‐19	 ...
EducaAon	                                           Primary	  School	          11.3%	   9.2%	                             ...
Income	              2.8%	                     2.3%	                                                   without	  income	  ...
Online	  Games	  •  120	  million	  online	  game	  users                                                      	  •  $5	  ...
Market	  Shares	                     Others                    16%                                 Tencent                ...
Revenue	  &	  Profit	  4,000	                  Unit:	  million	  US$	                                                      ...
Market	  Cap	          $53.5B	  8	                                                                                        ...
Digital	  Goods	  Dominate	  a	  Crowded	  Market	  New	  Game	  Titles	  (2010)	  2,000	  1,500	  1,000	    500	       0	...
Tencent	            Other          21%                            Online                            Games                 ...
Renren	                                  SNS	  +	  Game	  Dev.	         Value-­‐Added	  Services	            Includes	  Nu...
Renren	  Digital	  Currency	  •  “Renren	  Beans”	  since	  2007.10                	  •  Sales	  channels	                ...
Walled	  Garden	                   Item	                          Figure	       Third-­‐party	  ApplicaAons	              ...
3.	  Japan	  
Online	  Games	  Market	  in	  Japan	                                             Online	  game	  users	  accounts	       ...
MMOs	  &	  Casual	  Games	  Origin	  of	  PC	  MMOs	  in	  2009	     Origin	  of	  PC	  casual	  games	  in	  2009	       ...
Business	  Models	  Shiz	  Online	  games	  	  and	  their	  revenue	  model,	  evoluAon	  since	  2005	                  ...
The	  Real	  Thing:	  Mobile	  Social	  Gaming	            Self-­‐published	  +	  Open	  plavorms	                        ...
GREE	  Service	                                     AdverAsing	                                -­‐ 	  Banners	  &	  Ae-­‐u...
GREE	  Games	  
Revenue	  of	  Leading	  Plavorms	  Net	  sales	  and	  profitability	  (million	  USD)	     AdverAsing	  revenue	  vs.	  d...
Not	  Only	  Kids	  &	  Housewives	             Teens	                20s	            30s	                         Male	  ...
Who	  Pays?	  Social	  apps	  users	  spending	  per	  plavorm	  according	  to	  age	  
Social	  vs.	  Virtual	  Graph	  
Benefits	  of	  Virtual	  Graph	  
DENA	  &	  GREE	  •  Self-­‐Published	  Games	  +	  Walled	  Gardens	  •  Proprietary	  digital	  currencies	  •  70/30	  ...
Payment	  
CyberAgent	  |	  $18M	  in	  1Q2011	  CyberAgent	  Subsidiaries	     37	  Atles	  across	  6	  plaiorms	                  ...
Pigg	  
Pigg	  by	  CyberAgent	  •  6M	  reg.	  users	  bring	  fortunes	          •  $20M	  in	  1Q2011	          •  As	  much	  ...
Mini-­‐Games	  for	  $1M	  •  Each	  game	  generated	  $1.2M	  in	  December	  2010	  
On	  Android	  
4.	  South	  Korea	  
Digital	  Goods	  Market	  $100	  mln	   $10	  mln	         $10	  mln	  $1	  bln	                                         ...
Online	  Games	  |	  Key	  Players	  
Revenue	  &	  Profits	  (2010)	                                            Revenue	          Profit	  1,400	                ...
Market	  Cap	  (2011.04)	  14.0	       13.0	  12.0	                                                                       ...
Ranking	  in	  Internet	  Cafes	  	                                  Name                                         Category...
Secondary	  Markets	                                 6M	  Users	  	       $480M	    Growth	  of	  	  ItemBay	  users	     ...
Social	  Plavorms	  •  Fragmented	      –  Naver	  Social	  Apps	      –  Nate	  /	  Cyworld	      –  Facebook	  Korea	   ...
Cyworld	  |	  Digital	  Currency	                  Type of payment                Credit card             Regular credit c...
5.	  Succeeding	  in	  Asia	  
Defining	  Success	  1.  Revenue	  2.  Profit	  3.  Usage	  /	  Brand	  recogniAon	  4.  Development	  5.  Learning	  
Western	  Companies	                                China	                 Japan	              Korea	                     ...
Wealth	  of	  Plaiorms:	  How	  much	  for	  you?	  •  China	      –  Qzone 	         	  $M	  for	  happy	  few	  (~10)	  ...
