This document summarizes a presentation given in Macau in 2010 about lessons learned from social networks in Asia. It discusses how social networks in Asia diverged from Western models, with each country developing its own unique social networks focused on different revenue models. Japan focused on mobile innovation with Mixi and Gree, Korea led in web innovation with Cyworld, and China has the largest user numbers led by Tencent. Overall, social networks in Asia are viewed more as media companies than just social platforms.

1. iGaming Marketing Masterclass
Macau | 2010.02
Lessons from
Asian
Social Networks
+8* | Plus Eight Star
Benjamin Joffe, CEO

2. Benjamin Joffe
本杰明
ベンジャミン
벤자민

4. 5 years
1 year
4 years

5. Consulting | Startups | Community

6. | Plus Eight Star
• “Innovation Arbitrage”
• Internet & Mobile Digital strategy
• Best practices from China, Japan & Korea
• Published reports
• Inside Cyworld (2007)
• Inside Tencent (2009)
• Inside Alibaba (upcoming)
• Contact
• benjamin@plus8star.com

7. References
EUROPE
USA
ASIA

8. Cmune
• 3D Social Games
• First “Social Shooter”
– Facebook
– Apple.com
– Web
• Check it out!
– www.facebook.com/paradisepaintball

9. Asian Leaders

10. Common Assumptions
1. Social Networks
1. The definition of “social network” is clear
2. All social networks are variations of Facebook
2. Asia
1. Asia is homogeneous
2. Asia is all about copy
3. What happens in Asia stays in Asia

11. Quick Survey!

12. How about those?

13. On the Origin of SNS in Asia

14. Charles Darwin
“On The Origin of Species”
(1859)

15. Voyage of “The Beagle”

16. “Diverging” from common ancestors

17. 150 years later…

18. IT Infrastructure
100%
Avg. 7 Mbps
80%
Avg. 15 Mbps
60%
3G users
40% C
hi
n
20% a Avg. 4 Mbps
www.plus8star.com
0%
0% 20% 40% 60% 80%
% of Internet connections measured above 5Mbps
(Source: Akamai, 4Q08)

19. Diverging digital species

20. Revenue vs. Profit (2008)
70%
60%
50%
Profit Margin
40%
30%
20%
10%
0%
0 200 400 600 800 1,000 1,200
Million USD

21. Market Caps
(February 2010)
$34.5B
$3.3B
$2.2B
$800M

22. Evolution of Social Networks

23. SNS Timeline: USA
1967 1996 2002 2003 2004

24. Facebook
• Real-name
• Revenue models
– Advertising (90%)
– Some digital gifts (10%)
• Application platform
– Leverage social graph
– Mostly games
• Text games
• Flash games
• (3D games)
– All for developers!

25. SNS Timeline: Korea
1967 1999

27. Cyworld “Mini-hompy”
(Initial Model)
• Real-name
• Digital goods
– Avatars
– Page designs
– Music
– Fonts
– Many payment systems
• Advertising
– Brand pages

28. Cyworld Integrated Into
SK Communications’ Ecosystem
• 20M reg. users (40% of web users)
• Revenue 2Q09: 50M USD
– (Includes IM + Portal)
– Community 40%
– Ads 40%
– Other 20%
• Revenue 2009: 200M USD
– (Minor loss)
– 1,000 staff
– 10 years! Getting old?

29. 3D Evolution

31. Application Platforms

32. Source: Web20Asia.com

33. 3D Social Networks
Converging with Games & Virtual Worlds

35. Conclusions for Korea
1. Convergence of SNS, gaming & virtual worlds
2. Cyworld still dominant, but young users
3. Branded pages main way to advertise
4. Social apps growing

36. SNS Timeline: Japan
2004 2006 2006

37. SNS Timeline: Japan

39. Mixi
(Initial Model)
• Nickname
• Advertising
– Banners
– Brand pages
• Premium services
– Storage

40. PC vs. Mobile
• Registered Users 18.6M
– Monthly UV 12.6M
• Monthly PV 27.6B
– Monthly PV / UV >2,000!

41. Going Mobile

42. Social Apps on PC + Mobile!

43. From PC to Mobile
Unit: 100M PV Unit: 10K Users
Application platform
introduced
PV (mobile) PV (PC) Users
Monthly PV 27.6B
– Mobile (80%) 22.5B
– PC (20%) 5.1B
2007.12 2008.12 2009.12

44. Demographics
Total
Mobile
Total
Mobile
Most active social life?

45. Mobile Platform since Oct.09
(330 apps as of February 2010)
City Building Harvest Moon Shopkeeper Furauni
By Liveware By Liveware By Geisha Tokyo By Konami

46. Parenthesis
How is this Possible?
1. 3G everywhere (>95% users)
2. Unlimited data widespread (>50%)
3. Flash on all mobiles

47. Web Apps
• Over 500 titles
– Tougher selection than FB
– Farm & Pet games leading
• Usage & Monetization
– 4.6M users for #1 (~25%)
– 800K USD in 1 month for #1
– Revenue share with Mixi
• Top developers are Chinese!

