Korean Social Game Market Trend Report (3rd Quarter 2010)-English

Korean Social Game Market

Trend Report

2010 Third Quarter (Vol.1)

2

Korean SNG Market Trend Report

2010 Third Quarter (Vol. 1)

By Sung-Hwan Ahn

Rubicon Games Inc.

Editor’s Note

Unlike Facebook and other major social game platform, not too many about Korean

social game industry is revealed to the public. On one hand, it may be an “Asian courtesy” for

platform service providers to hide its customers’ private information from their competitors. On

the other hand, it may create an entrance barrier and suppress new developers from entering the

market. Nevertheless, believing in the fact that freedom of information is harmless to fair market

competition, Rubicon Games Inc. suggested Nate AppStore Open Social Team to share their

statistics and information as much as possible. Gratefully, Nate AppStore agreed upon revealing

more information for both domestic and foreign developers who are interested in publishing their

games in Korea. However, please note that stats were given in bundles of genre, due to privacy

issues. To find out more about Korean social gaming industry, visit http://blog.playrubi.com or

email [email protected] or [email protected].

Executive Summary

- Nate AppStore continues to accumulate more users. However, user increase rate has

been slowly depreciating since May and fluctuates throughout third-quarter.

- Nate AppStore’s revenue has been steadily increasing since its launch in September 2009,

with a big leap in May 2010. In the third quarter, however, the revenue increase has

been slowed down in August and bounces back in September.

- The performance of game genres is still heavily dependent on few successful games.

Mostly because there are not too many games in the market yet.

- Very exceptionally, sports and RPG games were strongly male-dominant with gender ratio

of 85 to 15. Sports and RPG’s revenue tripled and doubled respectively throughout the

third quarter, covering 10% of total revenue of the market. User loyalty was also strong

showing high ARPPU (Average Revenue Per Paying Users) and conversion rate from non-

paying users to paying users

- Simulation games (Pet, City Building, Farming, Aquarium, and Business Admin.) are still

most profitable, covering more than 85% of the total profit.

- More female than male users are playing simulation games with higher ARPU (Average

Revenue Per User), but when it comes to ARPPU, male users are paying even more.

Market Overview

Nate AppStore has grown steadily s

continuously increasing, exceeding three million users in

however, have gradually decreased since early May, and has been fluctuating during third quarter.

With the initial inflow of successful simulation games in May, the market has

increase in revenue. During third quarter, however, the

<Line graph 1: Accumulated and New User of Nate AppStore>

<Line graph 2: Total Revenue of Nate AppStore

3

Nate AppStore has grown steadily since it took off in September

continuously increasing, exceeding three million users in September 2010. New user inflow rate,


successful simulation games in May, the market has experienced a drastic

During third quarter, however, the revenue increase has become stagnant.

and New User of Nate AppStore>

<Line graph 2: Total Revenue of Nate AppStore>

September 2009. Users are

. New user inflow rate,


experienced a drastic

has become stagnant.

Dependence on few successful Games

Korean social gaming market is yet heavily dependent on few successful games. The

user increase rate, revenue, conversion rate, and even stickiness of a genre

with few major successful games.

makes it possible for individual games to

Stats for RPG, for example, show

during September with the introduction

users in just one month.

<Line graph 3: Revenue and number of

On the contrary, Pet &

approximately 200% decrease for two consecutive months

games but are not spending as much as they use to.

Management genre are raising avatars or pets*)

<Line graph 4 Revenue and number of

4

Dependence on few successful Games


user increase rate, revenue, conversion rate, and even stickiness of a genre fluctuate

successful games. This is mostly due to the lack of games in the market, which

makes it possible for individual games to affect the overall market trend.

Stats for RPG, for example, show that user increase rate and revenue suddenly jumps

introduction of Friends Fighters, which accumulated more than

: Revenue and number of installs in RPG genre>

& Management genre experienced a drastic fall

200% decrease for two consecutive months. Users continue to install and play pet

games but are not spending as much as they use to. (*Please note that games filed u

Management genre are raising avatars or pets*)

Revenue and number of installs in Pet & Management genre>


fluctuate in accordance

games in the market, which

that user increase rate and revenue suddenly jumps

mulated more than 60,000

experienced a drastic fall in revenue, marking

Users continue to install and play pet

Please note that games filed under Pet &

The latest management game

the only game in the genre that is

Pet, Pet Society was all released before June but is already experiencing a

due to lack of updates and management.

Happy Idol, all the rest of pet games are developed and published by foreign developers.

Successful localization and continuous manageme

<Line graph 5: Accumulated Installs of

<Source from Rubicon Games Statistic Team>

City building games are also

Again, the same problem is observed in the

dependence on Happy Town. There are only two

but even Street Stall King went

<Line graph 6 Revenue and number of

5

The latest management game Happy Idol, which was released in mid June, seems to be

in the genre that is steadily accumulating more users. FooPet

all released before June but is already experiencing a high

due to lack of updates and management. It is also worthy of notice that with the exception of

pet games are developed and published by foreign developers.

Successful localization and continuous management is thus a key factor to keep the game alive.

