Facebook SPMD Brand Networks acquires PMD Optimal

Brand Networks, a Facebook Strategic Preferred Marketing Developer, announced recently that it has acquired Optimal — a Facebook Preferred Marketing Developer — in an effort to expand Brand Networks’ social advertising capabilities. Brand Networks acquired Optimal for $35 million.

Optimal recently won acclaim from Facebook, earning the top prize in Facebook’s PMD Innovation Competition with its Open Signals product, which takes into consideration several factors when managing an ad campaign.

Currently, Optimal is the only company that is both a Twitter Ads API partner and a Facebook Exchange qualified PMD in ads, apps and insights. The company was also one of the first two partners in LinkedIn’s Sponsored Updates partner program — giving Brand Networks much more power throughout all social channels.

Brand Networks CEO Jamie Tedford welcomed Optimal to the family:

I’m incredibly excited to partner with Rob and to welcome the Optimal team to Brand Networks. The industry is moving towards consolidation of social marketing and advertising spend and deeper integration with fewer trusted partners that have achieved scale. The combination of Brand Networks and Optimal delivers this for our clients and the platforms we serve.

Optimal CEO Rob Leathern discussed this newest partnership:

My team and I are all thrilled to be joining forces with Brand Networks. We share a customer-centric and innovation-driven culture and vision, focused on delivering deeply integrated solutions to the world’s leading brands and agencies. Brand Networks has built a powerful stack of data-driven social tools, and Optimal has been recognized as the best self-service ads platform in our space. We recently achieved profitability, and look forward to continuing our strong growth both domestically and internationally.

Leathern will join Brand Networks as the company’s Chief Product Officer, leading product innovation. The Optimal self-service ads and analytics platform will continue to be supported. Optimal’s San Francisco headquarters will become a branch of Brand Networks’ West Coast offices. Optimal’s New York City team will join Brand Networks in their office.

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Facebook platform industry hires: Adaptly, Brand Networks

Two Facebook Strategic Preferred Marketing Developers recently announced major hires: Brand Networks and Adaptly.

Brand Networks, a Strategic PMD in all four fields, added Anthony Green, the former Vice President of Development at Facebook PMD Optimal. Green will join Brand Networks as a Senior Vice President of New Business, driving growth into new markets and verticals. Prior to working for Optimal, Green co-founded Concep, a global B2B marketing technology provider.

The company has also hired Jeff Madison, the former Chief Operating Officer of Sparkart Group. He will become Brand Networks’ Vice President of Client Services, where he will grow the account management team to provide improved customer service. With Sparkart, he was responsible for the company’s day-to-day operations, working with major entertainment brands such as Bon Jovi, The Killers, America’s Cup and the UFC.

Brand Networks CEO Jamie Tedford commented on the new hires:

It’s an exhilarating time for digital marketers, as social platforms like Facebook, Twitter and LinkedIn blaze new advertising trails with continued innovation and steady growth. With our Social Marketing Stack, we help the largest brands in the world centralize and simplify their social efforts, empowering responsive social marketing at scale. We are cultivating a team primed to be a driving force as the social marketing space continues to expand and we are excited for the next phase with leaders like Anthony and Jeff.

Adaptly, a Strategic PMD in ads and insights, added JP Lester as its Chief Technology Officer. Prior to joining Adaptly, Lester was the CTO of Sony’s Digital Audio Disk Corporation group, leading a global engineering team.

Lester has built a stellar career in the music field, as one of the co-founders of TuneTo.com, which was acquired by Listen.com. After the acquisition, he was instrumental in the creation of Rhapsody, the world’s first legal on-demand music streaming service featuring content from all five major record labels.

Nikhil Sethi, Adaptly’s Co-Founder and CEO, commented to Inside Facebook about the hire:

We’re excited to have JP Lester join the Adaptly team as CTO. … We look forward to the impact that he will have at Adaptly that will take our engineering excellence to a whole new level.

Companies who want their new hires included in the post must contact us directly at justin.lafferty (at) insidenetwork.com. Must be a Facebook PMD or Facebook Strategic PMD to be included.

Images courtesy of Brand Networks and Adaptly Facebook pages.

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Forecasting Cross-platform Networks and Mobile Games

Editor’s note: During the upcoming Inside Social Games Conference on June 6-7, Bret Terrill, the Founder of 12gigs.com, will be moderating two panels on the future of social apps, “Gambling Games: The Promise of Real Money,” and “Platform Opportunities for Social Apps.” InsideSocialGames.com had the opportunity to ask Bret two important questions on the future of social and mobile games.

InsideSocialGames: Is it possible to build a cross-platform gaming network? Is this something the world wants?

Bret Terrill: A cross-platform gaming network is something that a lot of people were chasing last year as the next big thing. The idea was: Similar to Facebook owning the social graph, a company could own the “gamer graph”, connecting people who liked certain genres across platforms and games. As it stands today, Facebook is really the only company that has been successful in creating a cross-platform (PC and multiple mobile environments) gaming network , one that has largely fed off their immense social network.

Other large games companies, such as DeNA and Gree, have had success in the Japanese market, but they have moved toward a publisher model in the last year. It is an open question on whether Clash of Clans players care about what other games the people they “friend” within the game are playing. I suspect the gameing industry itself cares much more than the players, who are more interested to see what is in the top charts of their phone’s App Store.

