Although the vast majority of Facebook’s user growth has occurred outside the United States over the last couple of years, one of the most notable countries where it hasn’t grown is China. Access to Facebook within China is largely blocked by the Chinese government, as is the case with many other western websites. But while most Chinese Internet users can’t access Facebook and vice versa, that isn’t stopping social game developers and publishers in China and North America from eyeing – and moving into – each other’s markets.
It’s been well documented that much of what is happening today in the West in terms of the proliferation of virtual goods-based free-to-play business models has actually been around in Asia for a while. Historically, however, these markets have generally been led by local players. In 2010, we’re beginning to see what could become a larger and quite interesting trend: Chinese developers moving into western markets via Facebook, and even some western Facebook game developers beginning to move into China. The trade routes for virtual goods exports are picking up.
Chinese Developers Heading to Facebook
So far, most of the early Chinese success stories on the Facebook Platform have come from relatively young companies – and not China’s largest game operators. Shanghai-based Five Minutes, whose Happy Farm sports around 25 million monthly active users on QZone, RenRen, and 51.com, is now reaching about 3.5 million MAU on Facebook via Happy Farm and the new Happy Farm 2, according to AppData. (Five Minutes Co-founder and COO Season Xu is a speaker at our upcoming Inside Social Apps 2010 conference on April 20 in San Francisco.) Happy Farm launched in late 2008.
Beijing-based Rekoo reaches about 4.5 million MAU on Facebook through games like Animal Paradise and Sunshine Ranch, according to AppData. It was founded in 2007. ELEX, also based in Beijing, reaches about 5 million users per month on Facebook, according to AppData. The company also says it reaches 5 million DAU in China and 3 million DAU in Russia. It’s been around since 2005.
And 6waves, which is by far the largest publisher of Facebook games developed in the region (see AppData), and recently raised a large $17.5 million round of funding, is leading the charge across the Pacific. While the company has focused primarily on distributing Chinese-developed games on the Facebook Platform around the world but outside the US through 2009, CEO Rex Ng says the company is now targeting growth in the US in 2010. (Rex will also be speaking at Inside Social Apps 2010 next month.)
For all of these Chinese Facebook developers, it’s important to note that not all of their Facebook traffic is western, but they’re moving in that direction. Perhaps more interesting is who’s absent – notably, large Chinese online game operators like Shanda, Changyou, NetEase, and Tencent. Of those, only Tencent/QQ Games has launched pilot efforts on Facebook, but the company’s Treasure Hunter title only reaches 27,000 monthly active users, according to AppData.
Despite their absence to date, we’ve been hearing more rumors lately of China’s gaming giants preparing to put “large amounts” of capital into establishing a presence on the Facebook Platform – in some cases, over $50 million. “Who else is going to challenge Zynga?,” one industry veteran says. While EA chose to enter the market via a large acquisition of Playfish (which has incidentally long had a studio in Beijing), and other large US publishers are exploring a variety of options, we’re hearing the Chinese gaming companies are preparing to go to the build route (though we wouldn’t be surprised to see them taking interest in some smaller Facebook Platform developers too).
Facebook Developers Heading to China
While the number of Chinese developers moving onto Facebook is ramping up in 2010, some western Facebook developers are actually heading into China. After establishing a footprint on Facebook, these developers are not only building game studios in China, they also are trying their hand at building social games for Chinese users on local social platforms there. While these companies asked not to be identified, they are moving, and there may soon be two fronts in the Pacific social gaming theater.
Facebook Blocked in China, But Regional Influence of Facebook Ecosystem Increasing
While Facebook isn’t becoming a large online gaming platform in China, it is growing in influence in many other countries, surpassing other social networks in southeast Asia in overall reach. While the mobile social landscape is far richer in the region than it is in the US, Facebook has seen significant growth in mobile use in particular.
For example, in Indonesia, nearly every user is on Facebook via their phones, says Facebook’s Chamath Palihapitiya. And in Taiwan, Facebook exploded from just under half a million monthly active users to over 5 million MAU in just six months during the second half of 2009. Restaurants in Taiwan are giving out coupons for virtual currency in Facebook games to attract customers.
Take a look at these monthly growth numbers for other countries across Asia and the Middle East for the first month of this year:
Growth in Virtual Goods Exports via Social Games
Overall, this is going to be a very interesting year as more social game developers eye markets outside their native land. While the Chinese gaming giants have built tremendous businesses via a variety of social services, it will be interesting to see how aggressively they pursue the Facebook Platform, or if more nimble startups will be able to defend their early footholds.
Regardless, it’s clear that developers of apps and games on Facebook are increasingly thinking of themselves as global service providers. It’s sure to be an interesting year.