Mobile Monday Beijing this month featured speakers and panelists focusing on the SNS Gaming market and mobile Apps. The key speakers of interest for the evening were Justin Smith, Founder of Inside Network and the Mobile Gaming Panel led by Akio Tanaka of Infinity Venture Partners.
Mobile Monday was held this past Thursday over at the Orange Labs venue space in the Haidian District of Beijing. The reason for the shift was to accommodate some special speakers’ schedules, and overall, the change from the transitional Monday night was well worth it.
Keynote Speaker – “The State of Facebook Gaming”
Social Gaming- an overview:
Justin Smith, founder of Inside Network, provided some interesting insights on the state of Facebook currently in regards to SNS Gaming. Overall, in his opinion the market is maturing and beginning to settle due to the fact that Facebook has implemented controls to ensure a certain quality level in the games on its platform and they are now taking a cut of the revenue generated by SNS games on their platform – 30% to be exact. Facebook ensures they get their cut by requiring the purchase of Facebook credits to purchase things from the games. No game is allowed to sell material outside of this credit system. This cut in revenue combined with the saturation of the market has made it far more difficult for just any “average Joe” developer to jump on the Facebook SNS Game bandwagon. Be aware that according to Inside Network’s research, 34% of Facebook users don’t even know these credits exist, so Facebook still has an awareness problem to deal with in that respect.
All that said, there are still some dynamics at play with in the market. For instance, 6 out of the top 10 games on Facebook last month were completely new when compared to the previous year’s top 10. He attributes this to high level of user acquisition that can be done through the web-ads on Facebook. Most games are free to play with some sort of pay element cooked in that requires a payment should the user wish to “unlock” more features within the particular game. The current conversion rate of users from “free to play” to “pay to play” according to Justin is between 0.5% to 2%. This is a pretty darn good conversation rate for the business model.
Predictions on where gaming is going:
As far as the future goes, Justin sees the move being mobile game and midcore gaming. Smart phones are proliferating very quickly and, so the argument goes, they will replace PCs and consoles at some point. While I may be keeping my head in the sand, I don’t think this is the case. I merely believe the gaming industry is finding that there are more ways to sell games than through PCs and consoles in addition to the fact that there are different demographics attached to these new ways of selling games. For instance SNS gaming, unlike hardcore gaming, is tilted toward the young female demographic.
Midcore games are the latest niche to be explored in SNS gaming. Midcore is suppose to stand somewhere between SNS and hardcore. Though what a gamer may consider hardcore versus what a statistician would consider hardcore probably is quite dissimilar. That said midcore games are supposed to be more complex games built within the platform. These games carry a smaller following, but the business model is built around charging each user more per purchase to turn a profit. The Dragon Age game on G+ would be a good example of this.
Ultimately, HTML5 is the hope that will cause the platform lines to completely blur. But whether browser based gaming across any platform will be here next year or in 5 years in a big way is still too murky to determine.
Gaming Panel – “Japan Will Beat Facebook with Pokemon”
Below are the highlights from the panel.
Moderator (Not Pictured):
- Akio Tanaka – Infinity Venture Partners
Panelists (Left to Right):
Tanaka: Are consoles dinosaurs? Is mobile the way of the future? Where do y0u think there are opportunities?
Smith: There is/will be a major shift from social to mobile. Three years ago Venture Capitalists were after social game companies, now they are after mobile developers because that is the new frontier.
Tanaka: If I am a newbie developer, but I have excellent talent, where are the opportunities I should be targeting?
Smith: Midcore and undeveloped SNS genres are probably the best targets to go after right now.
Tanaka: Previously, Gree’s CEO said that the Japan market is big enough for Gree, but now they are expanding (particularly to China) – why the shift in strategy?
Hashimoto: We feel the Chinese market is still up for grabs. Gree makes better games than Zynga, so we feel we can dominate here.
Tanaka: Rekoo decided to expand to Japan – how did you accomplish this?
Jing: First, great local partners made the move possible. Additionally, we realized that the cultures are different. To succeed we need to modify our games, not just translate them. For example, stealing from friends and being rewarded for that action in a game is acceptable in China, but the Japanese culture would not accept such actions. We had to alter our games to match such sentiments. This is why knowing your market is so important. Lacking such knowledge leads to failure before you even begin.
Audience Question: Facebook’s rumored Spartan project will potentially position Facebook as a direct competitor to Gree. What is Spartan and how will Gree face this challenge?
Smith: Facebook is working on a web based platform for game distribution – think HTML 5 type situation that will eliminate the need for apps and give Facebook the ability to expand its gaming platform outside of SNS gaming.
Hashimoto: To counter Facebook, Gree will need to make strong alliances with companies that see Facebook’s growth as potentially threatening to their own marketing position. But until we see it, we really cannot say what will be the answer.
Tanaka: I have the answer. Japan will beat Facebook with Pokemon. (Laughter)
TL;DR (Too Long; Didn’t Read)
The evening ended up being one of Mobile Monday’s better events. The insights shared by the experts were telling as to where things have been going over the last few years and where they are headed. So what are the general “take-aways” from the event?
- Facebook has forced the SNS market to mature through its quality control checks and revenue share requirement.
- SNS Gaming developers are seeing excellent user acquisition through Facebook Ads.
- SNS gaming has lost its “sparkle” and the hot market going forward is mobile gaming.
- Midcore games are the “new frontier” in trying to find profitable niche markets in the maturing SNS gaming market.
- App based games are on the verge of being replaced by web-based games that aren’t hardware platform specific.
- China’s gaming market is huge and no player has become the undefeatable force in the market yet.
- Facebook is going to become a major gaming platform competitor, but Pikachu, Gree chooses you!