What are the upcoming tech challenges in mobile?

The problem with mobile is that, upfront, small developers have to make a rather large bet. To increase versatility, they have to develop across platforms. But to deliver the best possible experience, companies have to go native: For iOS that means writing code in Objective C, for Android apps that means using Java.

More recently some companies are opting for tech solutions such as Unity, which is expensive if you want to use the Pro version, or HTML5, which promises the ability to “write once, use anywhere,” only it does not really work that way. While HTML5 works great in a web browser, it is difficult to create a high-quality game that stacks up against most native apps (unless you are using the latest iPad).

If developers want to create social, HTML5-based experiences, such as the Bingo game we built at 12gigs, they will have to cut many corners to make it run on older mobile devices. That really hurts the player experience.

Another huge pain point for mobile developers is third-party SDK integration. Each one of our apps has at least ten SDKs built in. In many cases, developers find their game crashes because of a bug in one of these SDKs. Fixing the issue requires close collaboration with development partners. If you are used to developing for the web, it can be a very unpleasant, unplanned surprise.

Is building a game for cross-platform worth the effort then?

It certainly is not necessary. Clash of Clans, one of the top grossing games is only available on iOS. Its maker, Supercell, did not need to develop an Android version to become one of the most successful mobile gaming companies of all time. The fact that they have not developed an Android version, even though that is a huge untapped market, highlights the technical challenges of porting natively developed games across platforms.

Having said that, if you want to create social, turn-based games, such as Words With Friends, you definitely want to go cross-platform. Games that require interaction grow much faster if they are available on all the devices that your friends are using. Fortunately for developers, you can hit 90 percent of the smartphone market by targeting just iOS and Android.

As for building games for mobile and web, most companies are moving toward mobile-only development. Here is why: If you believe industry experts, including Mary Meeker, mobile is already surpassing the web in terms of user base. Also, Richard Firminger, the Managing Director of Flurry, says that 80 percent of mobile usage is not through the browser, but through apps. The point is: the world is moving away from the PC and connecting with phones instead.

Considering that Zynga just laid-off 18 percent of their employees because the revenue from their web games declined much faster then predicted, mobile-only seems like the smart play. It is where the momentum is headed.

To hear more from Bret Terrill and the future of social and mobile gaming, attend our Inside Social Games conference on June 6-7 in San Francisco.

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Stay tuned for Inside Network’s Casual Connect coverage

Tomorrow through Thursday, social and mobile game developers from around the world will be attending Casual Connect 2012 in downtown Seattle and Inside Network will be on hand to cover the show.

From left to right, Inside Network managing editor AJ Glasser, Inside Mobile Apps staff writer Kathleen De Vere and Inside Social Games lead writer Mike Thompson will be at the show throughout the week.

This year’s Casual Connect is covering a wide variety of topics, but many of the sessions are focused on the convergence of social and mobile games and are being led by industry veterans from companies like Zynga, 6waves and King.com.

We’ll be attending panels, meeting with developers see and generally looking around to see what’s in the works for social and mobile titles. If you happen to see us on the show floor or at one of the industry parties, don’t hesitate to come up and introduce yourself.

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Stay tuned for Inside Network’s GDC Coverage

Next week, hordes of social and mobile game developers from around the world will descend on downtown San Francisco for the Game Developers Conference 2012 and Inside Network will be on hand to cover the show.

From left to right, Inside Network managing editor AJ Glasser, Inside Mobile Apps and Inside Social Games staff writer Kathleen De Vere and Inside Social Games lead writer Mike Thompson will be at the show throughout the week. We’ll be meeting with developers see what they’ve got in the works and hear about their future plans for social and mobile titles.

This year’s GDC is noteworthy because so more social game developers than ever before will be presenting at the show. While many of these include big names like EA, Zynga and King.com, there’s also a host lesser-known successful developers and newcomers with games hitting Facebook, Google+ and mobile in the coming months. On the platform side, Facebook has revealed that its platform team will be on hand Monday for an all-day series of events designed to help developers learn how to make successful social games.

Meanwhile, a hot topic amongst developers will be Zynga’s new platform, which will allow third-party publishing of social games. Case in point: Zynga COO John Schappert will be delivering one of the six track keynotes at the show. For many indie studios, this new partner publishing represents a safeguard against having a larger group clone their title; at the moment, though, only a few groups have actually announced that they’ll work with Zynga.

If you happen to see us on the show floor or at one of the industry parties, don’t hesitate to come up and introduce yourself.

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Kabam branching off Facebook to iOS, new games networks

Kabam moves farther away from its Facebook origins today by launching Dragons of Atlantis on games portal Kongregate and Kingdoms of Camelot on iOS.

The official announcement today only mentions a publishing partnership with Kongregate, but we found Kabam’s first mobile game on the Canadian App Store early last week. Though Kabam VP of Mobile Matt Ricchetti had no public comment on the title, we observe he’ll be speaking at the upcoming Game Developers Conference in San Francisco next month — where he’ll presumably discuss Kabam’s efforts to diversify its offerings as a social game developer that got its start on Facebook.

