One Billion Users: Emerging Trends in Emerging Markets

Good Bye MS....hello yum yum games

2007-10-02T01:48:00Z

There comes a time when you look at your world and you say, its time to move on. The memories are great and it was a good experience but something has changed. The Bug triage is not as interesting as it used to be, the conference calls have lost that special meaning, the company meeting just seems silly and the confidence and optimism for the company is just harder to fathom. I also feel that I know more than the many of the people who are senior to me as well which is a definite signal that its time.

Both my co-blogger Neema and myself have already left MS months ago and weeks ago respectively. I join the ranks of the 5+ years of ex-Microsoft folks to "do something different." I could still post here but most likely I will post here at YumYum blog.

I will follow my passion for gaming in Asia further in Beijing. What started for me as a Regional Xbox Business Manager in Singapore will now morph into something else in China for games and entertainment. My friend Paul Denlinger sums it up best in his blog post over at ChinaVortex.

America used to be a much more entrepreneurial country, now it is overly regulated, overly expensive, overly specialized, overly structured and overly corporate. In order to be competitive again, the entire society and culture will have to make major adjustments. The road will not be a smooth one.
That is why the smart entrepreneurs, like Gage, start their businesses in China.
In this new globalized world, China has become what America used to be.

China has become the New California for Americans...and there are many of us ex-MS folks already here in China forming companies and making the local ones better.

so, goodbye.

My goodbye MS letter that i sent out. (the second time I left)

Good luck and good bye. Its been an honor working with you all and I hope we can work together again in the future. I really like some of the things that MS does and stands for and I hope you can all continue to make that happen. MS probably has the largest number of smart people in any company anywhere – just ask any of us ;)

Thank you DaveVR, Harry Shum, Alan Bowman and Sun Shaw for letting me follow my passion for games. Most of all I would I would like to thank my team in Casual Games both here and there for making this the best year of them all.

My last day is Sept 2 while most of you are in the Thailand offsite. Feel free to have a beer for me at Soi Cowboy with some of the Katooey

Take care

Frank Yu

If you want to connect:

Linkedin
http://www.linkedin.com/in/frankyu
and of course facebook
http://www.facebook.com/profile.php?id=607648416

You can find me and other former colleagues on FaceBook in the MS Alumni in Asia Group
http://www.facebook.com/group.php?gid=5705900361

or at the Beijing Zhonguancun Technology Startup Group
http://www.facebook.com/group.php?gid=5504465643

For those of you on the China Gaming newsletter, I may continue it here
http://www.facebook.com/group.php?gid=5228767003

The mandatory Recap – yes, I’m damn proud of these

Its been an interesting 4 years 11 months. This is the second time that I have left.
7 x managers., 9 x different teams, 2 x countries.
I’ve been an FTE, a VR, a CS, an FTC and an FTE again

1 x Console Launch of Xbox V1 in 4 countries (3 price drops in region, 4 bundles created)
Hong Kong,
Singapore,
Korea,
Taiwan
HED Sales and Marketing oversight on India and China

1 x MS Patent for Hierarchical Carousel Interface
http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PG01&s1=%22hierarchical+carousel%22&OS="hierarchical+carousel"&RS="hierarchical+carousel

1 x Publication
Kelvin Cheng, David Vronay, Frank Yu: Interaction design for the media pc.
77th ACM Symposium on User Interface Software and Technology (UIST 2004 Symposium),
Association for Computing Machinery, Inc. (ACM), James A. Landay (Program Chair),
Companion to Proceedings, pp 5-6. 2004. ISBN 1-58113-957-8.

