Inside Social Games

Yesterday I had the opportunity to speak on “The State of the Social Gaming Industry” at GDC in San Francisco. It was awesome to see the level of excitement in social gaming from developers and entrepreneurs across the gaming industry – much more than last year. Lots of people are now working on “social” projects, and larger players are preparing to throw a lot more weight in this direction over the coming year.

For those interested in checking out the slides, they are embedded below.

Topics covered: Social games, Virtual goods, Facebook, Zynga, Playfish, Playdom, PayPal, MySpace, Twitter, Social networks, Gaming portals, Payments, Monetization, Mobile, Offers

Mochi Media, the Flash gaming platform company that sold to China media giant Shanda Games for $80 million earlier this year, is continuing to focus on social. It’s announcing new tools for developers today, allowing them to provide ways for users to play games against friends and share activity to their social networks. It’s also offering a new $10 million fund for Flash and social games, in conjunction with its new corporate parent, to help finance promising new ideas.

The company worked last year to apply concepts from free-to-play social games to the Flash widget games on its site, introducing a platform-wide virtual currency, Mochi Coins, and a way for users to find friends from social networks and share things like high scores with them.

Mochi had begun live providing ways for developers to integrate pre-roll and other advertising into their widgets. Developers can then let anyone embed their games anywhere the web, and make money for themselves (with Mochi also getting a cut). On top of this, Mochi provides game analytics tools so developers could track usage and figure out where to improve their products. The company now says it reaches 150 million monthly active users, who play 15,000 games on 40,000 different web sites.

The Social API (application programming interface) lets users sign in to play a game via their identities on Facebook (using Facebook Connect), MySpace or Twitter, then play friends from across these sites and and access each site’s communication channels — say, posting a big gaming win to your Facebook wall.

But the API goes beyond what the company launched last fall, as vice president of product management Ryan Nichols tells us. It’s a layer on top of these other networks, and mimicks Facebook’s API so a social game developer on Facebook could easily port their game to it. Once a user adds a friend on Mochi from one of the social sites, that person becomes their Mochi friend — if Facebook goes down, for example, Mochi can still maintain its connection between the two people. The API =also includes a way for developers to message all users on a game, regardless of which social platform they are on.

This is a smart idea, but one issue is that many social gamers prefer playing games on social networks. Why? Many don’t even realize that they’re playing “games,” per se, but rather passing the time doing something entertaining with friends on the site.

The $10 million fund, meanwhile, “will be managed by members of the management team of Mochi Media and Shanda Games. Through participation with the fund, developers will gain access to technical, design and testing resources from Shanda Games, as well as a host of development tools and distribution….”

The big picture here is this: Shanda Games, a publicly-traded company controlled by Shanda Interactive Entertainment Ltd., wants to compete outside of China. Mochi offers distribution and monetization services that allow it to do so; the social features are another step in that direction. The fund is, too. The other interesting angle we’ve been hearing is that netbook usage is exploding in China, and the lightweight devices can’t handle the processing power required for many of the downloadable and massively multiplayer online games popular in the country. The company has organically gained millions of users in China — people who have just found Mochi-powered games on their own — so Shanda is aiming for Mochi to bring its 15,000 games to bear on the Chinese market.

Over the weekend, popular developer CrowdStar released a brand new Facebook app, Zoo Paradise. However, this one isn’t following the recent trend of city-builders. Rather, it’s an iteration on the “tycoon” concept. After the successes of RockYou’s Zoo World, who could blame the developer, as the zoological wonder not only reached #8 in this past month’s Top 25 Facebook Games, but is one of the contributors to the developer’s current popularity.

Nonetheless, Zoo Paradise is a lot like its predecessor in the core sense. The idea is to build the best looking zoo one can while coaxing the little computer-player patrons to spend as much money as they can.

The game is actually simple enough that there is no real tutorial, merely a giant purple arrow above the “Shop” icon. From here players can purchase animals, habitats, concessions, and decorations for a very reasonable price. However, based on the player level, only a limited number of these (save decorations) can be purchased at any given time.