Kabam’s reputation comes from asynchronous strategy combat games like Dragons of Atlantis and Kingdoms of Camelot. In 2011, the developer landed an $85 million fourth round of funding, the developer started to expand, bulking up its core technology and metrics tracking infrastructure, opening a San Francisco studio and launching games on other platforms like Google+ and its own site. Going into 2012, Kabam acquired Fearless Studios to push its games out of 2D and into streaming 3D. The company also completed some restructuring that resulted in layoffs, the magnitude of which we never quite discovered. As of February 2012, Kabam claims its quarterly bookings are up 10 times over its Q4 2010 and that it believes it’s No.2 behind Zynga in terms of social game revenue.

An interesting component buried in the press release is a proprietary framework called Pyramid that Kabam plans to use to connect all its games in a synchronous environment. The goal for the user-side experience is to allow players on various networks and devices to play together. On the developer-side, the framework eliminates the need for branched code and multiple update pushes for different platforms. It’s unclear how smoothly Pyramid will work in mobile, where Apple’s update policy often trips up cross-platform developers that want to release constant updates.

As Kabam’s attention has shifted away from Facebook, we’re not at all surprised to see its traffic on the platform sagging. Daily active users alone are down over 50 percent since July 2011, from 1.4 million to 590,000, according to our AppData traffic tracking service. For context, Kongregate claims a user base of 16 million monthly unique visitors.

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Horoscopes, Spotify, Social Networks, Family Tree, Microsoft and Lots of Greeting Cards on This Week’s Top 20 Growing Facebook Apps by DAU

This week, predictably, given the holiday season greeting card applications were popular on our list of the fastest growing by daily active users. Other popular apps included horoscopes, Spotify,  a few social networks within Facebook, Social Statistics, Family Tree and a few more.

The titles below grew from between 180,000 and 7.3 million DAU, based on AppData, our data tracking service covering growth for apps on Facebook.

Top Gainers This Week

Topping our list this week, Daily Horoscope with 7. 3 million DAU and a similar version, ????????????? ???????, with 800,000 DAU. These apps often ask users to post daily to their Walls. Spotify grew by 1.8 million DAU, while Samsung Mobile grew by 1 million DAU.  The aforementioned social networks on our list this week included: Nimbuzz Mobile   app for mobile devices with 870,000 DAU, Onedate dating app with 530,000 DAU  and dating app Niik with 280,000 DAU.

Assorted apps on our list included Social Statistics, which publishes a list of top friends to the feed, and grew by 740,000 DAU. Then there was a sophisticated video app, SmoothTV, with 678,000 DAU. Genealogy app Family Tree grew by 360,000 DAU. Finally, Microsoft Live grew by 300,000 DAU.

The rest of the list included the aforementioned greeting card applications which principally worked by asking users to send cards to their friends. Greeting Cards Grew by 480,000 DAU, Greeting Cards grew by 230,000 DAU, Cards grew by 220,000 DAU, Greetings grew by 210,000 DAU and Greeting Cards grew by 180,000 DAU.

All data in this post comes from our traffic tracking service, AppData. Stay tuned for our look at the top emerging apps on Friday.

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Networks: An Introduction

The scientific study of networks, including computer networks, social networks, and biological networks, has received an enormous amount of interest in the last few years. The rise of the Internet and the wide availability of inexpensive computers have made it possible to gather and analyze network data on a large scale, and the development of a variety of new theoretical tools has allowed us to extract new knowledge from many different kinds of networks.

The study of networks is broadly interdisciplinary and important developments have occurred in many fields, including mathematics, physics, computer and information sciences, biology, and the social sciences. This book brings together for the first time the most important breakthroughs in each of these fields and presents them in a coherent fashion, highlighting the strong interconnections between work in different areas.

Subjects covered include the measurement and structure of networks in many branches of science, methods for analyzing network data, including methods developed in physics, statistics, and sociology, the fundamentals of graph theory, computer algorithms, and spectral methods, mathematical models of networks, including random graph models and generative models, and theories of dynamical processes taking place on networks.

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China’s Top 4 Social Networks: RenRen, Kaixin001, Qzone and 51.com

Originally posted at VentureBeat

There is no single dominant network, no Facebook for all of China. The actual Facebook.com is blocked by government censors (Chinese sites all obediently and quickly remove “objectionable” content). No single social network will conquer the China market in the immediate future, least of all a foreign one.

Instead, there is fierce competition between the top four:

RenRen (formerly Xiaonei) copied the Facebook model: it started with students and has since opened to all.Kaixin001 attracted white-collar office workers by focusing on fun, addictive social games.Qzone gained young teens and rural users via cross-promotional traffic from QQ Messenger.51.com started strong in lower tier cities, but growth has since slowed.

This post will assess market share, profile the top four, and boldly predict the future.

In addition, there is a long tail of social networks in China, which will be covered in part 2 of this series. Most Chinese are members of multiple SNS, on average 2.8, according to the Chinese Internet Network Information Center. A number of smaller SNS target niche demographics: the elite, females, techies, etc. The Chinese social network scene is crowded and competitive, though clear separation exists between the top four and ‘the rest’ in terms of mass-market viability.

Market Share: Lies, Damned Lies, and Statistics

There is no trustworthy data on users or revenues. Every social network in China claims to be the largest: Qzone, RenRen, Kaixin001, and 51.com. The short and sweet is this: Qzone has the most users, RenRen has the most active users, and Kaixin001 has the most highly active users. 51.com user’s are the most rural.

