Social game developers need strong tie-ups in Asia

Summary:To succeed in this region, social game developers should work closely with Asia's social-networking sites to show off games to users here, says industry watcher.

Social game developers such as Zynga and Playfish should look to leverage existing social-networking sites in Asia-Pacific to bring their products over to the region. They should also undertake to learn about local consumers' mentality in order to introduce unique content that will draw gamers, said a Pearl Research executive.

According to Allison Luong, managing director of the research firm, these two developers in particular have been successful because of their partnership with Facebook. However, Playfish's site is "not as popular in Asia", and the two, together with other foreign game developers, need to partner with local social-networking sites instead.

"Zynga and Playfish are both successful companies with compelling games, [leveraging] the popularity and scale of Facebook in Western markets to their advantage, easily accruing millions of users," she said in an e-mail response to ZDNet Asia's queries. "One of the biggest challenges they face is that Facebook is not as popular in Asia, which means they must seek other social-networking partners."

The platform partners, however, must be willing to advertise and promote the developers' games since there are "thousands of social games on the market", said Luong. If not, gamers might not discover their games with all the competing apps out there, she added.

Furthermore, the Pearl executive mentioned that it is important for foreign social game developers to spend time understanding the region's culture and the gamers' general behavior. This, and the right portfolio of games, will go a long way to ensuring that these companies are able to "carve a niche" in the competitive social media scene here.

Strong monetization partners required
As for the monetization of social games and how companies can successfully do so in Asia, Claus Mortensen, IDC's principal for emerging technology advisory services (ETAS) and digital marketplace and new media, told ZDNet Asia that the "real growth" in revenue for social gaming is connected with virtual items and upgrades. That said, subscription revenue is still growing in Asia.

However, subscription-based revenue models work with only the more "hardcore" games, and social, or casual, games have to rely on other approaches to make money, he added.

He also went on to point out that getting revenue from virtual sales is "only possible" once there's a certain mass of users, particularly for social games.

"Social game developers will probably continue to offer all aspects of their games for free until the individual games become popular enough to make virtual sales revenue viable," said Mortensen.

One game developer which realized early on that it could not sell its games the way it does in markets such as the U.S. is PopCap Games.

James Gwertzman, the company's Asia-Pacific office vice president, said in his e-mail that PopCap's strategy since its entry into the region was to build up a local studio specifically to create online versions of its games that are targeted at the local audience.

These games utilize business models that are "widely accepted and proven in Asia", such as free-to-play games coupled with sale of virtualized items, he added.

The company also recognized that each country in the region is unique in its own way, which meant PopCap would have to further customize its offerings to individual markets, he noted. For instance, Japan's audience is into mobile and social networking on such platforms, while in South Korea, online free-to-play games are popular. In the meantime, China is embracing social and free online games. So PopCap caters to each market's needs differently, said Gwertzman.

He also pointed out that the company's Asia business is "already profitable" and sales from the region amounts to "more than 6 percent" of the firm's global revenue.

"That's not a big number yet, but Asia is also the fastest-growing region for PopCap and the opportunities are vast...with new platforms opening up new opportunities for us," Gwertzman said.

When quizzed about the virtual currency it uses for online transactions, the PopCap VP said the company has a long history of partnering with other firms to provide the means for users to purchase virtual goods. One example of this is its collaboration with Chinese social-networking site RenRen to use the latter's virtual currency framework, not unlike that of Facebook's Credits system, he added.

Recently, competitors Zynga and Playfish both revealed that they have set up shops in the region, too.

The former established its foothold in Asia in May 2010, when it bought over China-based XPD Media, which is known as one of China's largest social game developers. Playfish, which was acquired by Electronic Arts in 2009, established a development studio in Beijing earlier this year.

When contacted, Playfish's director of global communications, Tom Sarris, declined to comment save to say that "our activities in Asia are at a stage where we wouldn't have anything substantive to contribute to your story". Zynga did not reply to ZDNet Asia's queries by press time.

Topics: Software, Apps, Browser, CXO, Social Enterprise

About

A Singapore-based freelance IT writer, Kevin made the move from custom publishing focusing on travel and lifestyle to the ever-changing, jargon-filled world of IT and biz tech reporting, and considered this somewhat a leap of faith. Since then, he has covered a myriad of beats including security, mobile communications, and cloud computing... Full Bio

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