Gaming consolidation has happened several times in the West over the last two decades, but it will be new to Asia. Due to such high growth levels across Asia it will be a slower process over several years. Unlike the console transitions, the multiple delivery and revenue channels will still remain open and active, with some markets lagging well behind others in timing.
Recent trends and tech announcements across both east and western markets share a number of core threads which need to be focused on in development planning. A great game in Asia is no longer based on graphics and licensed IP (or even franchises). In the online space both the delivery channels and business monetization must be given equal weight to the game itself.
The sum of online development success has become far more complex, but at the same time if addressed correctly the risk factors are less.
The Core Elements:
Let’s work through the current trends and threads from west and east in order to develop a workable path for new development.
Social Networks.
Social Networks are critically important for online gaming monetization and expansion. They have already captured an audience of friends and game players. We can now use them to supply our audience, and an additional revenue, producing promotional channel.
Facebook has highly successful competitors across Asia. QQ in China with over 300 m users, Cyworld Korea with 20m+ and Mixi in Japan with 16m+. What QQ and Cyworld have done far better than the Western SNS is to monetize through digital items and not advertising. The QQ revenue mix only has around 13% in advertising revenue.
Facebook has been moving rapidly into games and item transactions. We have seen amazing growth and success in social gaming through developers like Zynga. Digital item monetization in Asia is being increasingly used successfully across the Western online offers. In 2009 online players in the USA spent more than $1 billion on virtual goods, and they’re expected to spend $1.6 billion this year, that is remarkable growth and change in player engagement.
Cyworld Koreas has a highly developed digital item and avatar community. They are now operating a search engine and so stepping into the browser arena. However they are not an open platform for 3rd party.
Mixi Japan has now become a more open app’s platform which will drive a huge amount of content through to its community. It opens the door for developers to marry a link between online gaming and the SNS community.
QQ has developed many levels of community engagement (depending on how much you want to pay) from IM to dating to music and PVP gaming. They (Tencent) are experts in monetizing across so many content offers and evolving their offer. QQ is closed to outside developers so the more open Chinese SNS like Kaixin or 51.com may secure more future 3rd party development focus.
Hi5 in the USA recently acquired The Big Six social gaming company and yes, you guessed, they are moving into gaming and digital items for future monetization.
The Asian and Western SNS in essence are becoming closer in operational engagement of their communities, gaming is a core deliverable.
MMO’s
The financial crash may not have hurt the Asian gaming majors, but what it has done is clarified the need for gaming to have a mass market approach. Move to browser/cloud content and clever item based monetization. Digital item selling in Asia has been around for sometime but it continues to evolve in how it encourages repeat and long term purchases. Areas like limited time rental instead of purchase, gifting and even player to player trading are becoming increasingly used.
Omake recently completed a successful North Asian tour with a 3D browser MMO; item based game from Sparkplay in San Francisco called Earth Eternal. What was very different to previous trips was that an equal amount of time was spent on the business model as the game itself. The CEO of Sparkplay Matt Mihaly is in-fact one of the pioneers of micro-transactions way back in 1997 with text based MMO’s. That alone was a surprise to many Asian publishers.
The Asian publishers have attracted massive daily users to their games but have generally not managed them as a SNS like community. The free to play model may have a low barrier to entry but equally a lower one to leave. It is friends and clans which drives the life of an online game, the same friends that would be found within their local SNS.
Browser/cloud based gaming, large MMO’s are moving very quickly towards mass market one-click game entry. Ignoring the current limitations of Flash and 3D, there are a number of 2D MMO’s across Asia enjoying huge consumer traffic. The catch being how to monetize them and hold them as a publisher within a community, not as a single game specific group of players
Browser and Mobile
One of the most telling key note speeches recently made by the CEO of Google Eric Schmidt at the Mobile World Congress, where he emphasised the Google focus and importance on the “mobile web, mobile is 1st in everything…….”.
Christian Lindholm of Fjord also at the congress, remarked that we are still in the “dark ages of mobility” – meaning we are going to see huge advances quickly, both statements are extremely powerful and lay the foundation for a remarkable future.
The combining of the powerful mobile processors and cloud/browser applications have a huge impact on online gaming. I have highlighted many times in the past how today’s consoles are old technology in Asia. Part of the comment in the past has been related to online and more directly now at its mobility.
Cloud technology from a publisher’s perspective, helps manage the operational and the “distribution” costs of running large online games.
Far more tech savvy people can talk to Flash and its demands on RAM, lack of 3D, and the Apple positioning on not using it. Fortunately there are a stack of developers working on browser content that will be far more processor friendly within a mobile unit. The Apple-Flash war also points to controlling 3rd party application transactions within a closed platform.
Enter the hardware majors like Nokia, Apple, Samsung and Google “browser” everything, not to mention its Anroid operating system. The iPhone is allowing micro-transactions although the rules are still evolving. Games like Tap Tap Revenge 3 on the iPhone game have begun selling avatar based items including clothing.
Then look towards Japan where Mobile Game Town is a social network for mobile. It is hugely successful with over 10 million users and a full avatar, virtual room digital items monetization system. And yes they do run flash games.
Mid -2009 China overtook the USA in internet users with 330m+ users, around 50m core gamers and obviously a massive casual basic gaming. That is exciting but they also went over 500m mobile users and that is expected to hit 1 BN by 2020.
The Trend
Predicting the change is Asia combines a number of similar traits from the advanced tech Japan/Korea and the “lower tech mass markets” in China, South East Asia and India.
We can see the rapid movement of the Asian developer base towards browser and flash. Interestingly 2D in China is still currently the best performing presentation.
Smart phones continue to emerge in capabilities with 4G and Wimax etc increasing mobility for a number of technologies. The faster and more mobile broadband will be utilized across all of Asia and India.
Social networks world-wide continue to embrace gaming based digital monetization. Portal majors like Google will not only support gaming but could become standard.
MMO’s cross over into browser delivery, then social networks as the place to sit within established communities rather than try to establish game specific outposts of player groups. The active links to SNS and mobile gaming will continue to expand.
Publishers (specifically related to China) will need to manage their consumers as a SNS community and then engage with them from a multiple content offering catering to segmentation and social community requirements. Meaning move from single PC games to multiple demographic segments in the multiple channels, with community support and direct community ownership.
Hardware will be mobile, either the phones will get bigger and faster or the Netbooks will become cheaper, providing community gaming, chat, talk, SMS and browsing.
What I am alluding to is the first purpose built mobile social network platform. Maybe this is the console style that will succeed in Asia? iPad will be used for online gaming and then we can expect somewhere around 15 other tablets to be launched within the next 12 months. They will run a number of operating systems, some will push flash more than others.
In development the question must be asked what is more important, cutting edge 3D graphics or a cleverly designed community based gaming that can be engaged across the internet, SNS, mobile and tablets.
I personally would go where the audience is already.
This leads back to the implied consolidation which will occur across the various Asian markets at varying speeds. I expect a mobile gaming community platform to consolidate both SNS and gaming content together. From a publishing perspective the SNS context will provide a wider variety of styles and segments but it will be consolidated into a more flexible operational cloud based vehicle.
