You said $12B!? You can't be serious!

1. US$ 12 billion in Market Cap
Learning from Mobile SNS in Asia
Benjamin Joffe, CEO | Plus Eight Star Ltd.
Mobile Social Networking Asia
Hong Kong | 2010.05

2. Let’s go home
“Social Networking
Is Not a Business…”
MIT Technology Review
(July/August 2008)

3. TIME (April 2009)

4. Meanwhile…

5. Source: “What Asia can tell us about mobile SNS”, +8*, June 2008

6. Source: “What Asia can tell us about mobile SNS”, +8*, June 2008

7. Tour Guide
Slava Polunin
Clown

8. Introduction

9. Benjamin Joffe
4 years 1 year 5 years

10. 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

11. Paradise Paintball | World’s First Social FPS!
AWARDED
“BEST NEW
GAME”
ON MYSPACE
(GDC 2010)
www.cmune.com
www.facebook.com/paradisepaintball

12. Quiz

13. Who are They?

14. Answers
#2 youngest self-
made billionaire
in the world after
Mark Zuckerberg
Pony Ma, CEO, Tencent Yoshikazu Tanaka, CEO, GREE

15. The US$12 Billion Challenge

16. Market Caps (May 2010)
$35.3B
$4.2B
$2.5B
$900M

17. Tencent 1Q 2010
• Results
– Total 620 million USD
– Mobile 90 million USD (14.5%)
– Net margin 42.7%

18. Tencent 1Q 2010
• If share of market cap
– 14.5% of 35 bln = 5 billion USD

19. Internet Trends, April 2010

20. 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

21. 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?

22. Context

23. Digital Populations
Country USA China Japan Korea
Population 300 mln 1,300 mln 130 mln 50 mln
Internet users 225 mln 380 mln 100 mln 35 mln
Mobile users 260 mln 700 mln 100 mln 45 mln
www.plus8star.com

24. IT Infrastructures
100% 3G: 95%
Web: 59%
Avg. 7.6 Mbps
80% 3G: 72%
Web: 68%
Avg. 11.7 Mbps
60%
3G users
C
hi
40%
n 3G: 25%
Web: 25%
a Avg. 4 Mbps
20%
3G: 2.5% www.plus8star.com
0% Web: >1%
0% 20% 40% 60% 80%
% of Internet connections measured above 5Mbps
(Source: Akamai, 4Q09)

25. The Story of Mobile SNS

26. Is the New so New?

27. ImaHima (Japan)
(“are you free now?”)
250,000 users in 2001

28. Mogi
(Japan, 2003)

30. Book | Mobile Social Networking
• Author: Tomi Ahonen
• 50 Case Studies!
– Published: 2009
– 10 EUR 

31. It all started
(almost) by accident

32. Mobile Game Town
(Initial Model)
• Mobile only
• Simple Flash Games
• Avatars
• Advertising (pageviews)
• Affiliate (“offers”)

33. Mobile Game Town

34. Source: DeNA

35. 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

36. 3D Avatars

37. National Brands on Board!

38. 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

39. Mobile App Platform (Oct.09)
(330 apps as of February 2010)
City Building Harvest Moon Shopkeeper Furauni
By Liveware By Liveware By Geisha Tokyo By Konami

40. Revenue

41. Revenue
70 MUSD
in Q3!
PV x2
With apps
35M USD
= games!

42. Business Models Evolution
#1 Mobile SNS in Japan
US$250M in 2008
Ads CPA Virtual goods

43. Gree
(Initial Model)
• Web-based
• Real name
• Advertising
• Competing with Mixi!

44. Gree
Model Change!
• Web-based > Mobile > Mobile + Web
• Real name > Nickname
• Advertising > Digital goods
• Competing with Mixi! > With MBGT!
• Partnership with Mobile Operator KDDI

45. Gree

46. Advertising
Gree Home Advertising &
Affiliates | 25%
Avatars & items
B2C virtual
Games goods | 75%
60% avatars
40% games

50. 4Q09
Revenue
81M USD
Profit
50M USD!

51. Usage & Demographics
• PageViews • Demographics
– 99% Mobile – Gender parity
– 24.7 bln/month – 75% users 20+ y.o.

52. Mixi: From PC to Mobile
Unit: 100M PV Unit: 10K Users
Application platform
introduced
PV (mobile) PV (PC) Users
Monthly PV 27.6B
– Mobile (80%) 22.5B
– PC (20%) 5.1B
2007.12 2008.12 2009.12

53. 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

54. QQ IM & QZone

55. Chat room
WAP Brower Game
Info: finance,
Music player
book, news
E-mail Movie
Qzone (blog) Source: Inside Tencent Report 2009
www.plus8star.com

56. PC-Mobile Connection
Cross-platform gaming
QQ Show service
available on PC and
mobile

57. Tencent IR, May 2010
• “Increase in subscription to our bundled SMS packages
as 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”

58. Sticking to it
Tencent
#1 SNS in China
US$1 bln in 2008
90% From Virtual Goods
(40% Net Margin) Market cap
US$35 bln
(more than eBay)
IM was not making money and our
competitors moved to other
ventures. I did not have other ideas
Pony Ma
so I stuck to it. Founder & CEO
Tencent (QQ)

59. Some Interesting Curiosities

60. One Mobile SNS to Rule Them All?
• Cyworld Mobile • Disney Wonder Days
• N-Plugs • Eki-Moba
• Dear Profile • Helpers Network
• Face Check • World Camera

61. Cyworld Mobile
Mini hompy/ Cyworld Zone: Map, Video
Item shop
My picture 1.Guest book
2.Photo album
3.Friends list
Emotion expression
4.Diary
About service fees 5.Plaza
Find subscribers 6.BBS
Registering for fixed payment 7.Club
8.’My Cy’ (settings)

62. N-Plugs: 6 degrees mobile SNS

63. 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

64. “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)
Profile page
• Simple Friends-matching - Display photo
SNS - Gender, age, blood
type
- Email address for
• Very low privacy & trust contact: real mobile
email display (no
levels messaging function)

65. 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?

