Korea Social Game Market

Trend Report

2011 First Quarter (Vol. 3)

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Table of Contents Market Overview .......................................................................................................................................... 3

Accumulated AppStore Users .................................................................................................................... 3

Total Revenue of Cyworld AppStore .......................................................................................................... 4

Gender Ratio and Age Distribution ........................................................................................................... 5

Age Distribution by Gender ....................................................................................................................... 6

RPG Genre continues to show potential ....................................................................................................... 7

DAU for RPG Genre ................................................................................................................................... 7

Revenue for RPG Genre ............................................................................................................................. 8

ARPPU for RPG Genre ............................................................................................................................... 8

Gender Ratio for RPG Genre ..................................................................................................................... 9

Simulation Games Going Strong ................................................................................................................. 10

Total Install Ratio and Total Revenue Ratio ............................................................................................ 10

Revenue of Simulation Genre .................................................................................................................. 11

ARPPU of Simulation Genre by Gender ................................................................................................... 12

Number of Installs – Business Management........................................................................................... 12

A Look At Entire Cyworld AppStore ............................................................................................................ 13

ARPU of All Genres .................................................................................................................................. 13

ARPPU of All Genres ................................................................................................................................ 14

Accumlated Number of Installs by Genre ................................................................................................ 15

DAU of All Genre ..................................................................................................................................... 16

Revenue of All Genre ............................................................................................................................... 17

Developers at a Glance ............................................................................................................................... 18

App Installs Ratio .................................................................................................................................... 18

Increase of Foreign Developed Games ....................................................................................................... 18

Total number of Apps in Cyworld AppStore ............................................................................................ 19

Conclusion ................................................................................................................................................... 20

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Market Overview Cyworld AppStore, after having a positive fourth quarter in 2010, has continued to grow across

the board in the 1st quarter of 2011. Users, developers, games and revenue saw an increase at

the start of the new year.

The Cyworld AppStore attracted close to a 800,000 new users in the 1st quarter or roughly

about 260,000 new users each month, increasing the overall the total users from 3.6M users to

4.5M users at the end March 2011.

<Line graph 1: Accumulated AppStore Users>

The overall increase in users also had a positive impact on the total revenue for the Cyworld

AppStore. While the total revenue ending December 2010 was slightly over $5M USD, the

overall revenue at the end of March 2011 was at $7M USD.

0

5,000

10,000

15,000

20,000

25,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

9/3

0

10

/31

11

/30

12

/31

1/3

1

2/2

8

3/3

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8/3

1

9/3

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/31

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/30

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/31

1/3

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2/2

8

all users

new users

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<Line graph 2: Total Revenue of Cyworld AppStore (Mar 2011)>

Games and the number of developers also increased. There were a total of 30 games launched

in the first quarter from both local and foreign developers. As mentioned in the previous report,

2010 was a good year for local developers, but expect 2011 to be a better year for foreign

developers as well.

Demographics for the Cyworld AppStore remain very much the same as the previous

quarters. In terms of overall gender ratio for AppStore users, there continues to be slightly

more male users than female users (51:49) and remained unchanged from the end of the

previous quarter. Again, while there are more male users visiting the AppStore, it is the female

users that are installing apps, more than the male users (56:44).

₩0

₩100,000,000

₩200,000,000

₩300,000,000

₩400,000,000

₩500,000,000

₩600,000,000

₩700,000,000

₩800,000,000

₩900,000,000

Total Revenue of CyworldAppStore (Mar 2011)

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<Pie graph 1: Gender Ratio> <Pie graph 1: Age Distribution>

The overall AppStore age distribution also showed little change from the previous

quarter. Majority of the users who are using the AppStore are university students between 19-

24 years old (32%). They are then followed by high school students between 16-18 years old

(19%) while young professionals between 25-29 years of age and teenagers between 13-15 year

old (both at 15%) round out the majority age groups in the AppStore.

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<Pie graph 3: Age Distribution by Gender>

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RPG Genre continues to show potential Mentioned in the fourth quarter report last year, RPG genre was said to have potential based

on the early numbers of new games that were introduced towards the end of the fourth

quarter. The genre had a strong growth from last year with the increasing traffic, but had

difficulties at the start of the 1st quarter. With one new RPG game introduced at the end of the

1st quarter, the DAU for the genre took a slight dip in March. Overall, the genre continues to be

driven by two popular games, Friends Fighters and God Wars. We’ll see how the new entrants

will perform in the next quarter.

<Line graph 3: DAU for RPG>

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<Line graph 4: Revenue of RPG Genre>

The revenue for the genre has also gone up with the increased traffic. As seen in the graph,

RPG genre has been overall positive despite the dip in revenue during the month of February.

The same can be said for the Average Revenue per Paying User (ARPPU) for the RPG genere.

<Line graph 5: ARPPU for RPG Genre>

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As with past quarter, the RPG genre is still a male dominated genre with its current game lineup.

Whether we’ll see a RPG game targeted towards the large female user base remains to be seen,

but clearly, there is an opportunity there.

<Pie graph 4: Gender Ratio for RPG>

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Simulation Games Going Strong

While RPG genre continues to have good results, the games that draw much of the users to the

AppStore are simulation games. Combining business simulations, farm and aqua management

and city building games into a general simulation genre, these games continued to drive much

of the revenue in the 1st quarter.

