RockYou Licensing Chinese Social Games to the World

Top social application developer RockYou announced a smart plan to tap the Chinese social gaming world last Friday. It is starting to license Chinese social games and publish them around the world. Monetization and distribution services are not new to Facebook, as RockYou and many other developers have provided them for years -- the company has sold advertising for applications since 2007, for example. But most services have either focused on being a developer or on being a service provider, while RockYou has so far managed to do both. Taiwan-based 6 Waves has specifically based itself around the publishing model, providing a network of its own apps that it has leveraged to distribute others' social games, especially ones from China. Today, RockYou wants to publish Chinese social games outside of China, rather than build its own apps for social networks in the country or try to provide platform services there. The announcement comes at a time when the company has been been on something of a rebound on Facebook. It has also been rumored to be considering an acquisition from Chinese gaming giant Shanda, as we covered last week. Rockyou has not directly denied talking with Shanda and it has framed the possibility as "just rumors." But, RockYou cofounder Jia Shen says that the company is planning more acquisitions of its own in the country and region. We first heard a rumor about this when RockYou raised $50 million in a fourth round of funding last fall, following in previous funding of $67 million; the latest announcement appears to affirm its independent plans. China investor/blogger Bill Bishop interviewed Shen on Friday, and got some more details. "Shen did not address [the rumor] specifically, but after talking to him and others in the industry I don’t think RockYou would sell to Shanda right now," he writes. "When asked generally about possible moves into US social gaming by Shanda and Tencent, he said that those firms are still trying to figure out SNS gaming in China and so does not expect them to move that quickly into the US." RockYou made a big point of its China partnership efforts last Friday, with Shen providing a presentation to developers in Beijing about the nuts and bolts of social apps during a social gaming conference. Many Chinese developers do not have the resources to go after big US markets on their own. The Chinese market is big, but most gamers are playing well-established massively multiplayer online games or casual games offered within portals, rather than ones based on users' social graphs in social networks. Revenue in other popular games can be quite high, with the overall Chinese virtual goods market estimated to be worth more than $5 billion -- but most of that amount is not from social games like what one sees on Facebook or MySpace. And it is harder for developers to make money. "For something a Chinese user is willing to pay one Renminbi [for], a user in the U.S. would pay $1,” Shen said, according to The Wall Street Journal. "'It’s almost a one-to-one comparison." (One dollar is the equivalent of almost seven Chinese yuan. Other factors, like tight censorship rules, also get in the way of building successful social gaming companies. Small developers can't typically afford the fees and time required by China's increasingly rigorous censors. Bishop got a range of other key details, as we'll summarize here. But before we get into them be sure to check out the details what RockYou's monetization platform includes, if you're interested: Basically, a range of advertising and virtual currency services. To date, the company says it gets 13 billion ad impressions every month. It has 280 million unique visitors across major social networks, 121 million of whom are in the US -- and 72 million un-deduplicated users on Facebook, according to AppData. 1,000 developers are already using its platform. It shares 50% of the revenue from licensed games with monetization platform partners. RockYou has already been busy in the country, as Shen told Bishop. Although it published two games on RenRen in 2008 -- that Shen says did well -- it does not plan to do any more of its own. But it has outsourced some of its own game development to Chinese developers, and it may establish an internal studio in Beijing. In the meantime, it has "a Singapore-based executive overseeing China (though Shen is very involved)," as Bishop describes. It has licensed one game already, CafeJoy's "Casino World," and it is working with some of the largest Chinese social game developers today, it announced. No names yet, though. In terms of buying more companies, it is "open-minded on possible deal structures, from license deals or minority investments to outright acquisitions." The company is, unsurprisingly, not looking for "one-hit wonders." The focus also continues to be social versus traditional gaming, as Shen "does not believe there will ever be a market on the English-language social networking sites for Chinese-themed games like 'Romance of the Three Kingdoms' or 'Journey to the West.'" Lots of big social gaming companies based in the US and other parts of the world have been spending more time in China over the last year or two. RockYou has made the biggest moves yet, and if its publisher plans work, you can expect to start seeing a lot more China-based social games coursing through the Facebook ecosystem in the near future. The strategy should give the company more total traffic, meaning additional inventory for its advertising business, and purchasers for its other monetization services.

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RockYou Licensing Chinese Social Games to the World

Eric Eldon

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Eric Eldon