Case	  Studies	  •  Blizzard 	   	   	  Korea’s	  religion	  •  EA	   	   	   	   	  FIFA	  Online	  in	  Korea	  •  PopCa...
Case	  Studies	  •  Blizzard 	   	   	  Korea’s	  religion	  •  EA	   	   	   	   	  FIFA	  Online	  in	  Korea	  •  PopCa...
Blizzard	  in	  China	  (with	  Netease)	                         •  WoW	  in	  China	                              –  Lic...
PopCap	  (now	  EA)	  •  $100	  million	  in	  revenue	  (2010),	  famous	  games	      –  Dev.	  team	  in	  Shanghai	  s...
Rovio	  •  Angry	  Birds	  |	  #1	  smartphone	  game	  in	  the	  world	      –  $20M	  (1Q2011),	  $100M+	  in	  2011	  ...
Uberstrike	  	  	  by	  Cmune	                       #1	  First-­‐Person	  Shooter	  on	  Facebook	   •  Made	  from	  Chi...
6.	  New	  Asian	  Wisdom	  
InteresAng	  New	  Things	  1.  	  Nano-­‐transacAons	  2.  	  SNS	  as	  MMO	  funnels	  3.  	  New	  social	  plavorms	 ...
1.	  Nano-­‐TransacAons	  •  Tencent	  had	     –  1	  Q	  Coin	  =	  1	  RMB	  =	  0.1	  EUR	  •  They	  introduced	     ...
2.	  SNS	  as	  MMO	  funnels	  •  Renren	  revenue	  more	  from	  games	  than	  ads	  •  MoneAzaAon	  much	  higher	  i...
3.	  New	  Social	  Plavorms	  •  Naver,	  Nate,	  Daum 	   	   	  Portals	  •  QQ,	  NateOn 	   	   	   	   	  IM	  •  Am...
4.	  Fourth	  GeneraAon	  Model?	  •  1G 	   	  Box	  game	  /	  Pay-­‐per-­‐download	   	  (e.g.	  COD)	  •  2G 	   	  Ti...
e.g.	  ZT	  Online	  2	  •  Giant	  InteracAve	  no	  longer	  sells	  items	  in	  ZTO2!	      –  Trading	  is	  main	  r...
5.	  Smartphone	  Opportunity	  •  Smartphones	  booming	  in	  Japan	  &	  Korea	       –  Japan:	  50%	  of	  new	  phon...
6.	  Deals	  &	  Partnerships	  •  China	      –  Funds	  by	  Tencent,	  Giant,	  Shanda	  (>$1B)	  •  Japan	      –  Fun...
More	  about	  us	  •  We	  helped	  Kabam	  with	  market	  entry	  •  We	  helped	  IMVU	  	  	  	  	  	  with	  best	  ...
Danke	  Schon!	     More	  about	  “InnovaAon	  Arbitrage”	  www.plus8star.com	  benjamin@plus8star.com	  	               ...
Asia and Gaming
Asia and Gaming
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Asia and Gaming

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Presentation from July 2011 for YetiZen, gaming-focused accelerator in San Francisco.
Kao-nashi rulz.

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Asia and Gaming

  1. 1. Asia  and  Gaming  @benjaminjoffe  |  CEO,  +8*  |  Plus  Eight  Star   YeAZen  |  San  Francisco,  July  2011  
  2. 2. #HowAsianAreYou?   4%   2%   2%   Chinese   8%   Japanese  8%   42%   Korean   French   American   33%   German   Singaporean  
  3. 3. What  do  I  know  about  Games?  •  Asia   –  In  Asia  2000-­‐2010  (Japan,  Korea,  China)   –  Researched  all  major  SNS  &  virtual  worlds  in  Asia   –  Advised  IMVU,  Kabam,  Layar,  DeNA…   –  Founded  and  ran  40  Mobile  Monday  in  Beijing  •  Gaming   –  Part  of  “SoLoMo”  startup  Newt  Games  in  2003   –  Founding  Partner  of  Cmune  (#1  FPS  on  Facebook)   –  Now  building  a  social  uAlity  startup:  WEE.SH  
  4. 4. CDMA  1x  Handset  (KDDI,  Japan,  2003)   Other  user’s   avatar  /  distance  /  nickname  
  5. 5. Mac  App  Store  Uberstrike.com   Facebook  Cyworld  (Korea)  
  6. 6. Content  1.   What  is  Asia?  2.   China  3.   Japan  4.   South  Korea  5.   Succeeding  in  Asia  6.   Some  new  Asian  wisdom  
  7. 7. 1.  What  is  Asia?  