66. Disney Wonder Days
Toon Town
Disney Hills Disney
Where users characters’
have their residence
home area.
Select an area
Market Place Central Park
Buy items Meeting
area

67. Fitting Room

68. “Eki Moba” by Excite
• Launched by portal Excite in February 2007
• Targets train commuters
• Originality
– 3D Flash avatars Advertising in Tokyo train
– Virtual currency can be exchanged for real station
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 Buying items & Profile
playing games page

69. Job market SNS “O-Tetsudai Networks”
Partner
Registration Contract
Work Partner
demander User who can
@ Need a helper for a
short period in a
confirm the skills of
another user to
precise place establish trust
• Location-based Registration
I just had some time
Part-time jobs My plan cancelled
today, I have time…
Worker
Want to use free
between my shifts! I’m
so lucky!
The girl at the
time in an efficient
register caught a way. Want to use
cold today. How to one’s skills
replace her? How to find
• Skills / location
someone to take
care of my baby for
just an hour?
/ time-slots convenience
store
Student ex-worker
Convenience Restaurant
Store manager manager
Freelancer Housewife

70. Sekai Camera by Tonchidot

71. Sekai Camera

72. Sekai Camera

73. Location: Place Engine

74. Takeaway Ideas

75. 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.

76. 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

77. Parallel with Mobile Users
• Question: Is a user with $0 ARPU good?

78. 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.

79. 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

80. Thanks!
More about “Innovation Arbitrage”
www.plus8star.com
benjamin@plus8star.com
+81 | Japan
benjamin0123 +82 | Korea
+86 | China
http://twitter.com/plus8star
Telecom & Internet
www.linkedin.com/in/benjaminjoffe + Added Value
* High quality
www.slideshare.net/plus8star

81. 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.
• 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).
There are more ideas
outside of your country
than inside.
Tom Kelley
Author, The Art of Innovation
Mobile & Internet © Copyright 2010. All rights reserved. www.plus8star.com
Innovation Arbitrage 81 | 8

82. Our Clients
EUROPE
USA
ASIA
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83. 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)
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Innovation Arbitrage 83 | 8

84. 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.
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85. Speaking Engagements
• Speaking Engagements
– Regular keynote speaker & moderator in IT,
Media & Investment events.
– Engagements in 2008/09/10
• CHINICT (Beijing, Upcoming) • Graphing Social Patterns (Washington, D.C.)
• Global Mobile Internet Conf. (Beijing , Upcoming) • iGaming Asia (Macau)
• Echelon 2010 (Singapore , Upcoming) • Unite Conference (San Francisco)
• Mobile Social Networking Asia (Hong Kong , Upcoming) • China Mobility International Summit (Beijing)
• Virtual Goods Forum (London) • 3G Summit (Kunshan, China)
• Stanford University (Entrepreneurship) • Red Herring Asia (Hong Kong)
• Berkeley University (MBA) • China Internet Forum (Beijing)
• SXSW Interactive (Austin) • Media’08 (Sydney)
• PICNIC (Amsterdam) • China Internet Forum (Beijing)
• Virtual Goods Summit (San Francisco) • Wireless Developer Forum (Beijing)
• Inside Social Apps (San Francisco) • Open Web Asia (Seoul)
• eComm (San Francisco) • XMediaLab: Virtual Worlds (Seoul)
• Ad:Tech (Beijing) • Mobile Monday Global Summit (Helsinki)
• Ad:Tech (Shanghai) • Mobile Monday Global Summit (Kuala Lumpur)
• Ignite (Amsterdam) • EU-China Virtual Worlds Conference (Beijing)
• Ignite (Beijing) • EU-China eCommerce Regulatory Workshop (Beijing)
• Ignite (Paris) • Startonomics (Beijing)
• Mobile Asia Congress (Hong Kong) • UnConference (Singapore)
• Lift Asia (Jeju, Korea) • BarCamp (Shanghai)
• ITU Asia (Bangkok) • La Cantine (Paris)
• Infinity Ventures Summit (Sapporo, Japan) • Mobile Focus (Stockholm)
• LeMobile 2.0 (Paris)
• Asia Venture Capital Forum (Hong Kong) More information at www.plus8star.com/presentations/
Mobile & Internet © Copyright 2010. All rights reserved. www.plus8star.com
Innovation Arbitrage 85 | 8

86. 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/
Mobile & Internet © Copyright 2010. All rights reserved. www.plus8star.com
Innovation Arbitrage 86 | 8

87. 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)
Mobile & Internet © Copyright 2010. All rights reserved. www.plus8star.com
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88. 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.
+81 | Japan
• Contacts
– benjamin@plus8star.com +82 | Korea
– benjamin0123
+86 | China
– http://twitter.com/plus8star
– www.linkedin.com/in/benjaminjoffe Telecom & Internet
– www.slideshare.net/plus8star
+ Added Value
* High quality
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 info@plus8star.com
Mobile & Internet © Copyright 2010. All rights reserved. www.plus8star.com
Innovation Arbitrage 88 | 8