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You said $12B!? You can't be serious!
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Benjamin Joffe, CEO | Plus Eight Star Ltd.
Mobile Social Networking Asia
Hong Kong | 2010.05
US$ 12 billion in Market CapLearning from Mobile SNS in Asia
“Social NetworkingIs Not a Business…”
MIT Technology Review(July/August 2008)
Let’s go home
TIME (April 2009)
Meanwhile…
Source: “What Asia can tell us about mobile SNS”, +8*, June 2008
Source: “What Asia can tell us about mobile SNS”, +8*, June 2008
Tour Guide
Slava PoluninClown
Introduction
Benjamin Joffe
4 years 1 year 5 years
What I Do Now
• CEO, Plus Eight Star | www.plus8star.com– Digital Strategy & “Innovation Arbitrage”
– Best practices from Asia’s web and mobile
• Partner, Cmune | www.cmune.com– World’s First 3D game on social networks
– On Facebook, MySpace and Apple.com
• Mobile Monday Beijing– Monthly forum for mobile professionals
– 35 events, 120 speakers, 3,000 participants
• Angel Investor, Advisor, Speaker
Paradise Paintball | World’s First Social FPS!
www.cmune.comwww.facebook.com/paradisepaintball
AWARDED“BEST NEW
GAME”ON MYSPACE(GDC 2010)
Quiz
Who are They?
Answers
Pony Ma, CEO, Tencent Yoshikazu Tanaka, CEO, GREE
#2 youngest self-made billionaire
in the world after Mark Zuckerberg
The US$12 Billion Challenge
Market Caps (May 2010)
$4.2B
$2.5B
$900M
$35.3B
Tencent 1Q 2010
• Results
– Total 620 million USD
– Mobile 90 million USD (14.5%)
– Net margin 42.7%
Tencent 1Q 2010
• If share of market cap
– 14.5% of 35 bln = 5 billion USD
Internet Trends, April 2010
Our Real Challenges
1. We are old
2. We are not users
3. We are from a different place
4. We have a lot of preconceptions
Questions
• Why are mobile SNS only successful in Asia?
• Why are GREE and MBGT worth more than Mixi?
• How does Tencent succeeds on mobile?
• What are the key factors for mobile SNS success?
• What’s ahead?
Context
Digital Populations
Country USA China Japan KoreaPopulation 300 mln 1,300 mln 130 mln 50 mln
Internet users 225 mln 380 mln 100 mln 35 mlnMobile users 260 mln 700 mln 100 mln 45 mln
www.plus8star.com
IT Infrastructures
3G
use
rs China
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80%
3G: 72%Web: 68%Avg. 11.7 Mbps
3G: 95%Web: 59%Avg. 7.6 Mbps
3G: 25%Web: 25%Avg. 4 Mbps
3G: 2.5%Web: >1%
% of Internet connections measured above 5Mbps(Source: Akamai, 4Q09)
www.plus8star.com
The Story of Mobile SNS
Is the New so New?
ImaHima (Japan)(“are you free now?”)
250,000 users in 2001
Mogi(Japan, 2003)
Book | Mobile Social Networking
• Author: Tomi Ahonen
• 50 Case Studies!
– Published: 2009
– 10 EUR
It all started
(almost) by accident
Mobile Game Town(Initial Model)
• Mobile only
• Simple Flash Games
• Avatars
• Advertising (pageviews)
• Affiliate (“offers”)
Mobile Game Town
Source: DeNA
Mobile Game Town(Evolution)
• Mobile only
• Simple Flash Games
• Avatars
• Advertising (pageviews)
• Affiliate (“offers”)
• Direct Sales
• Partnerships with Game Publishers
• Open Application Platform
• Partnership with Yahoo Japan
3D Avatars
National Brands on Board!
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
Mobile App Platform (Oct.09)(330 apps as of February 2010)
City BuildingBy Liveware
Harvest MoonBy Liveware
ShopkeeperBy Geisha Tokyo
FurauniBy Konami
Revenue
Revenue
35M USD= games!
70 MUSD in Q3!
PV x2With apps
Ads CPA Virtual goods
#1 Mobile SNS in Japan
US$250M in 2008
Business Models Evolution
Gree(Initial Model)
• Web-based
• Real name
• Advertising
• Competing with Mixi!
GreeModel Change!
• Web-based > Mobile > Mobile + Web
• Real name > Nickname
• Advertising > Digital goods
• Competing with Mixi! > With MBGT!
