In talking to a number of international media companies about their digital strategies it immediately highlighted not only a short term copy-cat mentality but also a total lack of commitment to building a long-term community management and monetization solution.

Why is this happening (apart from this being an evolution)?

Firstly there is a push for corporate to engage with consumers through social media. That engagement focuses both on employees using social media to talk to customers and via applications sold or given away. Both great and they should be part of a digital strategy but not the strategy.

Secondly when I ask these companies “now that you have reached your customer in this new digital way, what do you do with them?” This question is met with a blank look and an immediate question back, “what do you mean, we just engaged with them, what else is there?”

Where is the Gap?

I keep thinking about the corporate rush into Second Life. It ultimately was providing a social media engagement point, like Facebook, smart phones, iPad on so on.
All these contact points are fragmented, the consumer in many cases is being sent to a 3rd party where alternative services may be offered to them via other app’s or advertising. There is nothing consolidating the various touch points within a larger community strategy.

What else should there be?

There needs to be recognition of your customers seeking out additional options in how they use a type of content or service. These customers share a common interest and within a social context, they have a community emerging around a specific interest.
Specifically there needs to be a community based digital strategy. Meaning you bring all these people together within a area where they share common interest and offer them your fragmented digital services. You give them a voice and you give yourself now the ability to manage your community rather than lose them to a 3rd party.
This concept applies equally to banks, movie and TV franchises, even sports fans….etc all shared interest within a community.

Why is this so important?

The answer is no different to real life. If your customer is going to the effort to visit you then it means they have an vested interest. So apart from making them feel content and recognized the two other things you want to do with them are keep them and sell something else to them.
So next time your company sends your customer off to a 3rd party to seek information or get an application you need to understand that your digital strategy is not complete, you are not giving them a complete frame of engagement – a home.

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.

Eric Schmidt the Google CEO clearly articulated the mobile future. Does it mean mobile phones or mobile everything and anything?

I wrote a blog at a similar time last year touching on consoles being a very outdated technology for Asia and why PC for online gaming was dominating. Enter the new generation netbooks, smart phones, IPad…….

In 2010 in Asia one of the major trends is currently towards very mass-market browser/cloud delivered content. Social Networks like the Japanese Mixi is rapidly expanding as an open platform and QQ in China, Cyworld Korea continue to dominate.

So in simple terms we will have very mass market interactive content delivered in the easiest possible manner via the browser/cloud. We then have the emerging mobile platforms that will only get faster and better.

Online gaming in Asia already reaches large communities but not traditionally from a social network starting point. We have a convergence happening combining online gaming, social networks and now mobile platforms.

Developers may need to spec down on the graphics but large compelling 3D MMO’s can still be delivered via browser as can be seen recently by Earth Eternal developed by Sparkplay.

The future of large community social networked games accessed anywhere and anytime is rapidly arriving. 2D flash into 3D (or better OS alternative…..) with no massive plug-ins will be with us soon.

A mobile SNS “console” Wimax/3G+ used to communicate, chat, game, email, share, must be very close!

When looking at Asia (Asia including South East Asia and India) we can use Japan as the only “mature” games market as a guide to some of the trends developing across Asia. However the key difference is the PC online market and its unique drivers which are not fundamental to the Japanese domestic condition: For example:

· Demographic including household income to simple living space. Greater China, South East Asia and India typically have lower disposable incomes and family living space is smaller than western standards.

· The wide use of internet cafes

· Social communities established within game environments.

· Mobile phone use, low entry cost.

This points to internet cafes and mobile communication as the dominating drivers for future Asian gaming and social interaction.

Japan is important from looking at how the game-play styles and age groups have segmented over time. Also the local development community has established a very high quality global product.

So the first and most obvious trend is that wider segments of game styles and player’s sex and age groups will emerge. Online RPG’s will still be a powerful segment but only one of many.

Secondly the local content will start to dominate the domestic market and then within time appeal to wider global markets.

Thirdly the method of delivery will still be somewhat decided through demographic factors.

The largest change within 2009 that Omake Interactive forecasts is the management of the online communities. These online game focused groups are currently single title focused and are generally managed poorly by the Asian majors.

We believe there will be a merging of the western use of social networks into the management of gaming communities. The key difference is that monetization of that community will go far beyond advertising into micro-transactions and mobile integration.

Within time that micro-transaction, free to play model will also begin to dominate the west. By returning the spending control to the consumer you empower them to a far greater level and so their long term commitment to the content is far greater.

The core points being:

The demographics of Asia will support online gaming through low cost mobile units as long as they also are closely linked to social networks.

The major Asian operators will focus heavily on the social community management. The large amounts of gamer traffic being generated needs to be held within a focused platform environment.

The western markets will embrace item transactions allowing 3 monetization channels of traditional advertising, subscription (retail box) and item sales.

Like PC it is not only a question of great games and IP but one of how it is delivered. If we use Japan as an example of a possible “Asia” in the future, then it is quite conceivable console could succeed. But today the simple demographic profile prevents wide success outside Japan. Many other factors come into the success equation but let us consider this in a generic example.

In the simplest of concepts consider the markets of greater China, South East Asia and India. People generally live in smaller homes (comparative against the west) and in the major cities within small apartments. The disposable incomes are typically low; most households would see a television as a luxury. Physically space is limited.

Not many households would allow their one TV (if they had one) to be dominated by a console, let alone allow their children to spend their household money the console hardware and games.

Then socially look at the wide spread use of internet cafes. These are a place where young friends can socialize within a different environment to home. They can enjoy gaming entertainment within a group environment. They can spend money on games without directly being seen by other household members. They can play fantasy games with their friends that provide some escapism.

In this context it is not the content as the major issue, but the delivery for each market and currently console hardware is limited in many ways. Perhaps the Nintendo DS is more a step towards a suitable direction; however it now needs to also develop for a large mobile social network interaction and communication.