Access Korean Social Games from your NateOn Messenger

“Is Nate AppStore any better than Facebook in terms of social games platform service?”  It’s a question that most people in Korean social game industry once had in their mind.  Oh well, it would be a rash judgment to say which is better over the other but one thing for sure is that Nate has been making some good progress recently.

Then how exactly is Nate AppStore progressing?  As I’ve mentioned briefly in my past article, Nate AppStore’s primary users are from its SNS, Cyworld.  But apart from Cyworld, Nate also has a big pool of users using its messenger service called NateOn.  Before moving on to more details, a brief overview of NateOn is prerequisite. 

NateOn is the biggest messenger service in Korea which has accumulated total 35 million users and 15 million MAU as of Aug. 2010.  Actually MSN Messenger was the leading messenger since 1999 but it yielded first place to NateOn in 2005.  NateOn promoted aggressive marketing strategy since 2002 by giving out 100 free SMS to its SK Telecom users and 50 free SMS to KTF and LG Telecom users.  Later in 2003, the outburst of Cyworld boom also contributed to the success of NateOn due to the linkage system with Cyworld mini blogs.  The synchronized NateOn and Cyworld created a synergy effect and led to the growth of both platforms.

And once again with its past success model, Nate is using its in-house viral resources to position its AppStore as the leader of the social games platform market.  NateOn recently started a promotion, introducing a new linkage system with AppStore by adding short cuts into “Quick Launch” on the bottom.  By adding short cuts in NateOn, users can directly go to the game page more efficiently.

Moreover, toast messages appear whenever a friend invites the user to try out a new game or challenge each other.  In this way, NateOn becomes more than just a “chat” messenger.  It is starting to send game feeds and let the user customize it into an apps-oriented messenger.  Depending on what the user puts more focus into, NateOn can become the perfect messenger for various usages.

On the other hand, however, NateOn only limits the toast messages to personal messages.  For example the user can’t see what other people are doing if the event has no direct relation to the user.  The user is only limited to seeing direct challenge or invite messages.  This may be one of the improvements NateOn can make, where the user can see his/her friend’s activities from the messenger.  Facebook, for example, let the users post game feeds on their wall, which would appear on their friends’ news feed when they log in.  Ignoring the fact that many people might consider game feeds as spam, at least the virality seems resolute.  One may argue that there is a distinct difference between a “wall” and a “messenger”, but if NateOn is striving to become more AppStore friendly, it needs to offer more ways to become MORE VIRAL.

The Korean Fortress – What’s keeping them away from Korea?

Cyworld, the biggest SNS in Korea is often referred as the Facebook of Korea.  Many social games company from Facebook such as Playfish, PopCap, Rekoo, RockYou have knocked the door on Nate AppStore but most of them are in slow progress compared to their success in Facebook or other SNS around the globe.  Some of you might already be confused by the term “Cyworld” and “Nate Appstore”.  To give you a brief idea, “Cyworld” is a micro-blog SNS service provided by a portal called “Nate” and Nate AppStore is the social game platform provided by Nate.  

Looking at the size of the market and the number of users for each game, actually it’s a bit hasty to evaluate their success.  Currently there are about 2.7 million users using Nate AppStore out of 21 million users of Cyworld.  Within this small pool of market, each foreign company has accumulated the following amount of users: 

**Statistics taken from Facebook and Nate on 30 July, 2010**

Just by looking at the numbers, the market size is relatively unattractive; Nate (2.7M) vs Facebook (500M).  This may discourage foreign developers from publishing their successful games in Korea since their intial cost may exceed its short term profit.  Moreoever, it may be easier for them to concentrate on acquiring more Facebook users than jumping into a whole new market carrying risks.  In reality, RockYou didn’t even publish their most successful Facebook game “Zoo World”, which has accumulated more than 6.7 million users in Facebook.  Zynga, Crowdstar, and Playdom have not yet established their based in Korea.  Why is this so?  There could be few reasons for this.

Firstly, localization cost.  Localizing the game into Korean is not as simple as one may think.  Not only it requires a good translation, but also a good understanding of the culture itself.  The cultural difference can make the game look fresh, but also foreign too.  We will cover the characteristics of Korean social game market and its user behavior in depth, later in other posts.

Secondly, the payment system.  Using a Paypal system is not yet familiar in Korea.  Koreans rather use direct credit card payment or most often times use phone bill monthly payment to purchase cyber cash.  In order to purchase virtual items in social games, “Dotori” is required, which cash credit unit for Nate.  Dotori can be purchased in many different methods as listed below.  The problem foreign developers face is that it is hard for them to get the payment up for themselves without going through Cyworld or third party publishers.  

