Industry Prediction #4: Asian & American Game Devs Will Begin to Cross-Pollinate

While the freemium model originated in Asia, the North American social gaming industry has so far been evolving in an inward-looking fashion, focused on consolidating products and users in America or, generally, the Western hemisphere. However, recent trends suggest that the industry will begin to see some transpacific activity; there will be a push in Silicon Valley towards moving into other markets – especially to Asia where there is an existing history of and demand for social games – and an equal level of incoming interest from Southeast Asian developers looking to expand into the U.S. market and cross pollinate their offices, products and personnel.

Zynga acquired XPD media in China and Unoh games in Japan, a clear indication that the company has plans to grow eastwards. Zynga would need to localize its games for the Asian market but with such strong partnerships, the expertise is likely to benefit them greatly. Indeed, Zynga just launched its public beta for its first international title, Zynga Texas Poker, in traditional Chinese, catering to local cultural norms by offering prizes in denominations of the lucky number 8, such as 8,888 poker chips.

Other stateside game developers are also expressing an interest in distributing to Asian social networking sites. Earlier this year, Viximo conducted a survey of the industry’s top independent social game developers, and 35% indicated that they plan to distribute their games on RenRen in the next 12 months, while 32% plan to be on Mixi.jp by next year.

Interest from Asian side has also been strong: SoftBank Japan invested $150 million in Zynga and $10 million in RockYou, while Japanese mobile and social game developer DeNA is on an investment spree in the U.S. and having acquired or invested in four American gaming companies this past year, appear to be aiming to become a household name in the U.S. gaming market, particularly in the mobile realm.

Additionally, traditional video game makers in Japan are facing with a shrinking home market demand as the social games sector explodes. Following a fiscal year net loss of $316 million, Namco Bandai is preparing to supply two games to Facebook, and it is very likely that Capcom, developer of Street Fighter and Resident Evil, will also begin to offer social versions of these games on Facebook and other U.S. based social networks. China’s social networks tend to create their own games and have otherwise closed platforms and sites that are experimenting with open platforms are often accused of promoting their own games with more viral notifications than those created by third parties; thus, they are more likely to find success distributing on American social networks that are more open and third party friendly.