3 x Shipit Awards in 3 years Thanks Todd and Paul
l          IE7
l          Media Center TV (smart thumbnail)
l          Media Center Extender (Transrating)

PM for ATC’s first Tech Transfer in 2004 . Hierarchical Carousel User Interface Design from MSRA ACID to Windows Shell Team

1.5 Games Shipped

PM for ATC’s first game, first MS game team in China, (first consumer product) designed and created in China for global distribution (one of the fastest games shipped from design to RTM)

1) Rock Paper Scissors with the first Messenger game sim ship in 33 countries. Thank Debbie, Bulent, and Hakim for being our pilot on your phases

Austria

Switzerland*

Germany

Australia

Canada*

UK

Ireland

Malaysia

New Zealand

Philippines

Singapore

United States*

South Africa

Argentina

Chile

Spain

Latin America

Mexico

Belgium*

France

Indonesia

Italy

Japan

Korea

Netherlands*

Brazil

Turkey

Taiwan

Hong Kong

China

India

l game released in multiple languages in this market

2) ZPA Chess AI Integration
First AI integration of a multiplayer Web Chess game into a single player game for MS Casual Games

My ThinkWeek papers (FTEs only)

Why MS should consider acquiring Facebook (brand new – I won’t see the feedback)
http://thinkweek2/Details.aspx?subId=1507

ACORN: MS Alumni and Seed Venture Initiative (brand new – I won’t see the feedback)
http://thinkweek2/Details.aspx?subId=1508

Eight of the Billion Users: Decoding China’s Next Generation ( A winter 2007 and Ad Astra favorite) (BillG commented)
http://thinkweek2/winter2007/details.aspx?subId=1150

Connecting One Billion Gamers: Creating a unified entertainment experience in China (BillG commented)
http://thinkweek2/winter2007/Details.aspx?subId=1151

One Billion Gamers Service Pack 1: A high level action plan for redefining entertainment in China (BillG commented)
http://thinkweek2/winter2007/Details.aspx?subId=1203

Opening the Online Pandora’s Box: Unleashing 4 structured derivative based services in the online market (this was before anyone heard of the #1 game in China Zhengtu Networks)
http://thinkweek2/winter2007/Details.aspx?subId=1208

One Billion Gamers: Redefining Digital Play in China (BillG commented)
http://thinkweek2/spring2006/Details.aspx?subId=708

The Light Revolution
http://thinkweek/Winter2005/Lists/Papers/DispForm.aspx?ID=319

1 x Blog
http://blogs.msdn.com/acid49/default.aspx

How Microsoft won China (or at least changed its public image)

2007-08-06T03:12:00Z

I just recently ran into this article from Dan Brody's Google News Reader on FaceBook (ironic). To be fair, MS has not really won as much as it has improved its position from years past. For the most part, the changes described below are tangible and really has made a big difference. In some ways, the MS model for China relations could be a blueprint for other foreign companies wanting to do business here. At least its not as bad as Yahoo China's response and business model.

Who remembers Red Flag Linux? Born during the dot-com boom and officially financed and adopted by the Chinese government, Red Flag Linux was supposed to be China’s answer for avoiding the double-team of Windows and Microsoft Office that dominates the rest of the world’s PCs. In some circles, the potential spread of Red Flag Linux in the world’s most populated nation was even hailed as a critical sign that Microsoft was not going to be able to spread its domination of the software market to the rest of the world.
However, Red Flag Linux has turned out to be little more than a key bargaining chip in a high stakes game of commerce between the Chinese government and the world’s largest software maker. Thanks to some major concessions on source code and a precipitous price drop, the Chinese government has now thoroughly embraced Windows and Office. And thanks to a major about-face in the way that it deals with piracy, Microsoft has also won over the Chinese people.
In April, Microsoft Chairman Bill Gates took a victory lap in China, and Fortune magazine’s David Kirkpatrick went along for the ride, writing an account of the trip and an excellent synopsis of Microsoft’s rocky path to success in China in a piece called “How Microsoft conquered China - Or is it the other way around?”

This is the article linked to in the other article.