Thirdly, the Game Rating Board (GRB).  Every game published in Korea needs to get approval by the GRB, an organization that rates games before it is published.  Rates are categorized into “all age usage”, “over 12”, “over 15”, and “over 19”.  

The problem with the rating system is that it discourages developer’s efficiency and it prohibits many explicit contents.  Recently released StarCraft 2 was originally rated as “over 15” usage but right before it was released back in April, it was hold back since GRB changed its rate to “over 19” use due to its violent graphics.  After modification, it was able to release its open beta version with “over 12” rating.  As such, foreign game developers have difficulties fulfilling GRB’s requirements.

Fourthly, lack of information on the Korean social game market.  Currently, there are not many information about the Korean market  both online and offline.  At the moment, Nate does not provide any detail statistics such as user gender ratio or ARPU per game.  Also there are no regular report about market analysis, thus holding back foreign developers as well as VCs from entering the market. 

Last but not least, the Cyworld wall.  Unlike Facebook’s wall interface, cyworld allows users to hide their walls from others.  Moreover, more and more Cyworld users are hiding their blog contents from others, which discourages viral.  

Another difference in platform is what each platform shows on first page.  Facebook, for example, shows what other friends are up to on its first page.  Cyworld, however, shows personal page first, thus relatively harder to pay attention to what other friends are up to.  In the end, Cyworld needs to come up with a better solution to solve this viral problem for their Nate AppStore to quickly spread.  

In conclusion, Korea is yet a market with many entrance barriers.  However, the market is still in its infant stage with numbers growing steadily.  As mentioned in our previous post, Nate AppStore’s revenue is quickly increasing and Naver, Daum launching their new platforms could be the bright side of the picture.  Local “foreign game” publishers, which there is none notable yet, could also be a solution for foreign developers.  By minimizing initial costs and taking care of localization process, local foreign game publishers could also be the next successful business model in Korea.

Everything About Social Games

Here is a PPT presentation by Charles Pyo (CEO of Rubicon Games Inc.), which he presented in 2010 Social Media Marketing Conference held in Seoul.  This slide contains the following contents:

1. What are social games?
2. Why social games?
3. Present state of social games
4. Various global SNS and social games
5. Social games business model
6. Potential of mobile social games
7. Importance of social games and viral
8. Conclusion

*PPT by Charles Pyo, translation into English by Sung Hwan Ahn

Land of Promise for those who are prepared: Social Games

An interesting round table was hosted by Bloter.net on 15 July, 2010 regarding the future of social game market in Korea and where it is heading to. The following article is the translation (by Sung Hwan Ahn from Rubicon Games Inc.) from Bloter.net blog post for those who are interested to see what’s on Korea’s most influential social game experts have in their mind. Three experts in this industry were invited;

Young Eul Kim, Head of Open Platform for Nate/Cyworld at SK Communications

Andy Kyoseok Song, Manager of team Hedgehogs at AhnLab

Charles Pyo, CEO of Rubicon Games Inc. and Wizard Works Inc.

Host: Reporter Lee and Joo from Bloter.net.

 *Picture reference, “http://www.bloter.net/archives/35162“

Lee: Social game seems like the rising issue these days. Before we start, let’s define what social game is.

Kim: Usually social network game (SNG) is called ‘social games’ in short. There are two ways to look at this; is this a network that took off from games or game that took off from a network? As we can see from Facebook, social games originated from social network service (SNS), which means it is not a game for heavy gamers. One distinct character of social game is that it is viral. Every user’s action spreads across the network. Another distinctive character is that there is no set story line within the game. It’s the users that write the story themselves.

Lee: I understand that Rubicon Games is a social game company established by Wizard Works Inc. What attracted you to this market?

Kim: Currently there are about 50 developers registered in Nate AppStore. According to a VC, there are approximately 100 of them.

Lee: Isn’t Nate AppStore the first social game platform in Korea?

Kim: Yes it is. Most of the early birds are the ones who started off in Nate.

Lee: Hedgehogs is one of the early starter as well, right?

Song: Our initial service date was April 2009. At that time, flash-base games have just begun to merge. After seeing few games, we thought we could make something like that, but later we found out we were mistaken. (laugh)

Lee: What kind of mistake was it?

Song: We didn’t have a full understanding of how to utilize viral or revisit factors. In the beginning, gamers liked it, but after a while, many of them left. At that time Farmville have just came out and Zynga didn’t have that much of a hit game. We thought we were competitive but now the gap is big. However, we are prepared now and things will change.