48. Revenue
• Revenue 2009: 130M USD
– 10 USD / active user / year!
• Revenue Sources
– Advertising 89%
– Paid Services 7%
– Job Search 4%
• New Sources
– Applications & Payment (PC & Mobile)

49. Mixi
(New model)
• Saturation of user base
– Need for new revenue models
• Full throttle on mobile
– Mobile 4 times more active than web!
• Tapping into digital goods revenue
– Mobile & Web social apps
– Revenue share on apps

50. Mobile Game Town

51. Source: DeNA

52. 3D Avatars
For Self-Expression & Gaming

53. National Brands on Board!

54. Mobile Open Platform
• Launched January 2010
– 40 partners
– 92 games
– Virtual goods, ads, avatars
– Leverage expertise from in-
house games
– Some games also released
on Mixi Mobile!
• Target: Become the #1
Social Entertainment
Platform

55. Revenue

56. Revenue
70 MUSD
in Q3!
PV x2
With apps
35M USD
= games!

57. Gree
(Initial Model)
• Web-based
• Real name
• Advertising
• Competing with Mixi!

58. Gree
Model Change!
• Web-based > Mobile > Mobile + Web
• Real name > Nickname
• Advertising > Digital goods
• Competing with Mixi! > With MBGT!

59. Usage & Demographics
• PageViews • Demographics
– 99% Mobile – Gender parity
– 24.7 bln/month – 75% users 20+ y.o.

60. Gree

61. Advertising
Gree Home Advertising &
Affiliates | 25%
Avatars & items
B2C virtual
Games goods | 75%
60% avatars
40% games

62. 4Q09
Revenue
81M USD
Profit
50M USD!

66. Results
• Spent millions of USD on ads!
• Users skyrocketed
– 15 million! (15% of mobile users)
– Mostly thanks to 2 games titles!
(fishing & pet games)
• Opening mobile platform too

67. Conclusion for Japan
1. Mobile SNS is a Business
– Facebook makes $0 on mobile
2. Mobile SNS is a Media
– Not only for kids!
– Various FMCG already on it
3. Mobile Social Games
– In-house vs. Third-party
– Ecosystem getting more complex

68. SNS Timeline: China
1996 1998

69. Digital Goods

70. Will it blend?

71. In 2008
• Revenue: 1bln USD
– 90% from digital goods
• (35% from games)
– 10% from ads
• Net margin: 40%
• 2009: >1.5 bln USD

72. Facebook Influence
Kaixin001.com

73. Fighting Dirty
Kaixin001.com
Kaixin.com

74. Tencent Joins the Dance
Kaixin001.com
Kaixin.com

76. Happy Farm!

77. Main Model
• Advertising is not enough!
• Social games
– First farm game was in China!
– Advertising in games

78. Demographics & Users
• Young
– 70% of Internet users in China < 30 y.o.
– Urban white collars (have PC)
– University students
– Many women!
• Average income
– Avg. salary 500 USD / month

79. Key Numbers
• Users
– Tencent 1B+ (485M active)
– Qzone 310M users
– RenRen 200M (50M also mobile)
– Kaixin001 75M
– 51.com 160M (38M MAU)
• Multiple accounts!

80. Conclusion for China
1. Tencent dominates with IM
– BUT other SNS competing
– Huge ad inventory for all
2. Social games = major revenue model
– Social games are media too!

81. Leaders Going Global?

82. International Expansion
• Korea
– Cyworld early mover! China, Japan, USA, Europe, etc.
– Most operations closed by now.
– Online game companies growing globally.
• Japan
– DeNA (Mobile Game Town) acquisition in China, subsidiary in US.
– Gree at home.
– Mixi office in Shanghai but no traction so far.
• China
– Tencent: partnerships & investments (including US).
– Kaixin001, RenRen, 51.com busy at home.
Social networks are cultural products!

83. DeNA Buys TX.com.cn
(July 2009)
• 9M members
• Leverage expertise in
– Avatars
– Games
– Content

84. Conclusion

85. SNS in Asia
1. Social networks = media
2. Japan = mobile innovation
3. Korea = web innovation
4. China = leads by all numbers

86. How do you think?
1. Social Networks
1. The definition of “social network” is clear
2. All social networks are variations of Facebook
2. Asia
1. Asia is homogeneous
2. Asia is all about copy
3. What happens in Asia stays in Asia

87. Thanks!
More about “Innovation Arbitrage”
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benjamin@plus8star.com
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+86 | China
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