• Partnership with Mobile Operator KDDI
Gree
Gree Home
Advertising
Avatars & items
Games
Advertising & Affiliates | 25%
B2C virtual goods | 75%
60% avatars40% games
4Q09 Revenue81M USD
Profit50M USD!
Usage & Demographics
• PageViews
– 99% Mobile
– 24.7 bln/month
• Demographics
– Gender parity
– 75% users 20+ y.o.
Mixi: From PC to Mobile
Unit: 100M PV
PV (mobile) PV (PC) Users
Unit: 10K Users
Application platformintroduced
Monthly PV 27.6B– Mobile (80%) 22.5B– PC (20%) 5.1B
2009.122008.122007.12
Tencent
• #3 Internet Company in the world– After Google, Amazon
• 570 million active IM accounts
• 428 million active SNS accounts
• 23 million paying subs. for mobile services
QQ IM & QZone
WAP Brower
Chat room
Game
Info: finance, book, news
Music player
Qzone (blog)
Movie
Source: Inside Tencent Report 2009www.plus8star.com
PC-Mobile Connection
Cross-platform gaming
QQ Show service available on PC and mobile
Tencent IR, May 2010
• “Increase in subscription to our bundled SMS packagesas we enriched the privileges and features”
• “WAP portal traffic increase, reinforcing leading position in the free WAP portal industry.”
• “Growth of MVAS business dampened by the suspension of billing for WAP services by China Mobile since 30 November 2009 and decline in legacy mobile voice value-added services.”
• “Visibility of our MVAS business remains low as industry continues to face significant regulatory uncertainties”
Sticking to it
IM was not making money and our competitors moved to other ventures. I did not have other ideas so I stuck to it. Pony Ma
Founder & CEOTencent (QQ)
Tencent#1 SNS in China
US$1 bln in 200890% From Virtual Goods
(40% Net Margin) Market capUS$35 bln
(more than eBay)
Some Interesting Curiosities
One Mobile SNS to Rule Them All?
• Cyworld Mobile
• N-Plugs
• Dear Profile
• Face Check
• Disney Wonder Days
• Eki-Moba
• Helpers Network
• World Camera
Cyworld Mobile
1.Guest book
2.Photo album
3.Friends list
4.Diary
5.Plaza
6.BBS
7.Club
8.’My Cy’ (settings)
About service fees
Find subscribers
Registering for fixed payment
My picture
Mini hompy/
Emotion expression
Cyworld Zone: Map, Video
Item shop
N-Plugs: 6 degrees mobile SNS
Main Screen
① Alert List
② Find People
③ Mobile Home Page
④ Social Query
⑤ Search Engine
⑥ Sharing folder
⑦ Friend list
⑧ Online hard drive
⑨ Option
⑩ Customer center
“Dear Profile” by Rakuten
• Craze among junior high-school students.– Launched in April 2002
– 85% brand awareness for users between 13-15 y/o
– 9 million accounts (2008)
• Simple Friends-matching SNS
• Very low privacy & trust levels
Profile page- Display photo- Gender, age, blood type- Email address for contact: real mobile email display (no messaging function)
Face Check
• FSE (Face Sensing Engine) by Oki Electric
• Start in April 2007
• 30 million by end of June
• 100 million by Nov 2009
• Then what?
Disney Wonder Days
Disney HillsWhere users have their home
Market PlaceBuy items
Toon TownDisney characters’ residence area.
Central ParkMeeting area
Select an area
Fitting Room
“Eki Moba” by Excite
• Launched by portal Excite in February 2007
• Targets train commuters
• Originality– 3D Flash avatars– Virtual currency can be exchanged for real
money in banks and post-offices
• Eki Moba offers the following services– “Circle” community function– Chat / Smileys– Casual flash games / Ring-tunes– Shopping– Diary / Forum / Calendar– Translation / Fortune telling / Weather
forecast
Advertising in Tokyo train station
Profile page
Buying items & playing games
RegistrationPartnerContract
Registration
Convenience Store manager
Student
Freelancer Housewife
Restaurant manager
convenience store
ex-worker
Work demander
Need a helper for a short period in a
precise place
PartnerUser who can
confirm the skills of another user to establish trust
WorkerWant to use free
time in an efficient way. Want to use
one’s skills
@
Job market SNS “O-Tetsudai Networks”
My plan cancelled today, I have time…
How to find someone to take care of my baby for just an hour?