Lee: It seems like you have learned a lesson as an early starter. Could you please tell us more about what you could have done better back in that time?

Song: We were a bit naive, in a sense that we thought we knew a lot, but it turned out to be not. For example, we were not prepared on users leaving. There were thousands of users coming in per day, but we didn’t have enough revisit factors to keep them engaged. Nowadays we are more interested in game life cycle.
Number of Nate AppStore users marked 2.7 million recently. We predict that 10% of them are active users. These users try whatever new app is released and therefore, if a game is good, it is not difficult to accumulate 200,000 users. But then the next problem is that current social game life cycle seems to be only 6 months.

Lee: Is the trend similar in other countries?

Kim: Relatively, foreign countries are in a better position. Facebook, for example, has a user interface (UI) that shows other people’s contents first and then mine, but in Korea, it’s the opposite. People first see their own page and then other’s. Platform grows with new contents and in that sense, Nate AppStore has many problems to solve.

Lee: Isn’t that platform provider’s share of work?

Kim: Yes it is ours. Contents are important but what is more important is to develop a platform that could spread the game quickly. We still have a lot to learn from foreign platforms.

Lee: Social game developers must have benchmarked successful foreign games. What do you think is the reason for their success?

Song: In my personal view point, Playfish has introduced many innovative ideas in their games. They had a good philosophy and fresh ideas. Zynga had a good insight to combine the successful elements of a social game and applied it well to a business model.

Kim: Playfish had a fresh impact on the social game market, whereas Zynga already secured enough seeds to spread their game faster than its competitors. The common factor of success in foreign market is “speed”. I also think the consensus of starting a venture start-up in Silicon Valley has contributed to their success as well.

Lee: You mean not only social games are important but also the venture incubating culture has a great effect on success? In other words, is it possible to apply foreign success stories to domestic market?

Pyo: According to my experience, you need time. It is not an issue whether you have game or web developer experiences. Hedgehogs could do so much because of their accumulated experience since 2007. If game developers simply jump into social game industry, it would take some time for them to catch up with early starters. I realized after running Rubicon Games for a while, that no matter how good of a developer you work with, you will go over the same mistake that Hedgehogs and Sundaytoz went through. I could stress no more how important experience is in this industry. In this sense, if a startup think that they could catch up easily, it wouldn’t be too easy. We too, first had that misleading confidence but we are thankful that we were mistaken relatively earlier. (laugh)

Song: You’re being too modest. I personally think within a studio, there must be at least one expert who has good knowledge and insights for social games. Game developers take social game way too easy and most often pay too much energy on the quality of the game. Social game is a game but also a communication tool. It must contain some kind of an interaction with friends.

I once sorted out all the successful game titles. Most of them were ‘adjectives + noun’ and social games had cute, warm words. Most social gamers are not hardcore gamers who play strategy simulation or MMORPG. Many of them are female users or light users. The existing social game developers might stumble if they try to imitate Playfish or Zynga with a shallow plan.

Lee: What difficulties do you have as a platform provider?

Kim: There are many. (laugh) First we didn’t have too much experience with platform business. We are still in infancy level. There were not that many architectures that we could benchmark and since we built a system based on our existing network API, we strongly felt the need for technical and managerial knowledge. At the same time it was appealing since we could satisfy both developers and users.

Lee: Although there 100 developers out in the market, isn’t it at its premature state?

Song: Regarding only the size, yes it is. It’s hard to call a 1 billion KRW market big. But from the developer’s point of view, it is important when you enter the market. If you enter too early, you will drain out from only investing, and if too late, competition would be fierce. In this perspective, the speed of growth of social game market is attractive with great deal of potential.

Lee: Is there a decent revenue model for developers?

Pyo: If you look at the statistics from Nate AppStore, the periodic cycle of revenue growth(by 100 million KRW) is shortening. Number of AppStore users continues to increase. But I also have a concern that Hedgehogs may become like Zynga and gain more negotiation power with Nate. However, on the other hand, this is one of the reasons why we jumped in the market because we saw the potential.

Lee: I heard the Nate’s accumulated revenue marked 1 billion KRW recently. Do you think the growth is fast?

Kim: Yes I think so. In the beginning the stats didn’t meet our expectations but these days we see a lot of potential. Since many new developers with good understanding of social games are appearing, the stats started to soar.

Lee: Many SNS experts worry that foreign corporate are slowly gaining more share in Korean market. One of them is app’s dependency to platforms. Do you have any similar concerns?