As for the level itself, it seems that most of the experience needed to increase it is done by buying and placing new items. Periodically, players must also feed their animals and even water certain decorations such as a handful of trees. Also, all habitats and concessions seem to be upgradeable.

Unfortunately, Zoo Paradise is a bit of a slow burner. When first starting the game, players are able to pick up coins that were presumably dropped by customers. Nonetheless, no new ones were ever dropped during play, when we played and not once did a customer buy anything from a concession stand. Likely, since the game is in beta, this is merely a bug, but if it isn’t, then it certainly is a significant turn off to the game.

Thankfully, the lack of new income from the in-game currency (Zoo Coins) wasn’t too terribly hindering, as the game’s decoration’s panel in the shop has a fairly sizable collection of plants, bushes, rocks, and so on, that only cost anywhere from two to 15 coins, making it easy for the player to get started aesthetically.

This is a good thing too, as the game actually looks very nice. Everything has a sort of overly cute and saturated look to it (complete with great big watery eyes for the animals). All the habitats are animated as well as the animals who move about in a fairly believable fashion, for a Flash game anyway).

Of course, all this movement also corresponds to the zoo visitors as well, and while their wandering presence makes the game feel like a bustling park, their pathfinding AI isn’t exactly refined yet. These guys constantly walk out into the middle of nowhere, including through decorations, and at one point, every single one got stuck in the entrance and couldn’t enter. As a side note, multiple animals in a habitat seem to get stuck, too. Again, all are just beta bugs, but something to be aware of nonetheless.

Another curious point, is that this CrowdStar title actually doesn’t use its own virtual currency. Instead, it makes sole use of the Facebook Credits system, directing you to a Credits purchase screen if you try to buy the currency. Only a low percentage of items require Credits currency – about one-third of each section. That said, however, there isn’t exactly a large selection of items yet, so it is currently a bit limiting. For example, there are only three habitats – jungle, savanna, and polar – and the savanna costs 67 Facebook Credits, leaving a player that doesn’t want to spend money with very few style choices.

In regards to social ramifications, the game is typical of about any CrowdStar game, or any other virtual space type of app, for that matter. Players can send each other gifts, publish feeds to adopt rescued animals, send gifts, and visit each other’s zoo (to help out) via a leaderboard system. Nothing out of the ordinary, but why fix what isn’t broken?

Overall, Zoo Paradise isn’t too shabby. Especially considering its traffic — somewhere in the neighborhood of 112,000 monthly active users already. The game looks good, and it plays well (even if it is a bit slow). Moreover, despite its initial bugs, it was actually thoroughly enjoyable. We look forward to seeing a cleaned up version in the near future.

Although the vast majority of Facebook’s user growth has occurred outside the United States over the last couple of years, one of the most notable countries where it hasn’t grown is China. Access to Facebook within China is largely blocked by the Chinese government, as is the case with many other western websites. But while most Chinese Internet users can’t access Facebook and vice versa, that isn’t stopping social game developers and publishers in China and North America from eyeing – and moving into – each other’s markets.

It’s been well documented that much of what is happening today in the West in terms of the proliferation of virtual goods-based free-to-play business models has actually been around in Asia for a while. Historically, however, these markets have generally been led by local players. In 2010, we’re beginning to see what could become a larger and quite interesting trend: Chinese developers moving into western markets via Facebook, and even some western Facebook game developers beginning to move into China. The trade routes for virtual goods exports are picking up.

> Continue reading on Inside Facebook.

April 20 | San Francisco

As we recently announced, Inside Social Apps 2010, our first conference on the future of monetization on social platforms, is happening April 20th in San Francisco, one day before Facebook’s official “f8″ event. We’re excited to see all of the developers and entrepreneurs from around the world that are planning to attend!

In addition to the 24 confirmed speakers at Inside Social Apps 2010, including executives from all the largest developers on the Facebook Platform, we’re very excited to announce three more speakers today: Season Xu, Co-founder and COO at Five Minutes (makers of Happy Farm), Dave Etling, VP Product Development at InComm, and Jeremy Liew, Managing Director at Lightspeed Venture Partners. They will be joining our full list of speakers listed below.