  8. 8. The  Trouble  with  “Asia”   1.  Different  infrastructures   2.  Different  GDP  /  capita   3.  Different  distribuAon  channels   4.  Different  payment  soluAons   5.  And  someAmes  different  regulaAons   6.  Highly  compeAAve   (and  of  course:  language)  
  9. 9. Users   USA   Japan   South  Korea   China  Unit:  million   ©PlusEightStar,  2011  -­‐  www.plus8star.com   2,000   1,500   1,000   500   0   PopulaAon   Internet  Users   Mobile  Users   3G  Users   Sources:  CIA  World  Fact  Book,  MIIT,  Japan  TCA,  SKT,  March  2011  
  10. 10. Users   ©PlusEightStar,  2011  -­‐  www.plus8star.com   Country   USA   China   Japan   South  Korea   PopulaAon   310  mln   1,330  mln   130  mln   50  mln   Internet  Users   245  mln   460  mln   100  mln   40  mln   860  mln   Mobile  Users   295  mln   120  mln   50  mln   900  mln   3G  Users   120  mln   50  mln   115  mln   30  mln  Sources:  CIA  World  Fact  Book,  MIIT,  Japan  TCA,  SKT,  March  2011.  Numbers  are  rounded  for  easier  comparisons  
  11. 11. 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  ConnecAons  Measured  >5  Mbps  (%)   Sources:  Akamai  4Q10,  Japan  TCA,  SKT,  ITU,  IDA,  Internet  World  Stats,  March  2011  
  12. 12. H   Source:  GapMinder.org  A  R   MONEY  D  
  13. 13. What  is  this?  
  14. 14. What  is  this?   Answer:  Tencent’s   new  HQ  in  Shenzhen  
  15. 15. #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)  
  16. 16. Social  Networks  in  Asia   China   Accounts   Korea   Accounts   Japan   Accounts  Facebook   n.a.   Facebook   4M   Facebook   2.9M   Qzone   Mobage   505M   Cyworld   25M   24.5M  (Tencent)   (DeNA)   51.com   178M   Naver   n.a.   GREE   23.8M   Renren   117M   Daum   n.a.   Mixi   22.6M  Pengyou   Yahoo   101M   3M  (Tencent)   Mobage  Kaixin001   100M   ©PlusEightStar,  2011  -­‐  www.plus8star.com  
  17. 17. More  Social  Plavorms   (note:  Facebook:  750M,  Twiwer:  200M)  •  China   •  Korea   –  QQ          674M   –  Cyworld    25M   –  Q  Zone        490M   –  Me2Day  (Naver  microblog)  5M   –  QQ  Microblog    160M   –  Daum,  Naver,  Nate   –  Pengyou        101M   –  RenRen        117M   •  SE  Asia   –  Sina  Microblog    100M   –  Mig33  (mobile)  40M   –  Kaixin001      178M?   –  51.com        100M?  •  Japan   –  Mobage  (mobile)    24.5M   –  GREE  (mobile)    23.8M   –  Mixi  (web+mobile)  22.6M           Numbers  are  “registered”  and  “acAve”  accounts  as  of  2011.05,  depending  on  sources  
  18. 18. Just  an  idea  about  staff…  •  Twiwer      500   •  Renren      1,500  •  Facebook      1,500   •  Tencent      12,000  
  19. 19. Digital  Goods  &  Currencies  in  2010  Asia:  $18  Billion   USA:  $2  Billion   Source:  Plus  Eight  Star,  2011  
  20. 20. $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  
  21. 21. Digital  Labor  
  22. 22. 2.  China  
  23. 23. 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  
  24. 24. EducaAon   Primary  School   11.3%   9.2%   Junior  Middle  School  12.0%   27.5%   Senior  Middle  School   Professional  Training  College   40.1%   Undergraduate  EducaAon  and   The  Above   Source:  CNNIC,  2010.07  
  25. 25. 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  
  26. 26. Online  Games  •  120  million  online  game  users  •  $5  billion  in  2010   Unit:  billion  $US   7   6.2   6.6   5.6   5   4.1   3.2   2008   2009   2010   2011   2012   2013   2014   Sources:  2008-­‐2014  Chinas  Online  Game  Market  Annual  Report  by  Ministry  of  Culture,  iResearch,  2011  
  27. 27. Market  Shares   Others 16% Tencent 31% Giant 4%Changyou 7% Netease 16% Perfect World 7% Shanda Game 12% Source:  iResearch,  2010  
