Gaming in asia

Lifetime value starts here. @Kontagent | #KK2012

Game Internationalization: Where to Start

May 31, 2012 | Benjamin Joffe, CEO, +8* | Jason Lee, Sr. Manager, Customer Success APAC, Kontagent

@Kontagent | #KK2012

Kontagent Konnect 2012

CASE STUDY – Becoming Big in Asia



HI!

Benjamin Joffe @benjaminjoffe



12 YEARS ABROAD



PLUS EIGHT STAR

Research & Strategy ConsulRng Best PracRces & Market Entry China, Japan & South Korea



CLIENTS

EUROPE

USA

ASIA



STARTUP MENTOR



100+ talks, 20 countries



•  7 Cases for Market Entry •  Ecosystems 101

•  China •  Japan •  Korea

•  Case Study: Uberstrike

AGENDA

Get this talk at > www.slideshare.net/plus8star



7 Cases for Market Entry



1.  Surprise success 2.  Copycat

1.  OpportunisRc entrepreneur 2.  Hopeful entrepreneur 3.  Independent inventor

3.  Business contact 4.  IdenRfied opportunity 5.  Unclear opportunity 6.  Hope 7.  Necessity

7 CASES FOR MARKET ENTRY

Opportunity

DesperaRon



•  Concept Suitability •  Product / Market Fit •  Cultural Match

•  LocalizaRon Ability •  Copy •  Graphics •  Layout / white space •  Payment •  Support

ARE YOU THE ONE?

WIRED Top 15 Most Influen/al Games of the Decade



Ecosystems 101



DEFINING ASIA

Asia!



DEFINING ASIA



THE WORLD AS CIVILIZATIONS

Western!Latin American!African!Orthodox!Indian!Muslim!

Japanese!Chinese!



“Asia was a concept of Western Civiliza5on.”



•  Macro •  GDP •  GDP/capita •  Demographics

•  Culture •  Language(s) •  Religion(s)

•  Infra •  Web & Mobile Infrastructures •  Dominant Players •  Payment systems

ECOSYSTEMS 101



“Zynga Aims for 400 Million Tencent Users in China. Starts with CityVille”

BizTechDay, August 2011

DOUBLING AUDIENCE IS NOT DOUBLING REVENUE

“Just by going to China, we could double the audience,”

Peter Relan, CEO, Crowdstar May 2012



Country PopulaHon 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"
















- 1 JP user = 10 CN users for monetization - Hong Kong, Taiwan, Singapore, Malaysia medium-sized"
















Large user bases but:

- few smartphones- even fewer PCs- hard to monetize"

Pick your markets right!"



Mobile Users China Japan Korea

Mobile users 1.02 billion 127 million 50 million

Android (esRmates) ? 15 million 17 million

iPhone (esRmates) <20 million <10 million 3 million

3G Users 10% 100% 70%

- China, Japan, Korea embracing Android"- iPhones for the 1% in China"- Few reliable numbers available"



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 June 2012 Giant 1.2

Changyou 1.2 Facebook (75) NetDragon (91) <1 AcRvision Blizzard 13.8 Perfect World <1 Zynga 6.1

The9 <1 Electronic Aarts 5.0

Gaming giants dominate in each country."Very few foreign players do well."



China



•  1Q2012 $1.78B •  2012 (E) $8B+ (= 2 x Facebook 2011)

CHINA’S GAMING MARKET

Source: Analysys International"

> 80%



•  Local partners are prevy much mandatory for foreigners to get any distribuRon and operate.

•  Successes are rare, generally accidental, and mostly by dominant players •  Mobile Angry Birds, Fruit Ninja, Nubee (JP), etc. •  Online Games Koreans, Blizzard (licensing), Riot Games •  Social Games Avempts (PopCap, Zynga)

REALITY OF CHINA



•  Social networks are… TENCENT •  Livle money on RenRen •  No Facebook

•  Online Game Giants •  Developing their own games •  Licensing from Korea •  Rarely from other places (WoW) •  ExcepRon: League of Legends (but bought by Tencent)

SOCIAL NETWORKS IN CHINA



•  Revenue US$4.5 billion o  Mostly gaming! o  Mobile 10% o  AdverRsing 7%

•  Net Profit US$1.6 billion (35%)

•  Services o  Qzone 552 million MAU o  Pengyou 202 million MAU o  Open plaxorm 40,000 apps

–  Revenue share improved from 90/10 to 70/30 (though variable) –  A dozen have 10m+ MAU –  BUT ARPPU = 1/10th USA (var.) –  QQ Farm = $10m / month? (2011 rumor)

TENCENT



•  Revenue US$118.0 million •  ~50% from adverRsing

•  Net Loss US$5 million •  Net loss does not count sale of eLong for US$50 million •  PromoRng its Groupon clone Nuomi (spending US$30 million)

•  Plaxorm •  Average 50/50 revenue share

•  Curb your enthusiasm!