• Atul Bagga, VP Equity Research, Games, ThinkEquity
• Adam Caplan, VP Virtual Currency, Super Rewards / Adknowledge
  
• Renata Dionello, Chief of Staff to the CEO, eBay, and former Director of Consumer Business Development, PayPal
• Eric Eldon, Editor, Inside Facebook & Inside Social Games
• Dave Etling, VP Product Development, InComm
  
• George Garrick, CEO, Offerpal Media
• Vikas Gupta, CEO, Jambool
• Sebastien de Halleux, Founder and COO, Playfish, and VP Business Development & Strategic Partnerships, EA Interactive
• Ron Hirson, Co-founder and SVP Product, Boku
• Nick Lawler, Managing Director, Maverick Capital
• Keith Lee, Co-founder and CEO, Booyah
• Jeremy Liew, Managing Director, Lightspeed Venture Partners
  
• Vish Makhijani, COO, Zynga
• David Marcus, CEO, Zong
• Lisa Marino, CRO, RockYou
  
• Dave McClure, Investor, Founders Fund Angel and fbFund Incubator
• Rex Ng, Co-founder and CEO, 6waves
• Jason Oberfest, VP Social Applications, ngmoco
• Mark Pincus, Founder and CEO, Zynga
• Shervin Pishevar, Founder and Executive Chairman, SGN
• John Pleasants, CEO, Playdom
• Keith Rabois, VP Strategy and Business Development, Slide
• Peter Relan, Executive Chairman, CrowdStar
• Justin Smith, Founder, Inside Network
• Kavin Stewart, CEO, Lolapps
• Jay Weintraub, Founder, LeadsCon
• Season Xu, Co-founder and COO, Five Minutes

More speakers and a full agenda will be announced shortly.

Finally, a limited set of “early admission” tickets is now available through Friday at a special price of $299. This price will change after Friday, and space will be limited, so we encourage you to register now.

Inside Social Apps 2010 – April 20th in San Francisco

Three years after the Facebook Platform launched in 2007, what started out as sheep throwing and vampire biting has quickly become a profitable billion-dollar industry. Today, social games monetizing through virtual goods have quickly become one of the hottest sectors of technology and entertainment, both in the US and around the world. Where are social apps going, and who is leading the way?

Inside Network is proud to announce our first conference on the future of monetization on social platforms: Inside Social Apps 2010, happening April 20th in San Francisco, is bringing together the world’s leading entrepreneurs all in one place to discuss the future of social applications and games monetizing through virtual goods.

This will be an in-depth one day event geared toward developers on Facebook, MySpace, and the iPhone, senior executives, and investors. At Inside Social Apps 2010, founders and CEOs of the top social gaming, mobile social gaming, payments, and virtual goods infrastructure companies will be tackling the key issues facing the industry. We’re hosting it one day before Facebook’s “f8″ event in San Francisco, so this will be an excellent opportunity to learn about the key issues facing the future of the Facebook Platform and beyond before Facebook’s official event.

Register Now

A limited set of “early admission” tickets is available through Friday at a special price of $299. This price will change after Friday, and space will be very limited, so we encourage you to register early.

From all of us at Inside Network, we hope to see you on April 20th in San Francisco!

Chinese developer Five Minutes brought its popular farming application, Happy Farm to Facebook, one of many developers from the country that has pushed on to Facebook. The game has now grown to a respectable 3.1 million monthly active users.

How can you follow the game up with a sequel? Why you make it bigger, of course! Take Happy Farm as a base, spice it up with some elements of Pet Society, add a dash of YoVille, and throw it all into a miniature virtual world and you have the makings of a 681,000 MAU Happy Farm 2. Well… a Chinese language version of it anyway. Although Facebook is banned in mainland China, millions of Chinese speakers play games on the service throughout Asia and the rest of the world. 5 Minutes is making these Facebook users their target, at least for now.