  28. 28. Revenue  &  Profit  4,000   Unit:  million  US$   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   Kingsoz   NetDragon   CDC   The9   Renren   Game   World   InteracAve   Source:  Companies,  2010  
  29. 29. 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   Kingsoz   NetDragon   CDC   The9   Renren   Game   World   InteracAve   Source:  Companies,  2011.04  except  Renren,  2011.05  
  30. 30. Digital  Goods  Dominate  a  Crowded  Market  New  Game  Titles  (2010)  2,000  1,500  1,000   500   0   Charged by time Charged by item others Sources:  Online  game  industry  in  2010  year-­‐end  summary  report,  CNZZ,  2011  
  31. 31. Tencent   Other 21% Online Games 49% Non-gaming digital goods 30%$3B  in  2010,  $1B  in  1Q2011  
  32. 32. Renren   SNS  +  Game  Dev.   Value-­‐Added  Services   Includes  Nuomi   AdverAsing   (Groupon  Clone)   -­‐  Mostly  ads  sold  “per  day”   13%   -­‐  Limited  targeAng   42%   45%   Online  Games  Top  MMORPG  =  31%  of  game  rev.   (14%  of  total)   $76.5m  in  2010  (Loss)  
  33. 33. Renren  Digital  Currency  •  “Renren  Beans”  since  2007.10  •  Sales  channels   Type   Channel   1.  Bank  cards   2.  Mobile  Payment   Online   3.  SMS   4.  Third-­‐party  (Alipay,  Yeepay)   1.  News  stands   Offline   2.  Convenience  Stores   3.  Internet  cafes  
  34. 34. Walled  Garden   Item   Figure   Third-­‐party  ApplicaAons   1,000   Revenue  from   $3.5  million   Plaiorm  in  2010   (Renren  share)   Renren:  52%  (avg.)   Revenue  Share   Developer:  48%  Most  developers  Look  Overseas  or  at  Qzone  
  35. 35. 3.  Japan  
  36. 36. Online  Games  Market  in  Japan   Online  game  users  accounts   (unit:  million,  incl.  mulAple  accounts   by  same  user)   100   89   80   75  $1.5B  in  2010   59   60   42   40   28   19   20   0   2004   2005   2006   2007   2008   2009   Source:  Japan  Internet  White  Paper  2010  –  Japan  Online  Game  AssociaAon,  2010.07  
  37. 37. MMOs  &  Casual  Games  Origin  of  PC  MMOs  in  2009   Origin  of  PC  casual  games  in  2009   Korea  &  China  Dominate  MMOs   Source:  Japanese  Online  Game  AssociaAon,  2010.07  
  38. 38. Business  Models  Shiz  Online  games    and  their  revenue  model,  evoluAon  since  2005   Source:  Japanese  Online  Game  AssociaAon,  2010.07   F2P  over  40%  in  2010  
  39. 39. The  Real  Thing:  Mobile  Social  Gaming   Self-­‐published  +  Open  plavorms              Some  ads   SNS   +   Free  games   +   Homepage   Virtual  goods  
  40. 40. GREE  Service   AdverAsing   -­‐   Banners  &  Ae-­‐ups  GREE  top  page   AdverAsing   20%   banner   Avatars   -­‐   CustomizaAon  with  various  items   (clothes,  accessories,  etc..)   Digital  goods   Social  Games   80%   -­‐   Integrated  with  SNS  funcAons  
  41. 41. GREE  Games  
  42. 42. Revenue  of  Leading  Plavorms  Net  sales  and  profitability  (million  USD)   AdverAsing  revenue  vs.  digital  currency*   * Considering  that  there  are  no  other  source  of  revenues  
  43. 43. Not  Only  Kids  &  Housewives   Teens   20s   30s   Male   Female  
  44. 44. Who  Pays?  Social  apps  users  spending  per  plavorm  according  to  age  
  45. 45. Social  vs.  Virtual  Graph  
  46. 46. Benefits  of  Virtual  Graph  
  47. 47. DENA  &  GREE  •  Self-­‐Published  Games  +  Walled  Gardens  •  Proprietary  digital  currencies  •  70/30  Revenue  share  •  $500  million  paid  to  third-­‐parAes  (GREE,  2010)   Mobile  Social  Apps  Make  Money  in  Japan  
  48. 48. Payment  
  49. 49. CyberAgent  |  $18M  in  1Q2011  CyberAgent  Subsidiaries   37  Atles  across  6  plaiorms   Source:  CyberAgent,  2011.03  
  50. 50. Pigg  
  51. 51. Pigg  by  CyberAgent  •  6M  reg.  users  bring  fortunes   •  $20M  in  1Q2011   •  As  much  as  Angry  Birds!   •  $100M+  in  2011?  