<Pie graph5: Install and Revenue Ratio for Simulation Genre>

Leading the simulation genre are games Aqua Story, Every Town and Fashion City, each fall

under a different category within the simulation genre. They have continually held their spot in

our daily Top 10 ranking in the AppStore. Fashion City which saw a tremendous growth in the

past year, is likely to hit 1M installs the second quarter and will become only the third game to

have over a million installs. We’ll continue to see a positive outlook for games in this genre for

the near future. Meanwhile, Every Town saw a tremendous growth in revenue after it

launched their payment in December driving the entire Farming genre up.

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<Line graph 6: Revenue of Simulation Games>

Farming, Aquarium, Business Simulation and RPG games are driving most of the traffic and

revenue. The business simulation genre, especially, continues to see a steady increase in users

from both male and female audiences, but it continues to be very popular with the female user

base. With no new games introduced to the genre during the 1st quarter, the traffic increase

was from the solely from the existing games. Café Storia, a coffee shop management game,

continued to attract old and new users.

While female users tend to install more simulation games, the ARPPU for male users in the

Business Simulation genre increased from 4th quarter last year and were actually spending as

much as if not more than their female users in the 1st quarter.

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<Line graph 7:Number of Installs – Business Simulation Genre >

<Bar graph 2: ARPPU of Simulation Genre by gender>

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A Look at the Entire Cyworld AppStore

In addition to the Simulation and RPG genre, we cannot forget about the games in other genres.

Let see how these genres are performing in terms of their Average Revenue per User (ARPU)

and Average Revenue per Paying User (ARPPU). (Note that the ARPU was calculated with

Revenue/Accumulated Installs due to the lack of UV stats. Therefore, the ARPU listed on the

graph is smaller than the actual value).

<Line graph 8: ARPU of All Genres >

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<Line graph 9:ARPPU of All Genres >

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The install numbers for all genres continued to grow steadily throughout the 1st quarter.

Puzzle and Casual games continue to attract installs, and lead all the other genres however, as

seen in the previous graphs, these types of games does not monetize as well as compared to

other genres.

<Line graph 10: Accumulated Number of Installs by Genre>

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Looking at the DAU graph below, readers of our past reports will notice the DAU graph for this

report differs from previous ones. Due to a change in gathering statistics, we have updated the

graph accordingly. Games in the Aquarium and Farming genre continue to attract more daily

users than other genres. With the exception of the Business Simulation and RPG genre, much

of the other genres remained flat in the 1st quarter.

<Line graph 11: DAU of All Genres >

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While revenue for each genre had its ups and downs for the 1st quarter, there was one genre

which had a great 1st quarter. Farming genre saw unbelieveable spike in their revenue, making

close to four times the revenue in December 2010 in three months time.

<Line graph 12: Revenue All Genres>

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Developers at a Glance

As mentioned in previous reports, the AppStore has been driven by a few successful games.

This remains true for the 1st quarter with only 3% of the apps having over 500,000 installs. On

the other end, 60% of the apps in the AppStore have fewer than 50,000 installs.

<Pie graph 6: Apps Install Ratio>

Increase of Foreign Developed Games In 2010, the platform saw an increase of games from local developers and they were the driving

force for the platform during that time. In the 1st quarter, a total of 33 apps were launched in

the AppStore. It’s interesting to note that six of those games were developed by foreign

developers. Although considered a small number, to put it into perspective, Cyworld AppStore

launched with eight foreign developed apps/games in 2009. In 2010, fewer foreign developed

apps were launched, seven in total. Having already launched six foreign developed games in

the first quarter, we’re likely going to see more foreign games published for the remainder of

the year, adding variety to the AppStore.

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<Bar graph 1: Number of Apps in AppStore>

Since the launch of AppStore, foreign developers who wanted to publish in this platform

entered the market by themselves. Although entering a new market has its challenges, we are

now seeing local companies set up as a publisher to ease the entry barriers for foreign

developers and help bring their games into the Korean market. These local publishers mainly

focus on localization, payment integration, local support and marketing.

While there was a mix of casual and simulation games launched by a small number foreign

developers in the 1st quarter, one of the larger sized game was Wild Age, also known as Happy

Tribe on Facebook. While Happy Tribe’s performance on Facebook was below average, their

localized entry into the Korean market through a local publisher could prove differently.

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Conclusion The start of 2011 has been a good one for Cyworld AppStore. Continuing from last year,

Cyworld AppStore has overall continued to experience a solid growth in the 1st quarter of 2011.

After a transition period in the past two quarters, the AppStore has taken off and experienced a

fast growth through the 1st quarter of 2011, a positive growth in all areas as well.

This is the first time the AppStore has seen growth in foreign games since launching the service

back in September 2009. With new local publishers establishing themselves in the marketplace,

we’re likely to see more foreign games in the next quarter as well as for the remainder of the

year. In the 1st quarter, most of the foreign titles were developed by Chinese developers.

And what is trending in the AppStore? Simulation is a very good genre to be developing for.

We’ll continue to see games be published in the simulation genre and see success in RPG game

as well. Given how male audience has dominated the RPG, female focused RPG game could

likely see a positive result as well. Mobile platform is also an area we see will improve as it’s

slated to launch in 2nd quarter in 2011.

And as we see more local and foreign developers enter this market, we’ll likely see new games

targeting the popular genres but the AppStore should also benefit from the variety of games

added to other existing genres.