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January 14 2010

5 Predictions for China Social Games in 2010

(This is a guest post by Kai Lukoff. Kai Lukoff is an analyst at BloggerInsight and an editor on China Social Games. Follow Kai on Twitter @klukoff. You can find more information on China Social Game at the end of this post. )

The social game market is still in its infancy, but growing up fast. The first smash hits, Friends for Sale! Parking Wars, and Happy Farm are just over a year old in China. Here are 5 predictions for 2010:

1. Social Games Displace Web Games

Social games are reaching unprecedented demographics, including females and middle-aged users. These users are open to casual gaming, but unlikely to seek it out on 3rd party website. Social games go viral by using existing services (social networks) and trusted references (friends). As a result, social games enjoy unprecedented numbers of users. In China, Happy Farm has an estimated 23m daily active users across all platforms. On Facebook, FarmVille has blasted past 27m daily active users in only 6 months. Social games boast a superior distribution model and as in-game content also becomes more social, web games will be left in the dust.

2. Consolidation of Game Developers

The days of a few friends developing a hit from the dorm room are over. The Facebook market has already seen consolidation on a colossal scale, with huge paydays: Playfish (300m USD merger with EA), Zynga (180m USD funding), RockYou! (70m USD funding), and Playdom (43m USD funding). Production values are rising in China too, with RenRen Restaurants (copy of Playfish’s Restaurant City) and Happy Pet (copy of Playfish’s Pet Society). Developers will need more resources, serious teams and finances, to develop the next hit game.

China’s consolidation will be on a miniature scale compared to Facebook though. In fact, it has already begun: Five Minutes, developers of Happy Farm, scored 3.5m USD from Draper Fisher Jurvetson on December 1. And Rekoo, developers of Sunshine Farm, received 1.5m USD from Infinity Venture Partners. Expect more consolidation in 2010.

3. Entry of Western Game Developers

Western social game developers are knocking on the door. RockYou! launched a game on RenRen in June, 2009. PopCap Games followed up with with Bejeweled Blitz 2 on RenRen on November, 2009. China Social Games has spoken to several other players scouting the market.

The themes and mechanics of Facebook games tend to play well in China. The real challenge for foreign developers is managing relations with powerful social networks and the government.

4. Chinese Networks Open Up Their API

The games on RenRen (mostly-open API) blow away those on Kaixin001 and Qzone (closed APIs). RenRen has seen a proliferation of 3rd party developers whose are games are innovative, sticky, and popular. The other networks, especially Kaixin001, did a decent job of copying games in-house at the start. But as social games become more sophisticated and difficult to copy, their offerings look increasingly anemic.

Superior games will slowly drive users to spend more time on RenRen, at the expense of Kaixin001 and Qzone. As these networks realize that they can’t keep up with only in-house developers, they’ll open up their API. Qzone is already experimenting with licensing, starting with Five Minute’s Happy Farm). Expect this, in turn, to increase the leverage of game developers, who will demand greater than the maximum 56% revenue share RenRen currently offers. Chinese game developers are struggling to monetize, but if Kaixin001 and Qzone open up their API it’ll create more opportunities.

5. Family Friendly!

The rules are still being written, but expect social games to be harmonized in 2010. Mafia games are already gone. Happy Farmers are now picking—not stealing—crops. Expect developers, especially foreign ones, to err on the side of caution. All social games will be family friendly!

Bonus: What Will NOT Happen In 2010

1. Social Glue for the Chinese Internet!

While Facebook and Google compete to become of the social glue of the internet (via Connect features), Chinese networks are determined to defend their islands. RenRen, the closest copy of Facebook, is the best contender here, but its efforts (links with Dianping, etc.) all appear to be directed at keeping traffic on its site rather than connecting the internet.

2. Facebook Unblocked!

Dream on. But more and more Facebook games will be ported over to Chinese networks, though its unclear whether it’ll be Western developers or copycats who do it.

About The China Social Games Blog
China Social Games (@CNsocialgames) is a blog dedicated to tracking the hottest games, networks, and trends. It recently released a report for sale (590 USD) on the Top 10 Social Games in China. Though already wildly popular in China (and on Facebook), social gaming is still in its infancy, so the market is evolving, innovative, and competitive. China Social Games offers up-to-the-minute coverage. China Social Games is run by the BloggerInsight team (@BloggerInsight).

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Post tags: 2010, China Social Games, prediction, social game

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