Inside Social Apps 2010: Social Gaming’s Expansion in East Asia and Around the World

We had a strong international showing today at our Inside Social Apps 2010 conference, and this included leading developers coming out of China. As Facebook has grown around the world, social games on its platform have also spread. The example of their success has in turn inspired other social networks to open up their platforms to developers, notably happening on Mixi in Japan and RenRen in China.

We examined how developers are building businesses around the world in the “Thinking Globally: How to Monetize International Audiences” panel.

Here’s who was on it:
Rex Ng, CEO, 6 waves
Season Xu, Co-founder and COO, Five Minutes
Patrick Liu, Rekoo
Ron Hirson, Co-founder and SVP Product, Boku
Benjamin Joffe, Founder, +8* (Moderator)

And here are our highlights. Note: You can check out tweets from this and other conference sessions via the #isa2010 hashtag on Twitter.

Joffe: Can you start out by telling us more about your companies and were you focus.

Ng: We’re active around the world on Facebook, in every region.

Xu: Around one-eighth of our users are on Facebook, but that’s where we get 50% of our revenue; also, 80% of our Facebook users are Taiwanese.

Liu: We’re the top social game developer Japan, South Korea and China. We’ve launched on Facebook but we’re still not very big, with around 1.6 million monthly active users.

Hirson: Boku is live in 60 countries, with revenue coming from around the world.

Joffe: You’re all working in multiple countries. How did you pick the markets you expanded to?

Hirson: We went for merchants looking for traction on social networks. We looked at top 5 social networks, countries, mobile phone penetration and data usage, and compared that to credit card penetatration. Many countries don’t have good penetration. In some countries, we see mobile payments as the primary method that people pay. The US ends up being about one third of our payment revenue, then a third in Europe and a third from the rest of the world. That’s because of the spending power of Europe and America. But in Asia the amount per person is low but the volume is high because there are so many people.

Joffe: Patrick, you said you were the number one social gaming company in Korea and Japan.

Liu: We launched in China and decided to try Japan and South Korea, and now Russia, too. Second half of 2009 we came to Facebook. We made lots of changes for Western users. Japan is a pretty good market, but the barriers are extremely high. South Korea, too.

Joffe: How did you decide to address those options?

Liu: In the beginning we didn’t know, we just wanted to try. My first venture was a social network company in China in 2004 and 2005. I got to know Mixi in Japan. I saw the evolution of Facebook. I got to know Cyworld in South Korea, I thought, well, we have a product right here. Let’s try. In Japan we had to do a lot of changeover.

Joffe: If I remember you had a little help from local partners and investors.

Liu: In fact that’s not correct. In the very beginning, nobody helped us. But I happened to know some people, I asked the Mixi platform — can you get the foreign company in? Of course they said, but we went through lots of efforts. From the first day we launched our product in Q4 of last year. But after the first week, we had all viral growth, we grew so fast, that the platform said great job.

Joffe: Cultural differences — it can be difficult to localize a game to certain markets. You launched a farm game first. What’s different about China versus the US.

Xu: We added stealing, but that’s not popular in western audiences. It might sound bad, but it represents a different meaning. In China, a shy guy might like a girl so he steals her book, then inserts a secret note, then he gives her the book and she finds the note.

Certain aspects can work in China but not elsewhere. One of our animals has no anus. It holds money but nothing gets out. If you have it, then you can have 1% more harvest in our farming game. But obviously when we put it in Facebook, people didn’t buy it. Also in China, we have jokes called “cold” jokes” that, when you say out loud it’s so stupid that nobody says anything. You don’t say anything, you just stare at him. Those are popular. These cultural differences make it harder to port our games to different markets.

Joffe: Rex, you’re a publisher and you don’t develop your own games any more. How you decide which developers to work with?

Ng: We see the stuff from the US getting better at having universal appeal. It’s still the mass entertainment capital. Like movies — now social games. But we have to see if a game will work for a particular region. We used to have a game called “world at war,” where you represent your countries. But we found there are different behaviors. Chinese like to save money, Americans like to buy weapons, Italians just like to fight, period.

Xu: Asian people want to exchange money for status. But Western players want to exchange it for fun and entertainment.

Liu: More than language translation. We found that there are many many times that Japanese people don’t like at all. It seems Russians have a different feeling about vegetables [Ed. Reader cjin has a clarifying update on this point — different vegetables have different values in different regions and cultures].

Joffe: Patrick, what’d you do to localize?

Liu: We have our own office in Tokyo, and one in Russia. We also hired people in the states who have worked in China. They can communicate with us. We are dealing with different cultures and regions. The combination of different kinds of people.

Joffe: How are you handling global growth?

Hirson: Competition to get your app up and live and good penetration — better opportunities outside of the US. We see great ARPU in Nordic countries. If you’re developing on top of Facebook, you identify where advertising is cheaper and revenue is higher.

Joffe: What’s your view on future trends and opportunities of monetization.

Ng: I’m seeing a diversity of developers. Before it was only three types of games: resource management, RPG and pet-caring. A lot of those, and a lot of fast followers. Now I’m seeing a lot of diversity. Feature, higher ARPU. First-person shooters, all sorts. I think there’ll be different kinds of content.

Liu: You have to diversify the platform. You cannot be dependent on one platform. The second thing: Internationalization. Now that you have one product, you can distribute it to everywhere. Marginal cost is almost zero.

Joffe: Do you see revenue per user paralleling GDP per capita in countries?

Xu: It matches countries

Liu: It’s growing fast

Ng: After we get game cards, pretty comparable in China — a bit better than GDP per capita. We go in at pretty low price point. Gamers can choose… with the right optimization, it’s pretty comparable.