Song: We do. 2 years ago, we also wanted to start a platform business but then we switched over to application development. Many people wondered why Ahn Lab gave up its platform business and went into application development business. We understand that apps are dependent to platforms and we also have similar worries. But platform providers are also increasing and other range of platforms such as web, mobile, internet TV are expanding as well. We project that environment for app developers will improve, thus dependency to platform is unlikely to occur.

Lee: Are VCs interested in social games?

Pyo: Until early 2010 there were many but they soon turned their backs away. Nowadays, they are coming back, especially after hearing news about Softbank and Google’s investment. But not too many VCs have actually invested. Many new platforms are coming out and more success stories are prevailing and we expect more developers to receive investment in the future.

Lee: Do you have any pressure making profit from Nate AppStore?

Kim: Not at all. Our primary goal is not making profit. The board of directors also share the same view point. Our main goal is to provide “reasons” for users to use Nate.com. We even launched a commercial recently. What we continue to emphasize is the “ecosystem”, which could benefit everyone. We still have a long way to go though.

Lee: I hear news about Naver launching their own platform. Similar news from Daum as well. What is Nate’s reaction to all these new competitors?

Kim: We welcome everyone! The market could only grow when there are many players. Assume there’s only one search engine. The search engine market couldn’t have developed as it has today. We look forward to other portals to jump into this market but feel sorry for the delay.

Lee: It looks like many successful games are from similar genre. Isn’t it important to diversify the genre for successful games?

Song: We recently published a game called “Happy Idol” where the user has to manage a trainee to become a big star. We tried to come up with a unique idea. We were satisfied with our game but also worried. It’s either a big success or a big failure. (laugh) It seems to us that social gamers in Nate are matured enough to accept new type of games.

Kim: When we look at Nate AppStore these days, it seems like users are actually waiting for new games to release. An app with a good storyline receives immediate attention from the users. If the quality is guaranteed, I think the game could be at least a “medium hit” if not a big hit. In conclusion, success of a social game depends on its story. How good the story is decides whether it will be successful or not.

Lee: In that sense, social games for Nate should be differentiated from that of Facebook.

Song: Of course. For developers, it would be good if they could publish their games in Facebook and Mixi but it is not easy due to the difference in culture. Facebook is little better since there are many users worldwide like U.S., Europe, and Asia. It could be a strategy to target that niche market as well.

Lee: Let’s hear about Rubicon Games’ future plans.

Pyo: It’s been 6 months now. We are not trying to overtake Sundaytoz or Hedgehogs. It’s okay for us to be in the best five. What we are striving to do is to advertise the success stories of domestic venture startups to foreign countries. Foreign VCs are also turning their eyes from U.S. and Europe to Asian market. If we are successful, I’m sure there would be plenty of opportunities in front of us.

Lee: What is the future plan for Nate AppStore?

Kim: We recently launched a photo album API and now we are about to release NateOn buddy API. This would enable developers to utilize two categories within one game; NateOn buddy and Cyworld friends list. If developers utilize the NateOn buddy API, it will enable users to play games with friends real time. What is important for NateOn is whether the friend is connected now. Games such as chess or baduk requires real time game environment and we are trying to provide vital information for more variety of developers. I heard that Naver AppStore is planning to introduce three containers for Me2day, blog, and community clubs.

Lee: Now to conclude this round table, Hedgehogs, please give us an advice for venture startups.

Song: Hedgehogs is a venture startup from Ahn Lab. We understand that many big corporate are planning its own startup like us. If I meet them, I would advise them to be patient for three years. First year, they will encounter many drawbacks, second year, they will gain a bit of taste, and third year, they slowly start to move forward. We are now 3 years and 7 months old. Despite of all the hardships, I would like to express my gratitude to all my fellow employees for waiting with me patiently.

Daum takes its move in the SNG platform competition

In one of our previous post, we went over a brief overview of the Korean SNS and SNG market.  Nate and Naver were covered but nothing much was discussed about Daum.  However, according to the latest news, Daum has already made a big move to ignite the SNG platform competition.

According to the latest news, Daum is planning to introduce both domestic and foreign social games in “Yozm”, Daum’s social application platform.  Daum has previously introduced various flash games in their SNS but this is their first time to “actually” publish social games in partnership with major SNG developers.  Newly introduced social games are “Happy Town” and “Happy Idol” developed by Hedgehogs and “Go! My Resort” developed by Japanese developer GameOn.  Daum is not only providing SNG platform but also developing various social games itself in partnership with Softmax.

SNS has been big in Korea for almost a decade, but the recognition for SNG has been long neglected.  But with the success of social games in U.S., China, and Japan Korea is starting to recognize the potential in this industry.  Introduction of new platforms reflects the increased needs and recognition of social games in Korean society as well.