A Look at the Social Gaming Ecosystem on China’s RenRen.com

We took a look at virtual goods and social gaming in China, last week. Today, we’ll look at the app ecosystem inside RenRen.com and Kaixin.com; of these two sister sites, RenRen is the more popular and has one of the most open developer platforms in the country. We'll look at how they present and promotes apps to users but focus more on RenRen. Background RenRen.com is one of China’s top 3 social networks. Together with sister SNS Kaixin.com, it accounts for around 16% of the total social network market in China, according to a 2009 report on social network usage released by the China Internet Network Information Center (CNNIC). 16% may not seem like much (we last reported Facebook's estimated U.S. market share to be hovering around 58.6%), but it's a sizable figure for the highly fractured China social networking market. According to the chart above, 'other networks' combine to make up around 15% of the total market, or nearly as much as RenRen.com. Unlike in the U.S. or other markets around the world where one or two dominant players have tended to emerge, China’s social networking market includes many smaller players. Here, the CNNIC has chosen to group these as ‘other.’ The CNNIC estimates that the average user has multiple social network profiles - around 2.7 per user, to be exact. The graph shows the how much of that 270% belongs to each of the major networks: QZone accounts make up 50% RenRen accounts make up 37% Sina Space accounts make up 36.6% 51.com accounts make up 27.1% Kaixin001.com accounts make up 26.4% Bai.Sohu.com, Sohu’s newly launched SNS, accounts make up 16.3% Douban.com, a site for socializing around books, movies and music, accounts make up 10.1% 139.com accounts make up 10% Kaixin.com accounts make up 6.8% ‘Other,’ smaller or local services contribute 39.9% To calculate our 17% market share estimate for RenRen.com, we combined percentage figures for RenRen.com and Kaixin.com -- both owned and operated by parent media company Oak Pacific Interactive, who has also recently announced that it will merge the two sites’ userbases. Then we divided by 2.7 to capture the number of users on social networks. Notice that the ‘Other’ category makes up a very substantial percentage of the total. Overall, RenRen.com is China’s 14th most trafficked site, while Kaixin.com trails as the 122nd most trafficked site. This is according to Alexa, an imperfect web measurement service that is one of the few to make China web traffic publicly viewable. Kaixin001.com, on the other hand, is China's 11th most visited site. Note that Kaixin.com and Kaixin001.com are not the same social networking service. Kaixin001.com was established in early 2008, seven months before Kaixin.com, and continues to occupy a very significant portion of Chinese social networking traffic. Now, let's take a quick look at the portals themselves. Both RenRen.com and Kaixin.com have identical user interfaces, save for slight color theme variations. Additionally, both networks leverage one app directory to bring social games to millions of users every day. The RenRen.com homepage: friend updates, requests in the upper right-hand corner, instant messaging at the bottom, and a tab for apps in the blue section at the top of the page. The Kaixin.com homepage. Same friend updates, same requests in the upper right-hand corner, and same app directory link, this time in orange. Market share split: RenRen 13.7% Kaixin 2.5 % Total combined 16.2% Why is Kaixin.com so far behind its sister site? RenRen.com started out as Xiaonei.com, one of China's earliest and most popular social networking services. Like Facebook, Xiaonei seeded itself from within college campuses (its name means 'on campus') and fueled its growth by leveraging the high interconnectedness of college networks. Later, Xiaonei's parent company, Oak Pacific Interactive, decided to rebrand the site as the network for 'everybody,' or RenRen. In late 2008, an Oak Pacific subsidiary company, Qianxiang Wangjing, observed the increasing popularity of Kaixin001.com, and of its apps and games, and quickly launched a competitor site, Kaixin.com. In popular usage, the '001' gets left out, so both go by 'Kaixin,' which simply means 'happy.' In May of 2009, Kaixin001.com filed an unfair competition lawsuit against Oak Pacific for starting the site, which, according to China Daily, remains unresolved today. Anyway, Kaixin.com jumped into the social networking game a little later than others, as its traffic numbers clearly indicate. At the same time, though it offered apps and games earlier than some of its competitors, Kaixin001.com remains closed to 3rd party development to this day. For the remainder of this article, we will look apps from the RenRen.com portal - one that's both open to 3rd party development and sees significant traffic from China's millions of social game players. Major features: Standard feature set: status updates, notes, photo albums, gifts, and fan pages Prominent 'Apps' tab from homepage, another 'Add apps' link in left navigation Prominent virtual currency store link directly from the homepage A 'VIP' upgrade that, for an affordable 10 RMB a month (or about double the cost of a cheap lunch), allows users to increase the limit on their friend count to 2,000 (from the current 1,000), increase the number of messages they can store in their inbox, have access to additional profile customization features (special 'skins' and other self-expressive elements), and even get free antivirus software. The App Directory Like top social games in the United States, the most popular Chinese social games demonstrate a remarkable lack of game genre diversity. Farming games dominate across the board. Other popular game themes are fish / aquarium, pets / animals, and restaurants / kitchen. RenRen's top five games showcase familiar themes with a few variations: several are developed in-house by the SNS itself, and payments look a little different in China than what we've seen thus far on Facebook. 