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Can Asia Flip Facebook’s Business Model?

By thomascrampton ⋅ October 8, 2009 ⋅ Post a comment

As this chart shows, the sale of digital items rapidly overtook advertising as the major source of revenue for the Japanese social network GREE (same is true of other social networks in Japan and China).

For those unfamiliar, digital items sold can be anything from a gift for a friend to a pimped-up avatar. Benjamin Joffe has done some interesting studies of the topic.

Will Asia export this business model to Facebook?

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Comments for “Can Asia Flip Facebook’s Business Model?”

  • plus8star
    Thanks Thomas for your kind link :-)

    The story of GREE is quite an interesting one:
    - It started off as a PC-based SNS competing with MIXI.
    - It received investment from Globis in Japan at that time
    - DeNA's service Mobile Game Town was doing a lot better than MIXI and GREE revamped its service to do MOBILE and FLASH GAMES with virtual goods instead of PC + Advertising.
    - Now GREE is pretty much a mobile-only virtual-goods powered service

    There are some important market catalysts for GREE's success on mobile:
    1. 3G everywhere (over 90% penetration)
    2. Unlimited data (over 50% of users have it)
    3. Flash Lite on almost all mobiles (it started in Japan)
    4. Competitor DeNA "taught" the market about such service
    5. Early partnership with KDDI (Japan's #2 telco) to push the service on mobile
    6. MASSIVE (and expensive, but with good ROI) advertising to grow the service in a second phase
    7. Super-hit fishing game (with virtual goods: rods, baits, etc.) - GREE is currently suing DeNA for copycatting it.

    Cheers :-)
    Benjamin
  • I have always been encouraged by non-traditional revenue methods. It seems like the clear path more many is display ads, however, with a little imagination it seems evident that customer interest and profit can go hand in hand. It has always been my goal to move from advertising to interesting. We are starting to see this change in SMM.

    Much success,
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Thomas Crampton was a correspondent for the International Herald Tribune and The New York Times for more than a decade, reporting from five continents, writing a column on Asia and covering Asian politics, economics and culture. Currently based in Hong Kong, he writes here about China, the Internet and New Media seen from Asia, while also advising companies on digital communication strategies. For more information click here...