In addition to the rankings from Alexa and China Rank, the Chinese Internet Network Information Center conducted 3007 telephone interviews on SNS with respondents across China in July 2009. It found that Qzone has 22% market share of social network users, RenRen has 17%, Kaixin001 12%, and 51.com 12%.

Kaixin001’s users are highly active. It averages 34 pageviews and 33 minutes spent on the site per user, numbers that are about twice as high as the competition. Kaixin001’s white-collars love surfing the site at work, and occasionally in their free time too.

As scant as the user data is, that on revenues is even worse. The little data that the networks do release is questionable. Only rough snapshots are available of the positioning in China’s social network race.

Renren (formerly Xiaonei)

Renren’s design and business model are copied from Facebook. RenRen beat out a number of competitors at China’s elite universities and spread from there. It is aggressively courting the mass market.

Users: The majority of users are students, although RenRen strives to retain those users after graduation. In the fall of 2009, it launched a massive advertising campaign—both traditional and digital—urging Chinese to reconnect with old friends and classmates. The emphasis is on connecting with real-life friends online, just as on Facebook. As RenRen grows, it is encroaching on the turf of its rivals: teens (Qzone), white-collars (Kaixin001), and lower-tier cities (51.com).

User Interface: The user interface is nearly identical to Facebook (though it has not copied Facebook’s latest redesign). It has a few unique features, such as a “footprint” of who last visited your page and recently added game mechanics or 'funware' so that users can reach 'higher levels' for interacting on the site. It also allows custom skins, though the majority of users stay with the basic theme.

Platform: The application programming interface is open to 3rd parties, but revenue share is a capped at 56%. It boasts about 250 applications (almost all games) and is China’s most popular open platform. Foreign game developers are just starting to test the approval process, with FooMojo, RockYou, and PopCap leading the way. Access for foreign developers is certain to be a hot topic at the upcoming 2010 China Social Games Summit.

Games: RenRen has the most and best games, in large part due to its open platform. But RenRen also develops games in-house, leading to concerns that RenRen will favor its own games over those of outside developers. Other networks often copy the most popular games on RenRen.

Financing: Softbank purchased 35% of RenRen for $430 million, valuing the company at $1.2 billion. The company intends to hold an initial public offering as soon as 2011.

RenRen’s parent company is Oak Pacific Interactive, which also owns Mop, a smaller Chinese social network, forum, and humor site.

Revenues: Annual revenue was over 100 million RMB ($15 million) in 2009, according to one source from the company. The primary revenue channel is advertising (brands, games, and e-commerce).

Analysis: RenRen is the most popular, most open, and best-financed social network in China. Its management team is also the smartest and fastest-moving. It is actively developing advertising, gaming, and e-commerce revenues. Its user growth is impressive, in large part due to its aggressive marketing campaigns. The August 2009 name switch from Xiaonei (inside-campus) to RenRen (people’s web) signaled its ambition to become China’s dominant popular social network. By comparison, China’s other social networks are asleep at the wheel.

Kaixin001

While RenRen was still concentrated on students, the upstart Kaixin001 was able to attract white-collar workers (in large part via spam).

Its social games got entire offices addicted to parking cars, stealing crops, and other top games. Its white-collar workers are the richest and most monetizable demographic of social network users. Kaixin001’s critical battle is ensuring that the next generation of students “graduate” to its site upon entering the workforce, rather than remaining with RenRen.

Users: White-collar workers who can secretly farm crops and check friends’ photos from their office desk. Its users spend twice as much time on site, as compared to users on the other social networks.

User Interface: The interface is clean and very simple—Kaixin001 is a pared-down version of Facebook. It eases first-time users into social network: the most popular applications, like the popular “Buying a House,” even come pre-installed. Advertising is minimal.

Platform: Kainxin001 is a closed platform, although insiders say that it will eventually open up. It has about 50 applications, the majority of which are games.

Games: Kaixin001 launched the social games craze in China and its users are game-crazy. But its games now lag behind RenRen in quantity and quality, because it’s attempting to develop everything in-house. For instance, it took Kaixin001’s developers 6 months (an eternity in social game years) to copy a popular restaurant game on RenRen. That will damage Kaixin001 as it aims to attract new users and retain and monetize its existing users.

Financing: Kaixin001 has received a total of $23 million through two funding rounds. Investors include Sina, Qiming Ventures, and Northern Light Venture Capital.

Revenues: Kaixin001 has reached monthly revenues of 7 million RMB ($1 million), but is not yet profitable. Advertisers at ad:tech Beijing told BloggerInsight that Kaixin001 is the hottest site.

Analysis: Kaixin001 has seen rapid growth and has captured a desirable demographic of white-collar workers (appealing to advertisers), who spend tons of time on the site. But its management team is far more conservative and slow-moving than RenRen. It’s far behind in terms of its advertising and monetization channels. Its site design has changed little and its application programming interface remains closed. If Kaixin001 fails to innovate or at least keep up with the curve, it will lose out. Sudents will stick with RenRen rather than “graduate” to Kaixin001.

Qzone

Qzone draws traffic from QQ Messenger, which boasts 523 million active users and is also owned by Tencent. Qzone targets teens, rural, and casual users and claims a whopping 388 million active users, a highly suspect number. Tencent’s internet services, QQ Messenger, QQ Show, QQ Games, QQ Pet, and Qzone, do connect a huge number of Chinese people.

