Saturday, December 25, 2010

Facebook has serious competition in China

You would think that the Chinese would be grabbing hold of Facebook and Twitter as fast as they have with our sports, clubbing, and other Western-style decadent cultural influences. They love American-everything. Yet Facebook and especially Twitter are but Pinto cars to China's fast growing Social Networking giants, RenRen and Qzone. Kaixin001 and round out the four social networking giants in China.

I've spent much of the Christmas holiday chatting with friends from all over the world on dozens of social networks. Nearly every week I find another social network, never mind the games found on those networks. Sure, you could use a select few to connect to virtually everyone around the globe, but just about each country has their own networks that often cater in special ways (language being the primary) that simply aren't offered on others.

RenRen in China is particularly an interesting case. Originally called 'Xiaonei', it's almost a virtual copy of Facebook. That's not really surprising in itself, considering that China copies quite a bit of Western technologies and ideas. They split off from the core technology and get rather unique in how they market the product, considering it a way to restore long-lost friendships and discover the true inner core of one's person through connecting with strangers in nearby cities.

Kaixin001 has been marketed more toward white-collar works and social games than RenRen's friend factor. For the past few years, Qzone has connected closely with QQ, China's primary instant messaging service, and has become a major social network for young teens and particularly rural users that may have spotty internet connections (which isn't a surprising element in even China's urban centers). used to be more popular than all the others, but has since begun a rapid decline back in 2008.

If you want to hook up with someone from China, Qzone is the way to go, for now. It has the largest social network by far and a great way to hook up with those already using the QQ instant messaging service. However, don't expect it to be an all-in-one service like Facebook that provides a lot of interesting games on the side. It is also weak on more in-depth search capabilities for university students looking to share information. Go to RenRen for that.

Much like Facebook is fast becoming an all-in-one giant in the West, RenRen is increasingly becoming popular for a wider range of users in China and nibbling at Qzone's market share. It may not be long before RenRen encroaches on Facebook's territory and an interesting international social networking war begins. The irony is that Facebook started as a university networking tool, while RenRen is becoming one in the end.

Sunday, December 12, 2010

Chinese exporting an increasing list of games

Games are one of the few mediums of entertainment in the West where the influence of the East has been profoundly felt. Nintendo, Sega, Square-Enix, and countless other Japanese game companies have been in the enviable position of actually shaping the tastes of western gamers for decades. Although that influence has waned—in fact, there has been much talk of a game development crisis in Japan—no one would bother denying that the way we game today owes as much to Japan as it does to native influences such as Atari, Activision-Blizzard, and Zynga.

And while Japan may be stumbling, no one questions that China is on the world superpower fast track. Could this be the next Eastern game industry giant? China is already the world’s largest gaming market, and an emerging tech powerhouse. The phrase “Chinese Exports” usually conjures images of plastic widgets slathered in toxic paint, but this is more of a PR problem than a fair representation of the state of Chinese product development. Anyone with real knowledge of the market forces (skilled workforce, relatively low wages, room for expansion, government support) knows that China is already on its way to being a major player in the tech industry worldwide.

But what of games? The truth is, the wave of Chinese game exports is already underway and has been growing steadily over the last four years. Starting from two or three companies exporting games in 2006, there are now dozens of major Chinese game companies involved, many of them operating multiple games overseas. And while the blistering pace of growth in the Chinese domestic game market has slowed recently, revenue earned by Chinese game companies in overseas markets continues to grow by as much as 20% annually. As such, overseas profits are becoming a major strategy focus as the domestic market grows more competitive.

The numbers don’t lie: they are among us. But, where exactly? We have yet to see a major Chinese gaming hit to focus everyone’s attention on this phenomenon, and even moderately successful games have often avoided branding themselves as Chinese, which further reduces visibility. But they’re out there. Social game developers Five Minutes and Rekoo have been able to boast millions of monthly active users on Facebook, while Taiwanese-produced Runes of Magic has garnered praise as one of the highest quality F2P MMORPGs available. Beijing-based Perfect World (Nasdaq: PWRD), perhaps the most aggressive and forward-thinking participant in this trend, has a whole slew of F2P MMO titles and a 150-employee marketing, service and operations center in Silicon Valley. Though Perfect World’s overseas revenues have flagged recently, they still hit USD 7.8 million in Q3 2010, accounting for 7.4% of the company’s total. On a more ignominious note, the oft-ridiculed yet highly profitable strategy web-game Evony is a Chinese product. So, be warned, the Chinese invasion is on, and promises to bring dozens, if not hundreds, of new titles into the twitchy hands of western gamers with every passing year.