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China's Social Games, Advertising, "Innovation"

China's game industry, innovation, business model, going where the West won't go (yet?).

Bryan Ma, Blogger

January 18, 2011

3 Min Read

Originally posted at http://www.thepretentiousgamer.com/?p=370.


Some argue that China has no creative chops in gaming (or anything else), but its hard not to acknowledge the fact that China’s industries, gaming especially, have at the very least innovated on business model.

We’re talking about an industry that had literally no way to monetize in a traditional Western retail framework. So what do they do? Microtransactions, viral social gameplay, the psychology of addiction – this has been their approach with online games long before western MMOs considered going free-to-play a last-ditch option to save the ship, and this has been their approach with social games before Zynga made the industry blow its collective lid last year.

With social network games, it could be argued that China simply goes for what the West doesn’t have the stomach to do – in aggressive social gameplay (imagine watching your Farmville game 24/7 to make sure your neighbors aren’t actually STEALING your crops), in-game advertising, and in establishing privacy norms(what if allowing users to know who visited your Facebook page was an internally planned feature? Imagine if they monetized this feature!).

For example, from Fast Company:

The major innovations have come in social gaming, the biggest driver of traffic and revenue. The most popular game is Happy Farmer, a third-party app developed for Renren in 2008 by a firm called Five Minutes. This was the inspiration for Kaixin001′s Happy Garden — and for Zynga’s FarmVille, which debuted nearly a year after the Chinese versions. Three-quarters of Renren users have played Happy Farmer; by comparison, less than 10% of Facebook users play FarmVille.

Gaming’s immense popularity has opened up new channels for advertising. In April 2009, Lay’s potato chips launched its Happy Farmer campaign — more than a year before FarmVille had any product placement. “We let users grow Lay’s potatoes, which are bigger and beefier and create more profit for the user, and then we let them create a Lay’s factory,” says Alex Miller, advertising product manager at Renren. Before the campaign, he says, 45% of users surveyed had tasted Lay’s during the previous month. Within two months, that figure had jumped to 65%.

Both networks have been much more aggressive than Facebook and Zynga in sprinkling product placement throughout their games — and according to Nielsen, this is quickly becoming the biggest revenue source for China’s social networks. Players of Kaixin001′s Happy Garden can plant seeds and squeeze juice for Lohas, a soft drink made by COFCO, China’s biggest food manufacturer; they can also enter a lottery to win Lohas. And players of Happy Restaurant can earn virtual currency by hanging ads for companies on the walls of their virtual eateries. After meals, they can also hand out sticks of Wrigley’s gum.

Regardless of the inevitable cultural biases in assessments of creativity, these services are certainly innovating in finding and exploiting what their users want while turning a profit – and in turn will influence more and more the direction of discourse on individuality, entertainment, commercialism, and more in this country, and beyond. We in the West more or less adopted microtransactions from Asia. What’s next?

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