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Update of the "Asian Gaming" preso for the TGX Conference in Singapore on September 2011.
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Asian Eye for the
Gaming Guy
@benjaminjoffe | CEO, +8* | Plus Eight Star TGX | Singapore, September 2011
Asia, Gaming and Me
• Background • 10+ years in China/Japan/Korea • Researched all top SNS & virtual worlds in Asia • Advised IMVU, Kabam, DeNA… • Organized 40 Mobile Monday in Beijing
• Now building a social startup in Singapore
• Gaming • “SoLoMo” startup Newt Games in 2003 (JP) • Founding Partner of Cmune (#1 FPS on FB)
Content
1. What is Asia? 2. China 3. Japan 4. South Korea 5. Succeeding in Asia 6. New Asian wisdom
1. What is Asia?
The Trouble with “Asia”
1. Different infrastructures
2. Different GDP / capita
3. Different distribuCon channels
4. Different payment soluCons
5. And somedmes different regulaCons
6. Highly compeCCve
(and of course: language)
Users
Country USA China Japan South Korea
PopulaCon 310 mln 1,330 mln 130 mln 50 mln
Internet Users 245 mln 485 mln 100 mln 40 mln
Mobile Users 295 mln 900 mln 120 mln 50 mln
3G Users 120 mln 80 mln 115 mln 30 mln
Sources: CIA World Fact Book, MIIT, Japan TCA, SKT, March 2011. Numbers are rounded for easier comparisons
©PlusEightStar, 2011 -‐ www.plus8star.com
Networks 3G
Users (%
)
China
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80%
3G: 60% (W-‐CDMA only) Web: 72% Avg. 14 Mbps
3G: 98% Web: 60% Avg. 8.5 Mbps
3G: 40% Web: 34% Avg. 5.0 Mbps
3G: 5% Web: 0.5% Avg. 1.0 Mbps
Sources: Akamai 4Q10, Japan TCA, SKT, ITU, IDA, Internet World Stats, March 2011
Internet ConnecCons Measured >5 Mbps (%)
©PlusEightStar, 2011 -‐ www.plus8star.com
Source: G
apMinde
r.org
MONEY
H A R 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) – 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)
Social Networks in Asia China Accounts Korea Accounts Japan Accounts
Facebook n.a. Facebook 4M Facebook 3M
Qzone (Tencent)
505M Cyworld 25M Mobage (DeNA)
25M
51.com 178M Naver n.a. GREE 25M
Renren 117M Daum n.a. Mixi 25M
Pengyou (Tencent)
101M Yahoo Mobage
3M
Kaixin001 100M ©PlusEightStar, 2011 -‐ www.plus8star.com
Just an idea about staff…
• Twiuer 500
• Facebook 2,500
• Renren 1,500
• Tencent 12,000
Digital Goods & Currencies in 2010
Asia: $18 Billion USA: $2 Billion
Source: Plus Eight Star, 2011
$18 billion Digital Goods & Currencies in Asia
5,000 4,700
1,500
200 100
2,000
910
2,000
1,000
0
2,000
4,000
6,000
8,000
10,000
China Korea Japan
Online Games Social Plavorms Social Games
Virtual Worlds Tencent IM, etc. Secondary Market
Unit: MUSD
©PlusEightStar, 2011 -‐ www.plus8star.com
Digital Labor
2. China
Users Demographics
35.8%
35.4%
19.6%
7.9%
1.1% 0.2%
11-‐19
20-‐29
30-‐39
40-‐49
50-‐59
60 and above
Source: CNNIC, 2010.07
Educadon
9.2%
27.5%
40.1%
12.0%
11.3%
Primary School
Junior Middle School
Senior Middle School
Professional Training College
Undergraduate EducaCon and The Above
Source: CNNIC, 2010.07
Income
8.1%
20.5%
13.5%
13.9%
14.4%
14.4%
10.1%
2.8% 2.3%
without income
Below $76
$77-‐153
$154-‐229
$230-‐306
$307-‐458
$459-‐764
$765-‐1222
Above $1222
Source: CNNIC, 2010.07
Online Games
• 120 million online game users
• $5 billion in 2010
Sources: 2008-‐2014 China's Online Game Market Annual Report by Ministry of Culture, iResearch, 2011
3.2 4.1
5 5.6
6.2 6.6 7
2008 2009 2010 2011 2012 2013 2014
Unit: billion $US
Tencent 31%
Netease 16%
Shanda Game 12%
Perfect World 7%
Changyou 7%
Giant 4%
Others 16%
Market Shares
Source: iResearch, 2010
Revenue & Profit
2,966
689 852 866
365 329 203 148 81 213 111 77
1,228
197 180 336
128 176 123 56 5 22 0
1,000
2,000
3,000
4,000
Tencent Shanda Game
Shanda Netease Perfect World
Changyou Giant Interacdve
Kingsoy NetDragon CDC The9 Renren
Revenue Profit Unit: million US$
Source: Companies, 2010
LOSS
Market Cap
2.4
6.2
4.5
1.1 1.7 1.7
0.764 0.29 0.1 0.165
5
0
1
2
3
4
5
6
7
8
Tencent Shanda Game
Shanda Netease Perfect World
Changyou Giant Interacdve
Kingsoy NetDragon CDC The9 Renren
$53.5B
Unit: billion US$
Source: Companies, 2011.04 except Renren, 2011.05
Tencent
Online Games
49% Non-gaming digital goods
30%
Other 21%
$3B in 2010, $1B in 1Q2011
Renren SNS + Game Dev.