Today Gates openly concedes that tolerating piracy turned out to be Microsoft's best long-term strategy. That's why Windows is used on an estimated 90% of China's 120 million PCs. "It's easier for our software to compete with Linux when there's piracy than when there's not," Gates says. "Are you kidding? You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students.
...
"So with all this work," says Chen, "we start changing the perception that Microsoft is the company coming just to do antipiracy and sue people. We changed the company's image. We're the company that has the long-term vision. If a foreign company's strategy matches with the government's development agenda, the government will support you, even if they don't like you."
Microsoft put its money on the line, even inviting officials to help decide in which local software and outsourcing companies it should invest. So far Microsoft has spent $65 million, and it recently committed to an additional $100 million. Says Chen: "There was synergy, which we formalized, between the need of the Chinese economy to have local software capability and our need for an ecosystem of companies around us using our technology and platform."
At the same time, the Chinese government started thinking more like Microsoft: It required central, provincial, and local governments to begin using legal software. The city of Beijing completed its portion of the project late last year and now pays for software its employees - most of whom never adopted Linux - had previously pirated. (Microsoft won't say how steep a discount it offered the government.)
In another boost for Microsoft, the government last year required local PC manufacturers to load legal software on their computers. Lenovo, the market leader, had been shipping as few as 10% of its PCs that way, and even U.S. PC makers in China were selling many machines "naked." Another mandate requires gradual legalization of the millions of computers in state-owned enterprises. In all, Gates says, the number of new machines shipped with legal software nationwide has risen from about 20% to more than 40% in the past 18 months.

Like or hate Microsoft, it will and can adjust to market conditions and public opinion.

ADDENDUM (Oct. 1) From the Silicon Hutong by David

Turning a Corner
In the space of four years, Mr. Chen ensured that the company reversed its slide with all of its critical audiences, not by micromanaging, but by catalyzing change in each problem area through personal attention and careful appointments of key managers.
Across China, the company began rebuilding its reputation with consumers, enlisting deeper support among the channel, getting key manufacturers to begin paying for pre-installed copies of Windows, reinvigorating its relationships with government across all portfolios and all levels, and making significant progress in its fight against piracy. The government's outspoken efforts to drive the adoption of Linux have faded, and the company is getting more credit for its R&D.
Internally, Mr. Chen pulled the company together by installing experienced, China-savvy leadership in each department. He built a bridge between Redmond and the "sub" in Beijing through increased contacts and an all-out effort to educate headquarters in the challenges - and opportunities - the company faced in China, while at the same time proffering solutions rather than making excuses.
After Tim
To credit Mr. Chen alone with all of the improvements in Microsoft's fortunes in China over the last four years may be stretching the point. But as my father was fond of pointing out, a fish stinks from the head. At the very least, Mr. Chen was a critical agent of change, applying effort and attention in those places where he saw that properly-applied effort would help turn specific problems around.
What he left behind was a company heading in a far different direction here than it was when he found it, with the people and systems in place to continue that momentum. Assuming Microsoft can choose a successor (whom, for the moment, remains The Player to be Named Later) with a vision that will ensure Microsoft continues to address its problems and grab its opportunities in China, the company's future in the PRC looks bright indeed.
...
By all rights, Mr. Chen's efforts at Microsoft should have won him greater rewards and opportunities inside the company. In all likelihood, that was not in the cards. Growth for Microsoft is now a matter of adding and acquiring new businesses, and the company's senior leadership is fairly set in place. Mr. Chen's growth opportunities at Microsoft would probably have been largely limited to growing the China business incrementally. That's not a bad opportunity, but it's probably not the sort of thing to keep a guy with solid entrepreneurial/intrapreneurial instincts happy for long. Having to fly economy class on trans-Pacific business trips probably didn't help. (haha so true)

-Frank Yu

Class divisions in Myspace and FaceBook - Why a FaceBook idea will work in China

2007-06-26T04:21:00Z

China'sFuture MySpace crowd

When Facebook opened up their platform to developers and application hobbyists a few weeks ago, they opened up the platform to more than just the geekcore for tools and widgets, they also opened it up to the Friendster, MySpace and LinkedIn refugees who never thought of going onto facebook until recently like myself. I was quite surprised at how many friends were already on the network and how rich the features and gadgets selection really were. People who were not on the other social networks were quite open and chatty on FaceBook.