Accumulated Installs of Pet & Management genre>

<Source from Rubicon Games Statistic Team>

games are also experiencing a continuous downtrend in total revenue.

Again, the same problem is observed in the City Building game genre which shows heavy

. There are only two City games, Happy Town and

out of service as of October.

venue and number of installs in City Building (SIM) Games>

, which was released in mid June, seems to be

FooPet”, RockYou! Super

high churn rate, mostly

It is also worthy of notice that with the exception of

pet games are developed and published by foreign developers.

to keep the game alive.

a continuous downtrend in total revenue.

game genre which shows heavy

and Street Stall King

6

Overall, the phenomenon implies that Korean social gaming market still has a big room

for many new games to penetrate, which is good news for new developers who are still hesitant

over entering the market. The trend also shows that users are willing to spend and quit at the

same time, thus demanding developers to continuously develop and update better games

regularly to maintain positive momentum.

The Rise of Male Users

Before few male-biased games became successful, the consensus of Korean social

gaming industry strongly believed that success of a game depends on how much they can attract

more female users. As a result, most of the games were female-biased, introducing cute graphics

and simple game plays. However, few games seemed to have taken the road not taken:

Homerun King, Baseball Wars, and Friends Fighters. These strictly male-biased games proposed

an alternative business model to many developers.

The user gender ratio for Sports Games is strongly male-biased. Homerun King is an

arcade type sports game whereas to Baseball Wars is a team management type game. Relatively,

Baseball Wars have a bigger entrance barrier since the game is statistics-based rather than visual,

unlike Homerun King.

<Picture 1: Homerun King game play> <Picture 2: Baseball Wars game play>

<Pie graph 1: Gender ratio Sports Games>

What is more interesting

revenue of Sports genre soared

the overall revenue slightly decrease

regarding the stats for ARPPU

period, which can be inferred that

there were more inflow of non-

<Line graph 7: Revenue & Number of

7

: Gender ratio Sports Games>

more interesting is the revenue model (See line graph 5). According to the stats,

revenue of Sports genre soared in August together with the launch of Baseball Wars

decreased along with the ARPU in September. N

ARPPU, the average revenue continues to increase during Aug.

hat spending users are becoming even more loyal to the game

-paying users during the period.

umber of Installs in Sports genre >

. According to the stats,

Baseball Wars. However,

along with the ARPU in September. Nevertheless,

continues to increase during Aug. – Sept

becoming even more loyal to the game and

<Line graph 8: ARPU of Sports Games

<Line graph 9 ARPPU of Sports Game>

Sports genre revenue continues to

September. It is significant in the sense that ratio of total user still

the fact that puzzle games are only earning 2% of the total revenue while covering quarter of the

user pool, sports games are highly productive. (No

payment system)

8

: ARPU of Sports Games>

ARPPU of Sports Game>

Sports genre revenue continues to incline, covering 9% of the total revenue of Nate

September. It is significant in the sense that ratio of total user still covers only 2%.


user pool, sports games are highly productive. (Note that 12 out of 20 (60%)

of the total revenue of Nate by

only 2%. Considering


12 out of 20 (60%) puzzle games have

9

<Pie graph 2: Total Ratio of Installs and Revenue (July-Sept)>

RPG genre too, is showing a male

gender ratio, RPG revenue continue

the successful game Friends Fighters

compared with previous month.

battle game, which is strongly male

<Line graph 10: Revenue of RPG

It is observable that

increasing. In the broader perspective

closer look at the ARPPU, female users

phenomenon is also found in the Sports genre, thus female users

conversion rate from non-paying to paying user

spending just as much as male users.

<Line graph 11: ARPU of RPG>

10

RPG genre too, is showing a male-biased distribution. With three to one

gender ratio, RPG revenue continues to increase over the past three months. With the release of

Friends Fighters in early September, the revenue increases

previous month. Here again, Friends Fighters is a statistic

battle game, which is strongly male-biased.

: Revenue of RPG>

is observable that more users are becoming more loyal to the

perspective, male users are spending more on average but

, female users are paying just as much as male users.

phenomenon is also found in the Sports genre, thus female users general

paying to paying user to paying user but once converted, they

spending just as much as male users.

three to one male-dominant

se over the past three months. With the release of

ncreases more than 250%

Here again, Friends Fighters is a statistic-based martial arts

more users are becoming more loyal to the genre, with ARPU

n average but taking a

just as much as male users. Again, this

generally show smaller

once converted, they were

<Line graph 12: ARPPU RPG>

Overall, going niche by

users, conversion rate, and ARPU growing

developers will have more options to consider

Simulation Games Still Strong

Simulation games (Farming, Aquarium, City

Management) still covers the majority of the market share throughout

the user pool is just one-third

simulation games. (See pie graph

games incorporated payment system

adopted payment.