But the classification of Qzone as a social network is questionable. It has tons of dormant, skeleton profiles that are pulled from QQ Messenger. In that regard, it’s similar to MSN Spaces, which also has a ton of “users,” but low value and retention rates. Qzone users often use nicknames or aliases rather than real-life names.

Given Tencent’s awesome advantages and synergies in social networks, Tencent’s forays into “real-identity” social networking should be seen as a squandered opportunity.

Users: Teens and rural users. Qzone is attempting to funnel its older users towards its other social network, Xiaoyou (classmates), with limited success. It already failed with an earlier attempt called QQ Campus.

User Interface: Qzone is a lousy website: it’s ugly, unintuitive, and buggy. The site is very basic (for a social network), but not in a user-friendly way (like Kaixin001).

Platform: Qzone is a closed platform, though it is experimenting with licensing. It has about 50 applications (mainly games). Benjamin Joffe, Tencent expert and CEO of internet market research firm +8*, comments: “Applications are all copies or licenses or bought from social gaming companies, generally with terrible revenue share or poor valuation. Why? Because Tencent is a closed network and because they can. Problem is: operating social games is not the same as instant messaging or massive multi-player online games and there is a learning curve - even for Tencent.”

Games: Although Qzone should have a natural advantage (Tencent also owns QQ Games), the games, like much else on the site, are of low quality. Qzone develops in-house copies of popular games, but it lags way behind and prohibits users from adding games without paying at certain times. Perhaps Qzone’s comparatively young and rural users are so naïve that they pay Qzone when they can play the same—or better—games for free on the other networks. But it's doubtful that this a successful business strategy in the long run.

Financing: Tencent, Qzone’s parent company, is massively profitable and can employ incredible resources should it so desire.

Revenues: No public figures are released. There is a lack of advertising and quality games, so virtually all revenues must come from Qzone “Yellow Diamond” memberships. It is difficult to estimate that revenue stream, but it’s hard to imagine that too many Chinese users will stay loyal to Qzone in the long-run if they continue to offer lousy services.

Analysis: Tencent with Qzone is like Microsoft with Windows Vista: a near-monopolist (in instant messaging) that can thrive despite a terrible product and lack of vision. Tencent is still massively profitable: 2009 revenues were $1.8 billion, about three times Facebook’s estimated revenues. It’s unclear how much of that is attributable to the Qzone social network though.

Benjamin Joffe comments, “Tencent is definitely not the best in terms of products or innovation - similar to Zynga in that sense - but their ability to deliver a "good enough" mass market service and integrating it within their ecosystem is impressive.”

It holds the teen demographic, but poor site design and management have cost it ground against its competitors. Qzone is shut out of the market for older students and white-collar workers, and RenRen is now encroaching on its core demographic of teens. Qzone could still turn things around though, as its parent company Tencent is an 800-pound gorilla in the Chinese internet.

51.com

51.com was an early favorite with significant backing, but is now struggling. Growth has slowed and it has the lowest traffic rankings of the top four. In early January, the site was briefly blocked for “objectionable” content, so management is trying to clean itself of lewd users and content (it’s rumored to be a platform for the world’s oldest profession). Its Chief Strategy Officer recently resigned, citing illness.

51.com is a borderline mass-market contender at best. Urban and educated demographics have all turned to its competitors. It’s now in the precarious position of defending its core user base in lower tier cities.

Users: Users from lower tier cities.

User Interface: 51.com is a simple social network. It’s far more functional than elegant. Several popular applications are pre-installed and the skins are customizable.

Platform: 51.com offers an open platform. It has attracted about 50 applications (mostly games). It is expected to offer more favorable revenue share terms than RenRen.

Games: The games on 51.com are decent, though not as numerous or high-quality as on RenRen. 51.com also develops its own games in-house: it’s investing $15 million in a gaming portal, in an attempt to reduce its reliance on advertising and value-added services. It will also soon connect into the gaming platform from Giant Interactive, one of its investors.

Financing: Giant Interactive, a publicly-listed Chinese massive multiplayer online gaming company, invested $51 million for a 25% stake. Earlier backers include venture capital firms Sequia Capital, SIG, Redpoint Ventures, and Intel Capital. In early 2007 there was premature talk of an IPO in 2010, but nothing has been heard since.

Revenues: 51.com claims to have turned a profit in 2009, with advertising revenues of about 200 million RMB ($29 million). Its open platform generated roughly 12 million RMB ($1.8 million) in revenues.

Analysis: 51.com was likely doomed to the mass-market by its rural roots. Its lower tier cities approach initially allowed for quick user growth, but the site now has a low-brow reputation and is scorned by more sophisticated netizens. RenRen’s approach of starting with the elite students at China's top universities, BeiDa and Tsinghua, and then spreading outward (copied from Facebook), appears to have been far more successful.

Second tier social networks worldwide are falling to Facebook. Will China’s more “sophisticated” networks push into 51.com’s territory? BloggerInsight is inclined to think so. 51.com’s stagnation in user growth relative to other networks is not a good sign; spreading outward from elite users has been successful for social networks worldwide and for RenRen in China too.