[Update: An English-language version exists, although it's not viewable in Facebook's search and we didn't have it in AppData. Its MAU count is also looking decent so far, with 281,000.]

Thankfully, most of the icons are, well, iconic enough to allow a English-speaking individual to figure things out, and despite the language barrier, Happy Farm 2 proved to be quite entertaining.

Getting down to basics, the game is your basic farm title. Players create plots of land, plant seeds, water them, do a little pest control, and eventually harvest them for some coin. Players then use the money to decorate their farm as they see fit with the added feature of creating ponds to place fish in. Unfortunately, for us, most everything is only in Chinese, so we honestly have no idea what the fish are telling us. No, we’re not crazy: the fish and plants talk, but other than the phrase “Happy Day,” lord only knows what they have to say. Nevertheless, it does display an interesting difference in culture: How often do your crops talk to you in FarmVille? Different, and pretty cool.

Unlike Happy Farm, where the game was static and unmoving, players can move about their fields with a cartoonish (though a bit uninspired-looking) avatar. This is where things get interesting though, as players can actually enter their home.

From here, the game takes a more YoVille-like approach, allowing players to decorate their isometric abode (of a respectable size) with a rather impressive variety of furniture. Obviously, this creates a great deal more longevity for the app, as now players are not only building up their farm, but their house as well.

This is where the Pet Society elements comes in. To buy said furniture, players leave their farm and enter a miniature city that feels only slightly smaller than the one in the Playfish title. Conveniently enough, your farm is located, more or less, in the heart of town and players walk about the city streets visiting a collection of stores, including places to buy gifts, fish, seeds, outfits (yes, you can decorate your avatar too), farm decorations, functional farm items (fertilizer, for example), as well as visit the bank (for virtual currency, presumably) and a breeder for farm animals.

Social elements, that we could understand, seem fairly standard for farming games too. You have your gifting, leaderboards, and the ability to visit and take care of each others’ farms. Actually, it is worth noting that this last feature has a nice bit of polish too. If a farm is left unattended for too long it gets a dusty, abandoned town feel to it.

Honestly, despite the language handicap, it really turned out to be a great game for us. The only issue that comes to mind is that compared to all the character designs for the shop keepers, the player’s avatar is a bit ghastly. Nonetheless, if that’s not an issue for you, and you can read Chinese (or even if you can‘t, for that matter), then by all means, Happy Farm 2 is a game certainly worth a play.

And, considering the tendency of Western developers to build their own versions of features that get big in China, perhaps we’ll see the many competing Facebook farm titles out there add more Happy Farm 2 features to their games.

World of Warcraft Used to Protest Chinese Game Censorship – While it is not unusual for popular games to have fan made movies made using their in-game resources (dubbed machinima), a recent video called “War of Internet Addition” has come about that is both entertaining and a bit political. Using visuals and avatars from World of Warcraft, the 64 minute video almost directly represents the ever increasing Chinese restrictions of the web in a very satirical fashion.

The Chinese version can be found at Youku’s Buzz blog. English subtitles can be found in seven parts on YouTube: 1, 2, 3, 4, 5, 6, 7.

MyTown Hits 1 Million Users – Though it was one of the most recent of the location-based titles to appear on the iPhone, the social title, Booyah’s MyTown has passed 1 million registered users before competing location games Foursquare and Gowalla. Playing the game means checking in at real world locals, but while Foursquare and Gowalla encourage check-ins with achievements and badges, MyTown focuses on a more Monopoly-like approach, allowing people to actually “buy” locations” and earn money based on who checks in there.

Gavin Newsom Claims Social Gaming Companies Will Help Economy – San Fransisco Mayor, Gavin Newsom says, in a report from ABC, that the city is on its way to recovery, with the creation of more jobs and better economic conditions coming from a more diversified collection of industries — especially social gaming. In fact, Newsom specifically mentions social gaming companies with offices in San Francisco, including Zynga, Playdom, and Playfish.