The girl at the register caught a cold today. How to replace her?
I just had some time between my shifts! I’m so lucky!
• Location-based Part-time jobs
• Skills / location / time-slots
Sekai Camera by Tonchidot
Sekai Camera
Sekai Camera
Location: Place Engine
Takeaway Ideas
Why do users care?
• Time-filler– Day breaks– Entertainment
• Social value– Social capital– Serendipity– New encounters
• “Real” (as in “measurable”) value– Business, jobs, discounts, etc.
The Value of Freeloaders
• A bar with only 10% of patrons?– Spend for all others + profit
– Fortunately, servers and pixels are cheap
• Contribution of freeloaders– Virality
– Social Proof
– Engagement
– Re-engagement
Parallel with Mobile Users
• Question: Is a user with $0 ARPU good?
It depends…
• On your acquisition costs
• On your maintenance costs
• How many people call her
• How happy she is
• How many new users she recruits
• How many services she uses & introduces around
• How famous she is
• Etc.
What to do now?
• Understand psychology and sociology
• Understand the “real” and perceived value created
• Reinforce social graph
• Make payments painless– “Micro-transactions on iPhone” – Inside Social Apps, 2010.04
• Sell data plans
More about “Innovation Arbitrage”
Thanks!
www.plus8star.com
benjamin0123
http://twitter.com/plus8star
www.linkedin.com/in/benjaminjoffe
www.slideshare.net/plus8star
+81 | Japan
+82 | Korea
+86 | China
Telecom & Internet
+ Added Value
* High quality
81 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
About +8*
• Innovation Arbitrage
– “Bringing proven best practices and business models from Asia”
– +8* (Plus Eight Star) is the leading cross-market consultancy on mobile, telecom and Internet
in China, Japan and Korea.
– We work with large companies, SMEs, investment firms and governments worldwide to bring
them strategic advice and the best practices from advanced Asian markets.
There are more ideas
outside of your country
than inside.
Tom Kelley
Author, The Art of Innovation
• Our expertise
– Internet: our work covers
social media, communities,
ecommerce, online gaming
and virtual worlds.
– Telecom: we have extensive
experience with mobile and
telecom services (e.g. mobile
marketing and advertising,
mobile commerce, mobile TV
and mobile communities).
82 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
Our Clients
EUROPE
USA
ASIA
83 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
Selected References
• Adidas | E-commerce and mobile commerce market analysis and strategic
recommendations for China, Japan & Korea
• Bouygues Telecom | Cases studies of leading Asian Web 2.0 services and virtual
worlds
• Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet
convergence strategies
• EU-China Information Society | Research on e-commerce and virtual worlds to
support the regulatory dialogue between the EU and Chinese authorities
• Microsoft | Analysis of Japan’s key players and market catalysts for mobile
commerce market positioning in China
• DeNA | Benchmark of leading SNS in China and South Korea (DeNA operates
Japan’s leading mobile social network)
• China Mobile | Benchmark of Korean leading online communities
• Sands Capital Management | Evaluation of investment opportunities in social
networks in China
• MIH / NASPERS | Analysis of leading online verticals in China (MIH is the largest
shareholder in Tencent, China’s leading online community)
• IMVU | Benchmark of monetization and engagement best practices in Asian virtual
worlds & SNS (IMVU is a leading US-based 3D virtual world & chat)
84 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
Customer Testimonial | IMVU Inc.
COMPANY: IMVU Inc.
Lee Clancy, VP Product Management & GM of Direct Revenue
August 2009
Q Has the service performed by +8* met your expectations?
A The consulting services provided by +8* met IMVU's expectations. Benjamin and his team showed a deep
understanding of major Asian virtual worlds and gaming companies, as well as their potential implications
for IMVU. In our communications with them, they were very responsive to our follow-up questions and
completed their final deliverables on-time.
Q How have you used or plan to use this research within your company?
A Only a few weeks after +8* delivered their findings to IMVU, we had already identified and roadmapped
various product enhancements that were a direct result of our learnings from the +8* study. What is more,
we have since launched pilot versions of those new features that have received extremely positive feedback
from IMVU users (e.g., "My Pets" mode). Additionally, +8*'s comprehensive report is an invaluable
reference that I consult often when considering new product enhancements.
Q What decided you to hire +8* for this project?