There are certainly differing opinions though. Beijing-based internet guru Kaiser Kuo told BloggerInsight, “I wouldn't write them off at all: They've got a real hold in sub-secondary cities and with their tie-up to a major game company (Giant Interactive), they've got plenty of cash, and as far as I know, loads of traffic. It's also been cleaned up quite a bit within the last year, from what I've heard.”

51.com may or may not hold its ground in lower tier cities. But one thing’s for certain: 51.com stands little chance in China’s top-tier cities.

Future Predictions: One RenRen to Rule them All?

The competition is open and fierce between the top four networks, but BloggerInsight’s bold crystal ball sees RenRen’s on the rise in the future. Its management team is nimbler and more aggressive than its competitors. Where other networks are dabbling (licensing games), RenRen is blazing ahead (open application programming interface).

Because of its high value, RenRen is starting to push outward from university students into both younger and older demographics. As teens become savvier on the internet at younger ages, they will start to abandon Qzone for RenRen. As students move into the workplace they should remain loyal to RenRen, encroaching upon Kaixin001. 51.com, meanwhile, faces a difficult fight to retain its users in 2nd and 3rd tier cities and rural areas. China’s social network universe, though fractured by different demographics for now, may gradually coalesce around RenRen.

Kai Lukoff is an analyst at BloggerInsight and an editor on China Social Games. Follow Kai on Twitter @klukoff

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Kabam, Plinga Bringing Dragons of Atlantis to European Social Networks

Kabam (formerly Watercooler) has partnered with European game publisher Plinga to launch its “massively multiplayer social game (MMSG)” Dragons of Atlantis to 14 new European social networks. Beginning March 1, Dragons of Atlantis will be exposed to a large audience base of new potential players on these non-Facebook platforms.

Plinga, a Berlin-based company founded in 2009, will be responsible for the customer service, translation, and distribution of Kabam’s games in Europe, beginning with Dragons of Atlantis. The game will be playable in 11 different languages and will debut on social networks such as the Dutch network Hyves and the Polish network Nasza Klasa. Chris Carvalho, COO of Kabam stated, “We are excited to partner with Plinga to bring Dragons of Atlantis to the large number of European gamers who play games on social networks other than Facebook.”

Dragons of Atlantis was launched last October by Wonderhill, who was acquired by Kabam shortly thereafter. The game is very similar in gameplay to Kingdoms of Camelot and other fantasy themed strategy games on Facebook. According to our AppData tracking service, Dragons of Atlantis currently has over 2 million monthly users and just under 250,000 daily users.

Tami Baribeau is Senior Community Manager at ZipZapPlay and a contributor to Inside Social Games.

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China’s Top 4 Social Networks: RenRen, Kaixin001, Qzone and 51.com

Originally posted at VentureBeat

There is no single dominant network, no Facebook for all of China. The actual Facebook.com is blocked by government censors (Chinese sites all obediently and quickly remove “objectionable” content). No single social network will conquer the China market in the immediate future, least of all a foreign one.

Instead, there is fierce competition between the top four:

RenRen (formerly Xiaonei) copied the Facebook model: it started with students and has since opened to all.Kaixin001 attracted white-collar office workers by focusing on fun, addictive social games.Qzone gained young teens and rural users via cross-promotional traffic from QQ Messenger.51.com started strong in lower tier cities, but growth has since slowed.

This post will assess market share, profile the top four, and boldly predict the future.

In addition, there is a long tail of social networks in China, which will be covered in part 2 of this series. Most Chinese are members of multiple SNS, on average 2.8, according to the Chinese Internet Network Information Center. A number of smaller SNS target niche demographics: the elite, females, techies, etc. The Chinese social network scene is crowded and competitive, though clear separation exists between the top four and ‘the rest’ in terms of mass-market viability.

Market Share: Lies, Damned Lies, and Statistics

There is no trustworthy data on users or revenues. Every social network in China claims to be the largest: Qzone, RenRen, Kaixin001, and 51.com. The short and sweet is this: Qzone has the most users, RenRen has the most active users, and Kaixin001 has the most highly active users. 51.com user’s are the most rural.

In addition to the rankings from Alexa and China Rank, the Chinese Internet Network Information Center conducted 3007 telephone interviews on SNS with respondents across China in July 2009. It found that Qzone has 22% market share of social network users, RenRen has 17%, Kaixin001 12%, and 51.com 12%.

Kaixin001’s users are highly active. It averages 34 pageviews and 33 minutes spent on the site per user, numbers that are about twice as high as the competition. Kaixin001’s white-collars love surfing the site at work, and occasionally in their free time too.

As scant as the user data is, that on revenues is even worse. The little data that the networks do release is questionable. Only rough snapshots are available of the positioning in China’s social network race.

Renren (formerly Xiaonei)

Renren’s design and business model are copied from Facebook. RenRen beat out a number of competitors at China’s elite universities and spread from there. It is aggressively courting the mass market.

Users: The majority of users are students, although RenRen strives to retain those users after graduation. In the fall of 2009, it launched a massive advertising campaign—both traditional and digital—urging Chinese to reconnect with old friends and classmates. The emphasis is on connecting with real-life friends online, just as on Facebook. As RenRen grows, it is encroaching on the turf of its rivals: teens (Qzone), white-collars (Kaixin001), and lower-tier cities (51.com).