City of Eternals Sees Strong Starting Metrics – Ohai’s Facebook empowered MMO, City of Eternals looked impressive from the start, but initial metrics are showing just how many are agreeing with that assessment. Within the first 30 days, players that spend money on virtual goods have spent an average of $16.50, and that, of all players, an average of 65 minutes is spent, a day, playing the blood-sucking title with the 10,000 most active playing for 87 minutes.

Although the company hasn’t released overall user traffic numbers, it says 1% of active users play for seven hours a day (note that the game logs you off after 20 minutes of inactivity) and 42% play for multiple sessions a day. 60% of active users returning to play within seven days. Furthermore, of all these users, 60% are male and 40% female with 70% of the games most active members being women.

[via VentureBeat]

Bejeweled Turns 10 – PopCap’s ever popular casual game, Bejeweled has sold over 50 million units, making it one of the top selling video games of all time. In fact, the company states that a copy is sold ever 4.3 seconds. In order to celebrate, PopCap will be hosting its first-ever community-wide competition for it’s one minute, Facebook version, Bejeweled Bitz. The contest is called “Show Your Bejeweled Love” and will feature a myriad of promotional activities and, more importantly, rewards for the best Bejeweled Blitz players. The contest and details will launch next month at Bejeweled.com.

Apple Getting Nicer? - Anyone following or dealing with the Apple submission process for apps, knows how unhappy a great many developers became with the company last year. However, that was 2009 and in the new decade, it looks like Apple is trying to make amends with new and improved services for its application developers. Not only did submissions become faster earlier this year, but the company is now issuing surveys asking a myriad of questions in the hopes of improving their services before the next big boom for the Apple’s mobile platforms comes again (iPad anyone?).

[via TechCrunch]

Mochi Media Partners with USA Network- Earlier in the week, Mochi Media announced its new partnership with USA Networks. Along with the announcement came a week of Valentine’s Day promotions as a celebratory event. Obviously, this team up also means USA’s Character Arcade will integrate all of Mochi’s titles, and to that end, players that play the featured game, Mochi’s “Twin Shots 2: Good and Evil” will be registered to win a Wii Starter Bundle or $25 Best Buy gift cards. The winners will be announced Sunday at 11:59 pm.

Apple Patents a 3D Virtual Apple Store – In other Apple news, the company recently made a big win as it was approved the patent for a 3D virtual store. The concept is to create the more personalized and living feel of shopping at a brick and mortar location, but still have all the benefits that come from everyday online shopping (searches, always open, etc.). The store would be a virtual world with icons representing time of day and color schemes/decor representing the seasons indoors. Curiously, the patent also covers details such as outdoor lighting and settings to reflect time and seasons as well.

[image via Patently Apple]

Electronic Arts Says Digital Business Will Reach $750 Million in Revenue – Earlier this week, Electronic Arts proclaimed that the gaming giant’s digital business was “growing” and is “profitable.” It projected its digital business to reach around $750 million in revenue by next year; a substantial growth over the $575 million this year. Executives say that this is currently the most profitable portion of the company, and they do not expect much growth in regards to their traditional games (i.e. console box sales). Beyond its own online games, it is one of the top mobile developers, holding seven of the top iPhone apps), and big on Facebook via the acquisition of Playfish last fall (granting two top 10 Facebook games). Expect more to come online games to come from the company soon, like Madden Football for Facebook.

Mixpanel Raises Funding – Analytics company Mixpanel is active on and off Facebook, with clients including Kiva, HotorNot, Slide and UserVoice. It has now raised $500,000 in angel funding from PayPal cofounder and Slide founder Max Levchin and Bebo cofounder Michael Birch. For more on the company, check out the recent Inside Facebook guest post on social gaming metrics from cofounder Suhail Doshi.

In the most recent post in our China social games series, we saw that China’s social game developer landscape is marked by high barriers and a payment structure that favors large social network platforms over individual developers. Today, we examine the financial incentives for developers in that market, and look at why developers of all sizes are looking beyond China for growth.