RENREN



•  iPhone is for the 1%

•  Android stores are fragmented •  Over a dozen app stores •  Lots of copies •  Payment systems not sorted out •  AdverRsing don’t make much money

•  New smartphones by the day! •  Xiaomi •  Alibaba •  Baidu

MOBILE IN CHINA

Aliababa’s Aliyun Custom Linux mobile OS Runs Android apps! Yours for < $250!



•  Click to add text •  Click to add text

o  Click to add text

IOS IN CHINA

Source: AppAnnie.com"



•  Click to add text •  Click to add text

o  Click to add text

ANDROID IN CHINA

Source: AppAnnie.com"



Japan



•  GREE •  Revenue 1Q2012 $575 million •  Acquired OpenFeint ($104m) •  Acquired Funzio ($210m)

•  DeNA •  Revenue 1Q2012 $526 billion •  Acquired Ngmoco ($400m)

•  (Konami) •  $360 million from social games in 2011

REALITY OF JAPAN



•  Koreans, Chinese, Western •  Online games

o  Hangame (Korean online & casual games by NHN) o  NCso} (Korean MMOs) o  Nexon (Korean MMOs) o  Perfect World (Chinese MMO)

•  Social games o  Zynga, Crowdstar, Playfish -‐> ? o  Rakoo, Rekoo (China)

•  Mobile apps o  Many non-‐Japanese o  LINE (mobile IM by NHN)

•  Web: Twiver, Facebook, Evernote, Tumblr

FOREIGN SUCCESSES IN JAPAN?



SMARTPHONE GAMING OPPORTUNITY

About $3.6 billion

More than $1.2 billion

Official sites, $1 billion Social games over $1.8 billion

Core Gamers

Casual Gamers

PC

Console Game software

Mobile

2014

Smartphone games

Overall market size growing

Arcade games, Card games, Edutainment

2011



•  What is quality? •  USA “It works” •  Japan “It’s perfect” •  Korea “It’s new” •  China “It gives me status”

•  Consequently •  Requirements in Japan exceed your imaginaRon •  Copy = strong indicator •  On the upside: People pay for quality

“IT’S PERFECT”



Korea



GAMING MARKET

US$ million US$ million 7.1 863



•  Outliers •  Blizzard (local operaRon) •  EA/FIFA (partnership) •  League of Legends (hired Blizzard staff)

•  Mobile •  iOS •  Several Android app stores (Google, SKT, KTF, LGT, Samsung)

•  Regulatory limitaRons •  Game RaRng Board (GBR) •  Local partner necessary for smaller companies

KOREA



“Rest of Asia”



•  Rich & English-‐friendly •  Singapore (English) •  Hong Kong (Cantonese, Mandarin, English)

•  Somewhat wealthy & somewhat English-‐friendly •  Malaysia (some – most revenue from Chinese populaRon) •  Taiwan (Taiwanese)

•  Not there yet •  Vietnam •  Indonesia •  Philippines •  Thailand…

“REST OF ASIA”



COMING SOON: $50 ANDROID PHONES



•  Social FPS •  First-‐Person Shooter •  Free-‐to-‐play

•  4 Channels •  #1 on Facebook •  #1 on Mac App Store •  Uberstrike.com •  Kongregate

•  Upcoming: iOS & Android

UBERSTRIKE CASE STUDY



•  Users •  Only need a PC in Internet café •  Many users from emerging markets

•  Revenue •  Kids in Internet café in emerging markets do not spend •  Best revenue from large first world countries •  USA •  Germany, France, UK, Australia, Canada, etc. •  Singapore, HK, Taiwan, Malaysia •  Others.

GEOGRAPHY OF WEALTH: FACEBOOK



•  Users •  Hardware cost $500 to $2,000 •  Only “rich” people can really afford!

•  Revenue •  Anyone with such device has money •  USA, China, Russia •  Germany, France, UK •  Etc.

GEOGRAPHY OF WEALTH: MAC OS & IOS



•  Users •  Hardware cost: from $100

•  Revenue •  Lots of free apps •  Fragmented app stores •  MarkeRng is hard •  It’s like the old days of Java!

GEOGRAPHY OF WEALTH: ANDROID



Conclusions



•  “Big in Asia” = Pick your country!

•  Japan = Smartphones & Mobile Plaxorms •  Korea = Smartphones & MMOs •  China = Smartphones

•  Singapore + HK + Malaysia + Taiwan

•  Rest of the world: check ecosystems!

CONCLUSION: SMARTPHONES!



www.slideshare.net/plus8star [email protected]

GOOD LUCK!

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