User Interface: The user interface is nearly identical to Facebook (though it has not copied Facebook’s latest redesign). It has a few unique features, such as a “footprint” of who last visited your page and recently added game mechanics or 'funware' so that users can reach 'higher levels' for interacting on the site. It also allows custom skins, though the majority of users stay with the basic theme.

Platform: The application programming interface is open to 3rd parties, but revenue share is a capped at 56%. It boasts about 250 applications (almost all games) and is China’s most popular open platform. Foreign game developers are just starting to test the approval process, with FooMojo, RockYou, and PopCap leading the way. Access for foreign developers is certain to be a hot topic at the upcoming 2010 China Social Games Summit.

Games: RenRen has the most and best games, in large part due to its open platform. But RenRen also develops games in-house, leading to concerns that RenRen will favor its own games over those of outside developers. Other networks often copy the most popular games on RenRen.

Financing: Softbank purchased 35% of RenRen for $430 million, valuing the company at $1.2 billion. The company intends to hold an initial public offering as soon as 2011.

RenRen’s parent company is Oak Pacific Interactive, which also owns Mop, a smaller Chinese social network, forum, and humor site.

Revenues: Annual revenue was over 100 million RMB ($15 million) in 2009, according to one source from the company. The primary revenue channel is advertising (brands, games, and e-commerce).

Analysis: RenRen is the most popular, most open, and best-financed social network in China. Its management team is also the smartest and fastest-moving. It is actively developing advertising, gaming, and e-commerce revenues. Its user growth is impressive, in large part due to its aggressive marketing campaigns. The August 2009 name switch from Xiaonei (inside-campus) to RenRen (people’s web) signaled its ambition to become China’s dominant popular social network. By comparison, China’s other social networks are asleep at the wheel.

Kaixin001

While RenRen was still concentrated on students, the upstart Kaixin001 was able to attract white-collar workers (in large part via spam).

Its social games got entire offices addicted to parking cars, stealing crops, and other top games. Its white-collar workers are the richest and most monetizable demographic of social network users. Kaixin001’s critical battle is ensuring that the next generation of students “graduate” to its site upon entering the workforce, rather than remaining with RenRen.

Users: White-collar workers who can secretly farm crops and check friends’ photos from their office desk. Its users spend twice as much time on site, as compared to users on the other social networks.

User Interface: The interface is clean and very simple—Kaixin001 is a pared-down version of Facebook. It eases first-time users into social network: the most popular applications, like the popular “Buying a House,” even come pre-installed. Advertising is minimal.

Platform: Kainxin001 is a closed platform, although insiders say that it will eventually open up. It has about 50 applications, the majority of which are games.

Games: Kaixin001 launched the social games craze in China and its users are game-crazy. But its games now lag behind RenRen in quantity and quality, because it’s attempting to develop everything in-house. For instance, it took Kaixin001’s developers 6 months (an eternity in social game years) to copy a popular restaurant game on RenRen. That will damage Kaixin001 as it aims to attract new users and retain and monetize its existing users.

Financing: Kaixin001 has received a total of $23 million through two funding rounds. Investors include Sina, Qiming Ventures, and Northern Light Venture Capital.

Revenues: Kaixin001 has reached monthly revenues of 7 million RMB ($1 million), but is not yet profitable. Advertisers at ad:tech Beijing told BloggerInsight that Kaixin001 is the hottest site.

Analysis: Kaixin001 has seen rapid growth and has captured a desirable demographic of white-collar workers (appealing to advertisers), who spend tons of time on the site. But its management team is far more conservative and slow-moving than RenRen. It’s far behind in terms of its advertising and monetization channels. Its site design has changed little and its application programming interface remains closed. If Kaixin001 fails to innovate or at least keep up with the curve, it will lose out. Sudents will stick with RenRen rather than “graduate” to Kaixin001.

Qzone

Qzone draws traffic from QQ Messenger, which boasts 523 million active users and is also owned by Tencent. Qzone targets teens, rural, and casual users and claims a whopping 388 million active users, a highly suspect number. Tencent’s internet services, QQ Messenger, QQ Show, QQ Games, QQ Pet, and Qzone, do connect a huge number of Chinese people.

But the classification of Qzone as a social network is questionable. It has tons of dormant, skeleton profiles that are pulled from QQ Messenger. In that regard, it’s similar to MSN Spaces, which also has a ton of “users,” but low value and retention rates. Qzone users often use nicknames or aliases rather than real-life names.

Given Tencent’s awesome advantages and synergies in social networks, Tencent’s forays into “real-identity” social networking should be seen as a squandered opportunity.

Users: Teens and rural users. Qzone is attempting to funnel its older users towards its other social network, Xiaoyou (classmates), with limited success. It already failed with an earlier attempt called QQ Campus.

User Interface: Qzone is a lousy website: it’s ugly, unintuitive, and buggy. The site is very basic (for a social network), but not in a user-friendly way (like Kaixin001).

Platform: Qzone is a closed platform, though it is experimenting with licensing. It has about 50 applications (mainly games). Benjamin Joffe, Tencent expert and CEO of internet market research firm +8*, comments: “Applications are all copies or licenses or bought from social gaming companies, generally with terrible revenue share or poor valuation. Why? Because Tencent is a closed network and because they can. Problem is: operating social games is not the same as instant messaging or massive multi-player online games and there is a learning curve - even for Tencent.”