Low ARPUs and High Social Network Fees

While some developers are viewing Facebook’s impending Credits rollout and revenue share with apprehension, Chinese developers have been dealing with the revenue share question for years. China’s social networks take a cut – a generous one – of all revenues earned by social games on their platforms. These share rates are highly unfavorable toward developers, with some social networks reported to be keeping between 50% and 70% of all third-party app revenues.

On China’s social networking platforms, the number of visitors to apps is high and daily active users (DAU) are comparable to some of the most popular games on Facebook. The developer Five Minutes’ Happy Farm is seeing around 23 million DAUs while Zynga’s FarmVille is currently enjoy 27 million DAU according to our most recent numbers from AppData. Despite these promising traffic numbers, the average revenue per user (ARPU) remains very weak. One source reports that a game with 100,000 DAUs will bring in around $5,000 USD per month. That would calculate out to around $0.06 / DAU / month. For reference, many games on Facebook are making under $1 / DAU / month, with a few of the stronger games surpassing the $1 threshold.

Why are ARPUs so low? It’s not because Chinese users are strangers to virtual goods. As we noted in this series’ first installment, China’s overall virtual goods market is on its way to becoming a $5 billion market in 2010, while the U.S. virtual goods market is on track to becoming a $1.6 billion market, according to our research for Inside Virtual Goods: the Future of Social Gaming 2010.

A $5 million market from virtual goods alone should be nothing to complain about, but much of this revenue will be generated from virtual goods outside of social games by businesses like QQ’s extremely popular instant messaging service. It’s not because of high payment friction either. In fact, one insider we talked to told us the following about payments:

“Payment is actually BETTER than on Facebook and FB apps, with LESS friction. On RenRen you can already buy RenRen Beans, which are used across applications, like Facebook Credits plan to be.”

What we do know is that few in this industry understand the specific reasons why ARPUs remain low in China’s social games. Developers we’ve spoken with have cited a variety of explanations, from low transaction values, high volumes of non-transacting users, the relative newness of the social gaming trend in China, and the different audience it appeals to (as opposed to traditional gaming, which appeals to a different, ‘hardcore’ audience with different spending habits). Whatever the reason, the low ARPUs and high share rates with social networks have some Chinese social game developers setting their sites on new, more promising markets.

What’s Coming in 2010, and What It Means for the U.S. Market

It’s obvious from both our conversations and from observable movement in the China social games industry: Chinese social gaming has abundant developer talent and creativity. If the social gaming ecosystem in China is as stifling as some are indicating, then what will be the alternate outlets for this innovation?

We expect we’ll see two directions of expansion for the developers in China’s social gaming ecosystem. First, talent acquisition activities will increase. For example, as part of EA’s Playfish deal, it inherited the latter’s sizable Beijing office and the considerable developer talent there.

Second, we can expect more Chinese developers to begin moving into other markets, especially the U.S. We previously commented on the growing number of Chinese developers on the Facebook platform; as players in the Chinese social gaming start hitting the bounds of that market, we expect entrance onto platforms like Facebook and Japan’s Mixi to accelerate dramatically. Beijing-based Rekoo is already among the top ranking social apps on Mixi in Japan, with its Sunshine Ranch game drawing 3.8 million users, or around 20% of the networks total users.

These are natural transitions for Chinese developers outgrowing their home market. As source puts it, “Since the games are not a whole lot different [between] West and East and entry barriers are low, it is a reasonable move for Chinese social app developers to launch on Facebook, MySpace and even on Japanese, Korean or Russian social networks. The difficulty remains to “culturalize” the services and do proper community management, as those games are not ‘products’ but really ’services.’”

All this is good news for Facebook — its platform is seeing an influx of Chinese developers, and we expect that trend to continue this year. These developers are bringing in their experience and abilities, likely resulting in more high-quality apps. We also expect these developers to have a relatively favorable view of Facebook’s platform regulations and payment cuts, because they’ve endured months or years of far less favorable rules and share rates in their home markets.

It’s also good news for the big publishers looking to acquire top developer talent. Finally, the Chinese social game developer diaspora will have important implications for payments companies and other service providers catering to developers – they’ll soon find themselves with a new set of potential clients to win over.