1 - Sunshine Ranch by Rekoo 18,932,037 monthly active users 1.6 million daily active users Sunshine Ranch is a ranching and livestock game where users grow crops, raise animals, manage farm operations, and engage in ‘friendly competition’ to drive their ranch to the top of the leaderboard. In an interview with Inside Social Games last August, Rekoo CEO Patrick Liu indicated that Sunshine Ranch was already seeing 7 million DAUs across all Chinese platforms at that time, and today it still holds the number one spot on RenRen. 2 - RenRen Café by RenRen 8,142,643 MAUs 870,172 DAUs In RenRen Café, users recruit friends to be their café’s head chef, to act as waitstaff, or to "scrub the toilet." The café also incorporates numerous self-expression mechanisms – users can earn or purchase unique decorations and specialty dishes to enhance their café and get ahead. Notably, RenRen Café is developed in-house, and features fancier-than-usual 3D graphics: 3 – Building One by Shanghai Kai Ying Network Technology Co. 5,092,524 MAUs 588,491 DAUs Building One is a virtual world that somewhat mirrors the increasingly common urban Chinese experience of living, working, and playing in mixed-use high-rises. Users play house, run a small business, and simultaneously socialize and compete with friends and neighbors. Building One is developed by Shanghai-based Kai Ying Network Technology Co., which received an undisclosed amount in a funding round from Kleiner Perkins's China branch earlier this month. 4 – Happy Farmer by Beijing Tong Chi-Star Technology Co. 6,173,628 MAUs 574,688 DAUs Happy Farm, likely to be China’s most popular social game, mirrors the familiar farm game mechanisms that have helped to make farm-themed games on Facebook wildly popular. But this is not that Happy Farm. Well, not exactly. The 'Happy Farm' we're familiar with here is the popular game by Five Minutes that made its way onto Facebook in mid-2009. According to AppData, Five Minutes' Happy Farm is seeing 2,945,975 monthly active users and 921,131 DAUs. According to an independent Chinese application data service, Five Minutes' Happy Farm is seeing 27 million MAUs and 3.4 million DAUs on RenRen. So why didn't we see it on "Most Popular" leaderboard (sorted by MAUs) within the portal itself? It appears that there may be a disconnect between RenRen's own way of displaying and promoting certain apps and how well other apps are doing. Happy Farmer is an identical knockoff, created by a company called Beijing Tong Chi-Star Technology Co., Ltd. Development, that made it into the top 5 when we took this snapshot, but is in fact not as popular as Five Minutes' Happy Farm. We've reached out to contacts in the Chinese social gaming industry for comment, and will explore this question more in the next article in this series. 5 – Happy Aquarium by 6 Waves 4,688,484 MAUs 539,880 DAUs Not to be confused with Crowdstar's Happy Aquarium on Facebook, 6 Waves' Happy Aquarium is that developer's most popular app on RenRen, and its only app to have made it into this recent top five. Users get ahead by raising aquatic pets (some are more valuable than others), and decorating their aquariums with magical props. Note: It appears this app may actually be made by Twofishes Interactive, as the developer has a very similar app called "My Fishbowl" on Facebook. That app has been promoted through 6 Waves. In our observations of the leaderboard, significant traffic to the RenRen app platform is going to apps developed in-house by the SNS itself. This includes RenRen Cafe, noted above, but also factors in such non-game apps as photo albums, gifts, and a 'voting' app. Other top apps come from larger developers who have already made forays into markets outside of China's SNS. Within the leaderboard's top 20, many of the same names come up over and over again, not unlike lists we're seeing on AppData week over week. Update: Happy Aquarium was actually developed by Happy Elements Co., formerly Twofishes Interactive Co., while being published by 6 Waves, according to Haining Wang, Senior Director of Platform, Value-Added Services, and Social Gaming at RenRen.com. Will they monetize? How much money is there in the Chinese social games market? We noted in the last article in this series that the virtual goods market in China is estimated to be tracking toward $5 billion for 2010, while our latest numbers show the virtual goods market to be heading towards $1.6 billion in the U.S. But, what percentage of the impressive $5 billion is actually coming from virtual goods transacted within social games? Developers are not yet publicizing data on the ARPUs they're currently seeing, but here are a few things we do know: 1. Chinese networks are notoriously difficult to break in to because not all are not open to third party app development. Kaixin001 and QZone, China's two biggest social networks, currently feature in-house apps only. 2. Those that do officially allow third party development are often open only to ‘select’ developers who have cultivated business relationships (‘guanxi’) with the SNS. Additionally, as we've previously learned from an interview with Rekoo CEO Patrick Liu, the SNS often takes around a 50% cut of revenues. 3. Direct payment by bank card still seems the most common way to pay. Apps on RenRen integrate with payments provider YeePay, which offers bank card payment, mobile payment via SMS, prepaid card and timed IVR, but NOT credit card payment. 4. As of yet, there are no advertising offers of the likes we see on Facebook, but we did observe that you can now 'earn' points on Sunshine Ranch by inviting your friends to install the app. We have previously noted an increase in Chinese developers creating apps for Facebook - enticed by its openness and massive global audience. We are also now seeing significant foreign capital flowing in to the Chinese social games market, despite recent barriers imposed by the Chinese government in the form of a 'ban against foreign investment in the online games industry.' (Note that this would explain why Shanghai Kai Ying Network Technology Co. received its recent multimillion dollar infusion from KPCB's China gropu.) In the next post in our China social games series, we'll take a look at the promises and pitfalls of the Chinese developer landscape, and look at why some of China's most promising companies are looking to social networks beyond their borders.

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A Look at the Social Gaming Ecosystem on China’s RenRen.com

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