Games: Although Qzone should have a natural advantage (Tencent also owns QQ Games), the games, like much else on the site, are of low quality. Qzone develops in-house copies of popular games, but it lags way behind and prohibits users from adding games without paying at certain times. Perhaps Qzone’s comparatively young and rural users are so naïve that they pay Qzone when they can play the same—or better—games for free on the other networks. But it's doubtful that this a successful business strategy in the long run.

Financing: Tencent, Qzone’s parent company, is massively profitable and can employ incredible resources should it so desire.

Revenues: No public figures are released. There is a lack of advertising and quality games, so virtually all revenues must come from Qzone “Yellow Diamond” memberships. It is difficult to estimate that revenue stream, but it’s hard to imagine that too many Chinese users will stay loyal to Qzone in the long-run if they continue to offer lousy services.

Analysis: Tencent with Qzone is like Microsoft with Windows Vista: a near-monopolist (in instant messaging) that can thrive despite a terrible product and lack of vision. Tencent is still massively profitable: 2009 revenues were $1.8 billion, about three times Facebook’s estimated revenues. It’s unclear how much of that is attributable to the Qzone social network though.

Benjamin Joffe comments, “Tencent is definitely not the best in terms of products or innovation - similar to Zynga in that sense - but their ability to deliver a "good enough" mass market service and integrating it within their ecosystem is impressive.”

It holds the teen demographic, but poor site design and management have cost it ground against its competitors. Qzone is shut out of the market for older students and white-collar workers, and RenRen is now encroaching on its core demographic of teens. Qzone could still turn things around though, as its parent company Tencent is an 800-pound gorilla in the Chinese internet.

51.com

51.com was an early favorite with significant backing, but is now struggling. Growth has slowed and it has the lowest traffic rankings of the top four. In early January, the site was briefly blocked for “objectionable” content, so management is trying to clean itself of lewd users and content (it’s rumored to be a platform for the world’s oldest profession). Its Chief Strategy Officer recently resigned, citing illness.

51.com is a borderline mass-market contender at best. Urban and educated demographics have all turned to its competitors. It’s now in the precarious position of defending its core user base in lower tier cities.

Users: Users from lower tier cities.

User Interface: 51.com is a simple social network. It’s far more functional than elegant. Several popular applications are pre-installed and the skins are customizable.

Platform: 51.com offers an open platform. It has attracted about 50 applications (mostly games). It is expected to offer more favorable revenue share terms than RenRen.

Games: The games on 51.com are decent, though not as numerous or high-quality as on RenRen. 51.com also develops its own games in-house: it’s investing $15 million in a gaming portal, in an attempt to reduce its reliance on advertising and value-added services. It will also soon connect into the gaming platform from Giant Interactive, one of its investors.

Financing: Giant Interactive, a publicly-listed Chinese massive multiplayer online gaming company, invested $51 million for a 25% stake. Earlier backers include venture capital firms Sequia Capital, SIG, Redpoint Ventures, and Intel Capital. In early 2007 there was premature talk of an IPO in 2010, but nothing has been heard since.

Revenues: 51.com claims to have turned a profit in 2009, with advertising revenues of about 200 million RMB ($29 million). Its open platform generated roughly 12 million RMB ($1.8 million) in revenues.

Analysis: 51.com was likely doomed to the mass-market by its rural roots. Its lower tier cities approach initially allowed for quick user growth, but the site now has a low-brow reputation and is scorned by more sophisticated netizens. RenRen’s approach of starting with the elite students at China's top universities, BeiDa and Tsinghua, and then spreading outward (copied from Facebook), appears to have been far more successful.

Second tier social networks worldwide are falling to Facebook. Will China’s more “sophisticated” networks push into 51.com’s territory? BloggerInsight is inclined to think so. 51.com’s stagnation in user growth relative to other networks is not a good sign; spreading outward from elite users has been successful for social networks worldwide and for RenRen in China too.

There are certainly differing opinions though. Beijing-based internet guru Kaiser Kuo told BloggerInsight, “I wouldn't write them off at all: They've got a real hold in sub-secondary cities and with their tie-up to a major game company (Giant Interactive), they've got plenty of cash, and as far as I know, loads of traffic. It's also been cleaned up quite a bit within the last year, from what I've heard.”

51.com may or may not hold its ground in lower tier cities. But one thing’s for certain: 51.com stands little chance in China’s top-tier cities.

Future Predictions: One RenRen to Rule them All?

The competition is open and fierce between the top four networks, but BloggerInsight’s bold crystal ball sees RenRen’s on the rise in the future. Its management team is nimbler and more aggressive than its competitors. Where other networks are dabbling (licensing games), RenRen is blazing ahead (open application programming interface).

Because of its high value, RenRen is starting to push outward from university students into both younger and older demographics. As teens become savvier on the internet at younger ages, they will start to abandon Qzone for RenRen. As students move into the workplace they should remain loyal to RenRen, encroaching upon Kaixin001. 51.com, meanwhile, faces a difficult fight to retain its users in 2nd and 3rd tier cities and rural areas. China’s social network universe, though fractured by different demographics for now, may gradually coalesce around RenRen.

Kai Lukoff is an analyst at BloggerInsight and an editor on China Social Games. Follow Kai on Twitter @klukoff

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