April 20 | San Francisco

As we announced two weeks ago, Inside Social Apps 2010, our first conference on the future of monetization on social platforms, is happening April 20th in San Francisco, one day before Facebook’s official “f8″ event. We’re excited to see all of the developers from around the world that are planning to attend!

In addition to the initial set of 20 confirmed speakers at Inside Social Apps 2010, we’re also excited to announce three more speakers today: Keith Lee, Co-founder and CEO of Booyah, Ron Hirson, Co-founder and SVP Product at Boku, and Lisa Marino, CRO of RockYou. They will be joining our full list of speakers listed below.

• Atul Bagga, VP Equity Research, Games, ThinkEquity
• Adam Caplan, VP Virtual Currency, Super Rewards / Adknowledge
  
• Renata Dionello, Chief of Staff to the CEO, eBay, and former Director of Consumer Business Development, PayPal
• Eric Eldon, Editor, Inside Facebook & Inside Social Games
• George Garrick, CEO, Offerpal Media
• Vikas Gupta, CEO, Jambool
• Sebastien de Halleux, Founder and COO, Playfish
• Ron Hirson, Co-founder and SVP Product, Boku
• Nick Lawler, Managing Director, Maverick Capital
• Keith Lee, Co-founder and CEO, Booyah
  
• Vish Makhijani, COO, Zynga
• David Marcus, CEO, Zong
• Lisa Marino, CRO, RockYou
  
• Dave McClure, Investor, Founders Fund Angel and fbFund Incubator
• Rex Ng, Co-founder and CEO, 6waves
• Jason Oberfest, VP Social Applications, ngmoco
• Mark Pincus, Founder and CEO, Zynga
• Shervin Pishevar, Founder and Executive Chairman, SGN
• John Pleasants, CEO, Playdom
• Keith Rabois, VP Strategy and Business Development, Slide
• Peter Relan, Executive Chairman, CrowdStar
• Justin Smith, Founder, Inside Network
• Kavin Stewart, CEO, Lolapps
• Jay Weintraub, Founder, LeadsCon

More speakers and a full agenda will be announced shortly.

Finally, a limited set of “early bird” tickets is now available through Friday at a special price of $279. This price will change after Friday, and space will be limited, so we encourage you to register now.

Inside Social Apps 2010 – April 20th in San Francisco

Three years after the Facebook Platform launched in 2007, what started out as sheep throwing and vampire biting has quickly become a profitable billion-dollar industry. Today, social games monetizing through virtual goods have quickly become one of the hottest sectors of technology and entertainment, both in the US and around the world. Where are social apps going, and who is leading the way?

Inside Network is proud to announce our first conference on the future of monetization on social platforms: Inside Social Apps 2010, happening April 20th in San Francisco, is bringing together the world’s leading entrepreneurs all in one place to discuss the future of social applications and games monetizing through virtual goods.

This will be an in-depth one day event geared toward developers on Facebook, MySpace, and the iPhone, senior executives, and investors. At Inside Social Apps 2010, founders and CEOs of the top social gaming, mobile social gaming, payments, and virtual goods infrastructure companies will be tackling the key issues facing the industry. We’re hosting it one day before Facebook’s “f8″ event in San Francisco, so this will be an excellent opportunity to learn about the key issues facing the future of the Facebook Platform and beyond before Facebook’s official event.

Register Now

A limited set of “early bird” tickets is available through Friday at a special price of $279. This price will change after Friday, and space will be very limited, so we encourage you to register early.

From all of us at Inside Network, we hope to see you on April 20th in San Francisco!

Players in the U.S. social gaming industry are growing increasingly curious about China — for good reason, given the size of the market, and the wave of developers building for platforms like Facebook from within the country.

Today, we extend last week’s look at social gaming ecosystem on RenRen.com with additional information from our conversations with Chinese game developers and industry insiders to deliver an overview of the social game developer landscape in this challenging, yet fascinating, market.