I tried to find some of my friends from the game industry and found out that it was actually quite hard to connect with them since they were not on the service at all. I then realized why after some thought. The Video Games industry is quite young and many of the most smartest and senior people in this industry never went or finished college. Like journalism before they had journalism schools and the film industry before film majors, MBAs and Lawyers flooded it, the games industry was started by folks who loved games and created them at home or in small startup companies but did not go to college. Since FaceBook started from campuses (particularly Harvard and the Ivy league), there is a distinct class similarity in the current population of Facebook. As FaceBook becomes more popular and the games industry requires academic credentials, this underrepresentation of the games industry will probably lessen. FaceBook will continue to grow since as my friend Jason of Virtual-China (currently banned by China due to links to Shanxi slave brick scandal) describes it..."its too public" (spoken like a true Brown University graduate).

This paper explains it much better. Great essay on the real divisions within American Society.

"

When MySpace launched in 2003, it was primarily used by 20/30-somethings (just like Friendster before it). The bands began populating the site by early 2004 and throughout 2004, the average age slowly declined. It wasn't until late 2004 that teens really started appearing en masse on MySpace and 2005 was the year that MySpace became the "in thing" for teens.

Facebook launched in 2004 as a Harvard-only site. It slowly expanded to welcome people with .edu accounts from a variety of different universities. In mid-2005, Facebook opened its doors to high school students, but it wasn't that easy to get an account because you needed to be invited. As a result, those who were in college tended to invite those high school students that they liked. Facebook was strongly framed as the "cool" thing that college students did. So, if you want to go to college (and particularly a top college), you wanted to get on Facebook badly. Even before high school networks were possible, the moment seniors were accepted to a college, they started hounding the college sysadmins for their .edu account. The message was clear: college was about Facebook.

Most teens who exclusively use Facebook are familiar with and have an opinion about MySpace. These teens are very aware of MySpace and they often have a negative opinion about it. They see it as gaudy, immature, and "so middle school." They prefer the "clean" look of Facebook, noting that it is more mature and that MySpace is "so lame." What hegemonic teens call gaudy can also be labeled as "glitzy" or "bling" or "fly" (or what my generation would call "phat") by subaltern teens. Terms like "bling" come out of hip-hop culture where showy, sparkly, brash visual displays are acceptable and valued. The look and feel of MySpace resonates far better with subaltern communities than it does with the upwardly mobile hegemonic teens. This is even clear in the blogosphere where people talk about how gauche MySpace is while commending Facebook on its aesthetics. I'm sure that a visual analyst would be able to explain how classed aesthetics are, but aesthetics are more than simply the "eye of the beholder" - they are culturally narrated and replicated. That "clean" or "modern" look of Facebook is akin to West Elm or Pottery Barn or any poshy Scandinavian design house (that I admit I'm drawn to) while the more flashy look of MySpace resembles the Las Vegas imagery that attracts millions every year. I suspect that lifestyles have aesthetic values and that these are being reproduced on MySpace and Facebook."

The implications for China is even larger. Already there are two main groups of Chinese youth. The educated elite who are going to top universities in China and abroad and everyone else who has to work in restaurants, factories, the army and your local store. A MySpace China may be great idea on paper but what China really needs is a restricted FaceBook type social network to filter out the great masses yearning to climb. As harsh as that sounds, many of the urban fashions and trends seem more and more to identify or remake the haves (few and powerful) from the havenots and wannabees (huge and grumbling). It would seem that the Chinese Internet, like modern Chinese society is fast becoming more bifurcated on class, education and income far faster than disparity in the US or Europe.

-Frank Yu

MS launches its first game developed in China for the world - Rock Paper Scissors online

2007-06-16T08:44:00Z

Simple, Easy, Fast and Fun. Like a breathmint for your mind. That's why casual games continue to grow.

