It is hottest topic in the web biz world. No matter it’s on TC, Virtual Goods News, Venture Beat or even BBC, people everywhere are talking about the vitality of the virtual goods market in Asia. Many people are stunned by the fact that the biggest market of virtual goods is actually not in USA but in Asia. In a matter of fact, the VG in Asia is actually a $5 billion market in 2008, which is 25 times bigger than the States.
Indeed, most people from other parts of the world have just realized Asia has been in the leading position of VG for quite a while already. No matter on SNS or on web games, in China or in South Korea, the Asian counterparts seem to be steps ahead in terms of virtual goods monetization comparing to other places.
Great success gets eyes of curiosity. Everyone is trying the decrypt the secret behind. There are a lot of special coverage trying to give people the market insight either in quantitative or visual manners. However, as an Asian living in Europe, what I read so far seemed to fail their mission and most of them ended up like an old Chinese saying “appreciating flowers in the fog” – what you see is just a blurry view of beauty.
It’s quite difficult for people outside of Asia to find much sense out of all those analysis. The reasons are simple. Most of the successful companies are not the common names we hear usually. Big names such as Tencent (China) or Cyworld (S. Korea) are actually all local SNS and rarely known by users outside of their domestic market. It simply rings no bell to analyze their success.
You might wonder if they have such a great success in their domestic market. Why they didn’t try to go international. Then congratulations, you have just hit the “jackpot” and divined the key problem. Yes! Of course, they have tried. However, Tencent’s success was fueled by its massive user base from IM service QQ (the biggest IM provider in China). Somehow, QQ never managed to compete with MSN, YAHOO and AOL outside of China.
The more interesting case is Cyworld, the social network from South Korea. Their domestic success made them roll out an ambitious plan to go international or even to challenge Myspace (facebook was not the biggest yet at the time.). 3 years later, they have burned out dozens of million dollars and finally had to come back to financial reality and close down their service around the world this autumn.
Both companies did not manage to transplant their domestic success on monetizing cute virtual goods in foreign soils. The COD is simple. They failed to grow user base with their original business model. QQ IM did not have much advantage abroad in its category, while Cyworld’s closed-country network failed to compete with its borderless rivals.
Of course, lack of user base itself is already a huge topic to analyze, especially if it’s a cross-cultural business. For instance, facebook did not make much splash in Japan so far while it’s already crowned as the SNS dominator in most of countries. To Asian web warlords, lack of experiences in running a cross-cultural biz model is a huge common problem and it will still take years to catch up to develop something with a global scope.
On the other hands, Asian users are well trained already to pay for virtual goods and the market is massive in comparison with the rival markets in the initial phase in Europe and North America. That’s why we created this series to help more people to get some awareness and inspirations to go to this milky land. To be continued…
[...] we discussed about the virtual goods market penetration in Asia and worldwide. Today let’s dig a bit further into this trend with mobile payment gold [...]