The Powerful SNS

We’ve previously noted that many of the major social networking services (SNS) in China do not have platforms that are open to any third party developers. These closed platform SNSs include big players like QZone, Kaixin001, and 51.com who collectively make up around 40% of the Chinese social networking market. While apps and games are an integrated part of the social networking experience on these sites, all apps are either developed in-house or, to a very limited extent, acquired from outside developers via a one-time license sale. The ‘closed’ nature of these limits the number and variety of apps that the platform hosts, and prevents any kind of developer ecosystem from blossoming around the platform.

With so many social networks keeping their platforms closed to third party app development, the ones that are open, like RenRen.com, exert extraordinary sway.

Developers no longer listed, now “From a third-party developer”

In contrast to QZone, Kaixin001, and 51.com, RenRen.com / Kaixin.com (two sites owned and operated by the same parent company, Oak Pacific Interactive) have open platforms that host hundreds of third party apps. Over the past few days, we noticed that RenRen removed developer names from its user-facing application directory. RenRen previously displayed the name of the developer or publisher responsible for each app in its user-facing leaderboard, as you can see in this screenshot we took two weeks ago.

Now, all third-party apps are simply labeled with “From a third-party developer.”

While RenRen has not released specific information as to why they made this change, one of our sources in China suggests that it may be a nod to regulators from China’s General Administration of Press and Publication (GAPP) and the Ministry of Culture, who last October underscored an existing requirement that all developers of online games (traditional or social) must obtain licenses to operate. While it’s unclear exactly why RenRen would suddenly choose to obscure individual developer brands in their app directory, it could indicate that the social network is acting as the licensed publisher for these games, subsuming the identity of individual developers, and thus working around any licensing issues. Update: One source in touch with RenRen’s platform team has told us that the change was due to a technical problem, which has now been fixed so that the app directory once again displays individual developers’ names next to game titles.

Barriers to entry: Approval and regulation by the GAPP and the Chinese Ministry of Culture

In October of 2009, China’s GAPP reiterated an existing regulation governing China’s online games industry; among other stipulations, developers of games are required to obtain licenses to operate in order to build and publish games online. While this regulation was written for all “online games,” and most likely with more traditional online games and hardcore MMOs in mind, social games (which are of course still online games) have been bundled in as well. In the eyes of the regulating institution, social games are online games, and so should be treated exactly the same as other online games in China.

This makes sense logically to the GAPP (online games are online games), but not financially for social game developers. China’s Ministry of Culture reported in January that revenues from MMORPGs climbed to around 20.38 billion RMB, or 79% of total online game revenues. Casual games – including social games – grossed 3.55 billion RMB in revenues, or just 13.8% of the industry’s total sum. Although social games aren’t making the kinds of revenues as traditional online games, they are now subject to the same rules.

The GAPP requires that game operators have a minimum of 10,000,000 RMB (1,464,560 USD) in registered capital, a prohibitive sum for many social game developers themselves. Games are also subject to general approval by the GAPP before they can be considered to be in good standing.

When it comes to social games, tough requirements like these have been heretofore handled by the social networks that operate the games, not by the developers themselves. But, while developers previously relied on partnerships with bigger publishers who held these licenses, it’s now not entirely clear who will be responsible going forward. Added to the GAPP’s new attention to these rules is an ongoing regulatory battle between that body and the Chinese Ministry of Culture over who should control online games. For specific details on this, see our previous coverage of this regulation and of the ongoing turf wars between the GAPP and the Ministry of Culture. These shifts in the regulatory landscape have combined to create significant uncertainty for developers. For now, what’s clear is that all of the big social platforms already have licenses and approvals in place, and can use them to protect – or obscure – the identity of individual third-party developer brands as needed.

There is one more factor that shifts the balance of power in favor of social networks. In China, app-related revenue is collected first and foremost by the social networks themselves, who then distribute appropriate shares of revenue to third-party developers.

As a result of both the increased barriers and the way that revenue payouts are currently handled, we may be seeing more leverage shift into the hands of the social networks themselves, and away from individual, and especially smaller, game developers.

We’ll follow up on this article later in the week with a look at revenue in Chinese social games, and what the future holds.