42%
45%
13%
Online Games Top MMORPG = 31% of game rev.
(14% of total)
Value-‐Added Services Includes Nuomi (Groupon Clone)
AdverCsing -‐ Mostly ads sold “per day” -‐ Limited targedng
$76.5m in 2010 (Loss)
Walled Garden
Item Figure
Third-‐party ApplicaCons 1,000
Revenue from Plahorm in 2010
$3.5 million (Renren share)
Revenue Share Renren: 52% (avg.) Developer: 48%
Most developers Look Overseas or at Qzone
3. Japan
Japan’s Gaming Market
• Online Games
– $1.5B in 2010 – Casual Games & MMOs from Korea, China
– Shiy to Free-‐to-‐Play
• Mobile & Social boom
– Konami: Mobile/Social! ($10M/month on GREE)
– Mobile social gaming ecosystem >$500M in 2010
The Real Thing: Mobile Social Gaming
Self-‐published + Open plavorms
Some ads
SNS +
Free games +
Virtual goods Homepage
GREE Service
Digital goods
80%
AdverCsing
20%
AdverCsing
Avatars
Social Games
-‐ Banners & Ce-‐ups
-‐ CustomizaCon with various items (clothes, accessories, etc..)
-‐ Integrated with SNS funcCons
GREE top page
banner
GREE Games (8 self-‐published)
Revenue of Leading Plavorms
Net sales and profitability (million USD) Adverdsing revenue vs. digital currency*
* Considering that there are no other source of revenues
Not Only Kids & Housewives
Teens 20s 30s
Male Female
DENA & GREE
• Self-‐Published Games + Walled Gardens
• Proprietary digital currencies
• 70/30 Revenue share
• $500 million paid to third-‐pardes (GREE, 2010)
Mobile Social Apps Make Money in Japan
Very Local Payment
CyberAgent | $18M in 1Q2011
CyberAgent Subsidiaries 37 Ctles across 6 plahorms
Source: CyberAgent, 2011.03
#1 Virtual World | Pigg
Pigg by CyberAgent
• 6M reg. users bring fortunes • $20M in 1Q2011
• As much as Angry Birds!
• $100M+ in 2011?
Mini-‐Games for $1M
• Each game generated $1.2M in December 2010
On Android
4. South Korea
Digital Goods Market
$4.7 bln
$1 bln
$100 mln $10 mln $10 mln
Online Games
Secondary Market
Social Plavorms
Social Games
Virtual Worlds
Online Games | Key Players
Revenue & Profits (2010)
Unit: MUSD
>50% of Nexon’s revenue is overseas
935
1,310
525 427
243 376
607
251 111
47 0
200
400
600
800
1,000
1,200
1,400
Nexon NHN (Hangame)
NC Soy Neowiz CJ Internet
Revenue Profit
Market Cap (2011.04)
13.0
9.2
5.4
1.1 0.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Nexon NHN (Hangame)
NC Soy Neowiz CJ Internet
Unit: billion USD
This is sCll $300 million!