  52. 52. Mini-­‐Games  for  $1M  •  Each  game  generated  $1.2M  in  December  2010  
  53. 53. On  Android  
  54. 54. 4.  South  Korea  
  55. 55. Digital  Goods  Market  $100  mln   $10  mln   $10  mln  $1  bln   Online  Games   Secondary  Market   Social  Plavorms   Social  Games   $4.7  bln   Virtual  Worlds  
  56. 56. Online  Games  |  Key  Players  
  57. 57. 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  Soz   Neowiz   CJ  Internet   (Hangame)   >50%  of  Nexon’s  revenue  is  overseas  
  58. 58. 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  sAll   4.0   $300  million!   2.0   1.1   0.3   0.0   Nexon   NHN   NC  Soz   Neowiz   CJ  Internet   (Hangame)  
  59. 59. 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  MulAplayer  Online  Role-­‐Playing  Game  RTS    Real-­‐Time  Strategy  FPS    First-­‐Person  Shooter   Source  :  Gametrix,  2011.02  
  60. 60. Secondary  Markets   6M  Users     $480M   Growth  of    ItemBay  users   Unit:  million   Source  :  ItemBay  
  61. 61. 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  soluAons  
  62. 62. 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
  63. 63. 5.  Succeeding  in  Asia  
  64. 64. Defining  Success  1.  Revenue  2.  Profit  3.  Usage  /  Brand  recogniAon  4.  Development  5.  Learning  
  65. 65. Western  Companies   China   Japan   Korea   Zynga   OperaAons   n.a.   Blizzard  (WoW)   RockYou   EA  (FIFA  Online)   PopCap   Zynga  (w/  Tencent)   PopCap   Kabam   Licensing   PopCap  (w/  Renren)   Crowdstar   RockYou   WoW  (w/  Netease)   Playfish   Cmune   PopCap   Zynga   Zynga   Development   Playfish   Playfish   Kabam   RockYou   Cmune  Ideas  too!  The  First  Farm  Game  was  made  in  China  
  66. 66. Wealth  of  Plaiorms:  How  much  for  you?  •  China   –  Qzone    $M  for  happy  few  (~10)   –  Renren    SAll  small   –  Others    Unclear  •  Korea   –  SAll  small:  total  market  was  $10M  in  2010  •  Japan   –  Mobile  mostly,  but  hundreds  of  $mln!   –  Chinese  companies  first  movers  (Rekoo,  Rakoo,  etc.)  