A We chose to hire +8* for this project because 1) they had a strong professional track record, which we
confirmed with representatives from several blue chip clients of theirs prior to the study; and 2) we felt that
their area of expertise and past studies were strongly aligned with our research needs.
85 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
Speaking Engagements
• Speaking Engagements
– Regular keynote speaker & moderator in IT,
Media & Investment events.
– Engagements in 2008/09/10• CHINICT (Beijing, Upcoming)
• Global Mobile Internet Conf. (Beijing , Upcoming)
• Echelon 2010 (Singapore , Upcoming)
• Mobile Social Networking Asia (Hong Kong , Upcoming)
• Virtual Goods Forum (London)
• Stanford University (Entrepreneurship)
• Berkeley University (MBA)
• SXSW Interactive (Austin)
• PICNIC (Amsterdam)
• Virtual Goods Summit (San Francisco)
• Inside Social Apps (San Francisco)
• eComm (San Francisco)
• Ad:Tech (Beijing)
• Ad:Tech (Shanghai)
• Ignite (Amsterdam)
• Ignite (Beijing)
• Ignite (Paris)
• Mobile Asia Congress (Hong Kong)
• Lift Asia (Jeju, Korea)
• ITU Asia (Bangkok)
• Infinity Ventures Summit (Sapporo, Japan)
• LeMobile 2.0 (Paris)
• Asia Venture Capital Forum (Hong Kong)
• Graphing Social Patterns (Washington, D.C.)
• iGaming Asia (Macau)
• Unite Conference (San Francisco)
• China Mobility International Summit (Beijing)
• 3G Summit (Kunshan, China)
• Red Herring Asia (Hong Kong)
• China Internet Forum (Beijing)
• Media’08 (Sydney)
• China Internet Forum (Beijing)
• Wireless Developer Forum (Beijing)
• Open Web Asia (Seoul)
• XMediaLab: Virtual Worlds (Seoul)
• Mobile Monday Global Summit (Helsinki)
• Mobile Monday Global Summit (Kuala Lumpur)
• EU-China Virtual Worlds Conference (Beijing)
• EU-China eCommerce Regulatory Workshop (Beijing)
• Startonomics (Beijing)
• UnConference (Singapore)
• BarCamp (Shanghai)
• La Cantine (Paris)
• Mobile Focus (Stockholm)
More information at www.plus8star.com/presentations/
86 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
Media Coverage
• Media Coverage
– Our research and views have been quoted by numerous media outlets on topics ranging
from Telecom and E-Commerce to Social Networks, Gaming and Virtual Goods.
– Selected media: Forbes, The Economist, The New York Times, International Herald Tribune,
The Guardian, Advertising Age, VentureBeat, TechCrunch, ReadWriteWeb, Gamasutra, etc.
More information at www.plus8star.com/press/
87 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
Event Organizer & Advisor
• Founder & Organizer: Mobile Monday Beijing
– Mobile Monday is the leading network of mobile industry
professionals, counting over 50 chapters around the world.
– We founded the Beijing chapter of in 2006 to support the ecosystem.
– Results: 35 events, 125 speakers, 3,000+ participants (avg.100).
• Co-Organizer
– Startonomics (Beijing, May 2009)
– Startup2Startup (Beijing, May 2009)
– Open Web Asia (Seoul, October 2008)
• Advisor
– TEDxBeijing (November 2009)
88 | 8© Copyright 2010. All rights reserved. www.plus8star.comMobile & Internet
Innovation Arbitrage
Contact
• Benjamin Joffe, Founder & CEO
– 10 years experience with Telecom & Internet in Asia.
– “China’s Top 100 mobile industry influencers” in 2007 & 2008.
– Senior Expert for the EU Delegation to China.
– Regular speaker at events on mobile and Internet in Asia.
– Fluent in English, Japanese, French with working knowledge
of Mandarin, Korean and Spanish.
• Contacts
– benjamin0123
– http://twitter.com/plus8star
– www.linkedin.com/in/benjaminjoffe
– www.slideshare.net/plus8star
Beijing Office (HQ) Tokyo Office
Oriental Kenzo, Tower A-20D Flat Hagiwara 2D
48, Dongzhimenwai, Dongcheng District Setagaya-ku 6-36-8
100027 Beijing, P.R. China Tokyo, Japan
Tel: +86 (0)10 8447 7985 [email protected]
+81 | Japan
+82 | Korea
+86 | China
Telecom & Internet
+ Added Value
* High quality