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%
FIFA Online Sports Neowiz Games + Electronic Arts (US) 4.3%
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%
Source : Gametrix, 2011.02
MMORPG Massively Muldplayer Online Role-‐Playing Game RTS Real-‐Time Strategy FPS First-‐Person Shooter
Secondary Markets
Growth of ItemBay users
Unit: million
Source : ItemBay
6M Users $480M
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 soludons
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
Cyworld | Digital Currency
5. Succeeding in Asia
Defining Success
1. Revenue
2. Profit
3. Usage / Brand recognidon
4. Development
5. Learning
Western Companies China Japan Korea
OperaCons Zynga (w/ Tencent) PopCap (w/ Renren)
Zynga RockYou
WoW
Licensing / Partners WoW (+Netease)
Crossfire (+Tencent) Angry Birds
PopCap Crowdstar
EA (FIFA Online) PopCap Kabam RockYou Playfish Cmune
Development
Ubisoy PopCap Zynga Playfish Kabam Cmune
Zynga Playfish RockYou
Ideas too! The First Farm Game was made in China
Wealth of Plahorms: How much for you?
• China – Qzone $M for happy few (~10) – Renren Sdll small – Others Unclear
• Korea – Sdll small: total market was $10M in 2010
• Japan – Mobile mostly, but hundreds of $mln! – Chinese companies first movers (Rekoo, Rakoo, etc.)
iOS Mobile Rankings | China (games & udlides)
FHM
PvZ
Nubee
iOS Mobile Rankings | Japan (RPGs, Adventure)
(Book)
BioHazard
(Photo)
(Slot)
(Book)
(BioHazard)
(AR Game)
(Music)
(Racing Game)
(Adv. Game)
(RTS, SEGA)
(Social RPG)
(Slot)
(Adv. Game)
(Pokemon)
(Pirate RPG, by GREE)
(Hostess SIM)
(RPG)
(RPG)
iOS Mobile Rankings | Korea (English, Tools, Games)
(English)
(English)
(Xvid player)
(Tool)
(Tool)
Case Studies
• PopCap Pragmadc and organic
• Angry Birds Soon big in China?
• Cmune Made from China
Uberstrike by Cmune
• #1 FPS on Facebook
• Made from China + Global reach
• We’re hiring!
• www.facebook.com/uberstrike
Disclosure: I am an investor in Cmune
Mac App Store
Cyworld (Korea)
Uberstrike.com
6. New Asian Wisdom
Interesdng New Things
1. Nano-‐transacdons
2. SNS as MMO funnels
3. New social plavorms
4. Fourth GeneraCon Digital Goods Model
5. Smartphone opportunity
6. Various deals & partnerships
1. Nano-‐Transacdons
• Tencent had – 1 Q Coin = 1 RMB = 0.1 EUR
• They introduced – 1 Q Point = 0.1 RMB = 0.01 EUR
• …for goods & dme-‐based “nano-‐transacCons”
2. SNS as MMO funnels
• Renren revenue more from games than ads
• MoneCzaCon much higher in MMOs
• RetenCon is beuer too
• What’s your ROI?
3. New Social Plavorms
• Naver, Nate, Daum Portals
• QQ, NateOn IM
• Ameba Blog plahorm
• DeNA, GREE Mobiles + Smartphones
4. Fourth Generadon 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)
e.g. ZT Online 2
• Giant Interacdve no longer sells items in ZTO2! – Trading is main revenue model – Reward acdve users with items – Let users decide on the right price – 5% commission on transacCons
• Benefits – Capture secondary market – Avoid “one-‐price for all” for digital goods – Ensure fairness – MoCvate users
5. Smartphone Opportunity
• Smartphones booming in Japan & Korea • Japan: 50% of new phones in 2011 (today: 5M+ iPhones)
• Korea > 10M smartphones
• China has lots of smartphones & feature phones • Beijing Apple store is #1 worldwide (>Times Square)
• Android spreading but app stores fragmented • Building apps from China works
Disclosure: I am an investor in MyGengo
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) and Mig33 (SE Asia) – DeNA acquires NGMOCO (US)
• Korea – Various M&As – Some investments by Nexon in US
More about “Innovadon Arbitrage”
Thanks!
www.plus8star.com
benjaminjoffe
@benjaminjoffe
www.linkedin.com/in/benjaminjoffe
www.slideshare.net/plus8star
+81 | Japan
+82 | Korea
+86 | China
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