Among the simulation games, revenue of Aquarium genre soars while Pet

Management drastically falls. There are only two games filed under Aquarium genre (

and Sunshine Deep Sea), whereas Farming and Pet & Management genre have seven and four

games filed under respectively

September is almost equivalent

Moreover, when it comes to daily active

simulation games all put together. (123,130 to 117,803

Aquarium genre continues to accumulate

11

going niche by targeting male users is partially proven successful

users, conversion rate, and ARPU growing steadily. With bigger pool of male audien

developers will have more options to consider for their next game.

till Strong

Simulation games (Farming, Aquarium, City Building, Business Ad

the majority of the market share throughout third

third of the total users, almost 90% of the total revenue comes from

e graph 3 and 4) Moreover, 84% (16 out of 19

incorporated payment system, whereas only 37% (26 out of 70) of non

Among the simulation games, revenue of Aquarium genre soars while Pet

. There are only two games filed under Aquarium genre (

), whereas Farming and Pet & Management genre have seven and four

respectively. With just two successful games, Aquarium

equivalent to that of Farming and Pet & Management

daily active users (DAU), Aquarium genre exceeds all the rest of the

s all put together. (123,130 to 117,803). After taking the lead since May,

accumulate more DAUs and revenue throughout

male users is partially proven successful with number of

. With bigger pool of male audience,

Building, Business Administration, Pet &

third quarter. Although

of the total users, almost 90% of the total revenue comes from

19) of the simulation

) of non-simulation games

Among the simulation games, revenue of Aquarium genre soars while Pets &

. There are only two games filed under Aquarium genre (Aqua Story

), whereas Farming and Pet & Management genre have seven and four

two successful games, Aquarium genre’s revenue in

Management put together.

, Aquarium genre exceeds all the rest of the

). After taking the lead since May,

throughout third quarter.

<Pie graph 3: Total User ratio of

<Pie graph 4 Total Revenue ratio of

<Line graph 13: Revenue of Simulation Games

12

ratio of Simulation and Non-simulation Games>

ratio of Simulation and Non-simulation Games>

Revenue of Simulation Games>

<Line graph 14: Monthly Average DAU of Simulation Games

<Line graph 15: Monthly Average DAU of all Genre

Female Dominant, yet Male Users Show Strong Purchasing Power

If sports and RPG genre were male dominant, simulation games are favored by female

users. (See bar graph 1) Among the genres, Pet & Management and Business Administration

genre were especially female-

female-oriented. Regarding Business Administration

restaurant management, and others remaining were fashion boutique and public bathroom

management.

Revenue-wise, however, male users came much stronger in

ARPU, a segment of loyal male users were

genres. It implies that female users have higher co

male users have a segment of loyal users with

conversion rate.

13

Monthly Average DAU of Simulation Games

Monthly Average DAU of all Genres>



(See bar graph 1) Among the genres, Pet & Management and Business Administration

-biased; most of the games filed under these two genres

oriented. Regarding Business Administration games, out of four games,

and others remaining were fashion boutique and public bathroom

however, male users came much stronger in ARPPU. Despite of the low

ARPU, a segment of loyal male users were spending more than female users in most of the

female users have higher conversion rate but with lower ARPPU whereas

a segment of loyal users with stronger purchasing power



(See bar graph 1) Among the genres, Pet & Management and Business Administration

biased; most of the games filed under these two genres were

out of four games, two games were

and others remaining were fashion boutique and public bathroom

. Despite of the low

more than female users in most of the

lower ARPPU whereas

despite of the low

<Bar graph 1: User Increase of Simulation Games by Gender>

<Bar graph 2: ARPU & ARPPU of Simulation Games

14

<Bar graph 1: User Increase of Simulation Games by Gender>

of Simulation Games>

15

Conclusion

History of Korean social game industry is rather short. It was only recently that Nate

AppStore celebrated its first anniversay in September, and not until 2010 3rd quarter that major

Korean portal sites such as Naver and Daum jumped into the market. However, tracing back the

accomplishments Nate AppStore has shown so far, the future of the Korean social game industry

looks bright and promising.

Nate AppStore so far grew using Cyworld as a leverage, which has 25 million user pool.

However it is slowly expanding its audience from Cyworld to NateOn messenger (35 mil.) as well.

Moreover, as major players are now launching their own platforms through various channels, the

market size and potential user pool continues to increase. Today social games are not only

established on SNS but also penetrating through Naver blogs (18 mil.), Naver Cafes (6 mil.), and

even micro-blogs such as Yozm (N/A) and Me2Day (2 mil). Thus Korean social gaming industry is

now holding more than 86 million potential user pool. Also taking into note that more than 15%

of the Korean population is smart phone users, social games now have various channels for

convergence and become more ubiquitous.

Overall, the Korean social game industry is yet a blue ocean and has just entered its

second phase of growth with market expansion. Also, since Korean users have been gradually

educated to spend on SNS over the past 10 years, it is likely that the paying habits from SNS

would trickle-down to social games without repulsion. And as the stats shows, Nate AppStore

has just begun to witness this trend with revenue steadily increasing. Competing platforms like

Naver and Daum are also likely to see this trend as more users accept social games. Together

with more inflow of quality games and developers, the market is assured to benefit both

developers and platforms.

Documents

Korean Social Game Market Trend Report (3rd Quarter 2010)-English