  67. 67. Case  Studies  •  Blizzard      Korea’s  religion  •  EA          FIFA  Online  in  Korea  •  PopCap      PragmaAc  and  organic  •  Angry  Birds  Soon  big  in  China?    •  Cmune      Made  from  China  
  68. 68. Case  Studies  •  Blizzard      Korea’s  religion  •  EA          FIFA  Online  in  Korea  •  PopCap      PragmaAc  and  organic  •  Angry  Birds  Soon  big  in  China?    •  Cmune      Made  from  China  
  69. 69. Blizzard  in  China  (with  Netease)   •  WoW  in  China   –  License  to  The9,  then  switched  to   Netease  in  2009   –  Forbidden  to  run  for  several  months   in  2010   –  EsAmate  4M~6M  users   –  4,000  min  prepaid  card  =  $4.5   –  WoW  customer  service:  800+  staff   –  Revenue  est.  around  $40m/quarter   •  License  fees   –  WoW:  $30m  (minimum  guarantee)   –  StarCraz  II:  $4m  (id)   –  Total  commitment:  $200m  
  70. 70. PopCap  (now  EA)  •  $100  million  in  revenue  (2010),  famous  games   –  Dev.  team  in  Shanghai  since  2008   –  75  staff  in  2010,  150  staff  now   –  UnAl  recently,  no  business  in  China  •  Partnerships   –  Japan:  with  Taito  for  mobile  social  games   –  Korea:  with  NC  Soz  for  web  games   –  China:  PvZ  on  Renren   •  First  ever  social  adaptaAon   •  Exclusive  launch  announced  2  days  ago  
  71. 71. Rovio  •  Angry  Birds  |  #1  smartphone  game  in  the  world   –  $20M  (1Q2011),  $100M+  in  2011   –  100M  200M  downloads  globally   –  Free  DL  +  Fake  birds  on  sale  in  China  •  Wants  China,  Japan  and  Korea!   –  Partnerships  with  mobile  carriers   –  Partnerships  with  handset  makers  (Nokia,  etc.)   –  Will  release  on  feature  phones  in  China  
  72. 72. Uberstrike      by  Cmune   #1  First-­‐Person  Shooter  on  Facebook   •  Made  from  China  +  Global  reach   •  Combines  East  &  West  experAse   •  500,000  MAU  =  Top  3D  MMO  on  Facebook   •  Get  it  on  the  Mac  App  Store  for  Father’s  Day!  Disclosure:  I  am  an  investor  in  Cmune  |  www.facebook.com/uberstrike  
  73. 73. 6.  New  Asian  Wisdom  
  74. 74. InteresAng  New  Things  1.   Nano-­‐transacAons  2.   SNS  as  MMO  funnels  3.   New  social  plavorms  4.   Fourth  GeneraAon  Digital  Goods  Model  5.   Smartphone  opportunity  6.   Various  deals  &  partnerships  
  75. 75. 1.  Nano-­‐TransacAons  •  Tencent  had   –  1  Q  Coin  =  1  RMB  =  0.1  EUR  •  They  introduced   –  1  Q  Point  =  0.1  RMB  =  0.01  EUR  •  …To  allow  items  and  Ame  “nano-­‐transacAons”  
  76. 76. 2.  SNS  as  MMO  funnels  •  Renren  revenue  more  from  games  than  ads  •  MoneAzaAon  much  higher  in  MMOs  •  RetenAon  is  bewer  too  •  What’s  your  ROI?  
  77. 77. 3.  New  Social  Plavorms  •  Naver,  Nate,  Daum      Portals  •  QQ,  NateOn          IM  •  Ameba              Blog  plaiorm  •  DeNA,  GREE          Mobiles  +  Smartphones  
  78. 78. 4.  Fourth  GeneraAon  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)  
  79. 79. e.g.  ZT  Online  2  •  Giant  InteracAve  no  longer  sells  items  in  ZTO2!   –  Trading  is  main  revenue  model   –  Reward  acAve  users  with  items   –  Let  users  decide  on  the  right  price   –  5%  commission  on  transacAons  •  Benefits   –  Capture  secondary  market   –  Avoid  “one-­‐price  for  all”  for  digital  goods   –  Ensure  fairness   –  MoAvate  users  
  80. 80. 5.  Smartphone  Opportunity  •  Smartphones  booming  in  Japan  &  Korea   –  Japan:  50%  of  new  phones  in  2011,  already  5M+  iPhones   –  Korea  >  10M  smartphones  •  China  has  lots  of  smartphones  &  feature  phones   –  Beijing  Apple  store  is  #1  worldwide  (>Times  Square)   –  Making  money  with  apps  in  China  sAll  tough   –  Android  spreading  but  app  stores  fragmented   –  Building  apps  from  China  is  totally  fine  •  Localize  apps!   –  Angry  Birds  #1  iOS  App  in  China   –  Akinator  (France)  is  a  top  paid  app  in  Japan   –  Do  it  quick  with  MyGengo     Disclosure:  I  am  an  investor  in  MyGengo  
  81. 81. 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)   –  DeNA  acquires  NGMOCO  (US)   –  Sobank  invests  in  Japan,  China,  Korea  •  Korea   –  Various  M&As   –  Some  investments  by  Nexon  in  US  
  82. 82. More  about  us  •  We  helped  Kabam  with  market  entry  •  We  helped  IMVU            with  best  pracAces  •  We  helped  CiAbank  with  digital  currencies  
  83. 83. Danke  Schon!   More  about  “InnovaAon  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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