The ATC Casual Games team is proud to announce the launch of of Rock Paper Scissors for Messenger in China (and the whole world).

-The first game developed end to end (design and features) by MS in China for China and the world

-The first global sim ship (over 30 countries on launch) of a Messenger Game ( this means its in almost in 15+ languages including Chinese)

-Already #3 one day after launch on June 15. (marketing and advertising starts this Monday June 18th)

-Already has an ad sponsor

-Added BOLD functionality for subsidiary customization

-Built for easy skinning and theme changing

Give it a try now...its free on your Windows Live Messenger Game dropdown. You can play friends in different countries as well.

-Frank Yu

On behalf of Carbonated Games ATC and Redmond and the Messenger Games team, I’m pleased to announce that today we launched Rock Paper Scissors for Messenger as our first global sim-ship of a Messenger games title in over 30 markets:

Austria	Switzerland*	Germany	Australia
Canada*	UK	Ireland	Malaysia
New Zealand	Philippines	Singapore	United States*
South Africa	Argentina	Chile	Spain
Latin America	Mexico	Belgium*	France
Indonesia	Italy	Japan	Korea
Netherlands*	Brazil	Turkey	Taiwan
Hong Kong	China	India

* game released in multiple languages in this market

Rock Paper Scissors is free to customers running a supported version of Windows Live Messenger with a valid passport. The game will be offered in the Games dropdown in the Messenger conversation window, filtered to the locale that matches the customer’s passport country settings.

How to Play

Description

MSN Games is delighted to introduce Rock Paper Scissors, a new game for Windows Live Messenger that lets players play against their friends in real time. Easy to learn and super addictive, RPS allows friends to play against each other in the classic playground game known and played all over the world.

RPS is designed for two-player competitive game play and offers a fast and simple approach to start playing immediately.

Features

Rock Paper Scissors can provide you and your friends with a few minutes of fun or as an effective online decision tool.

Easy and ready to play start up with average games taking less than 5 minutes
Fun and colorful animation and sounds
Global release to over 30 markets. Now you can play friends online around the world
Players can use the random function to break up patterns and the play history screen to uncover them
Addicting and fast game play makes it easy to play just one more game

Rock Paper Scissors for Windows Live Messenger is a perfect way for friends and family to share a popular pastime even when they are miles apart!rank

Sure China has a billion people but can they make software (and games) ?

2007-06-14T04:54:00Z

In the ongoing debate of asking if China can make software the answer is an obvious and unequivocal yes. China can produce more software engineers and millions of lines of code in a few months than some Western countries can in years. Strip out the foreigners, overseas Chinese, and Chinese returnees who came back from school and work in the US from this process and the answer is probably no. The question to ask is if China can produce original and innovative software products that are more than localized versions of overseas products the answer is a big ambiguous maybe.

In some ways, the game industry in China in terms of technology and design can be described as derivative or outright clones of Taiwanese, Korean, Japanese or American games. In a few years, China will develop its own killer genres and platforms but its not going to be this year. However, in the business and deployment aspect of games (which aside from military is probably the most advanced software product in China), China has forged new and innovative schemes that cater to the local market preferences and economic means. in fact,the business and deployment model for games may be more advanced in China than in the west for casual and MMORPG games. The server loads of Chinese online games will dwarf the peak concurrent user stats of US based game servers.

So why is the business end more advanced than the technological end? Because the market had to be more innovative or the market never would have been created. Licensing and cloning was the lazy way out for innovation in game design.

The conference board report below is quite dead on about describing China's HR challenge. It seems even more applicable to the software and game industry as well.

-Frank Yu

Found via Talent in China Blog

Bridging China's Talent Gap

Feb. 21, 2007

The number of young people earning university and graduate degrees in China is increasing rapidly, raising the human capital and the quality of China's labor force. However, these newcomers to the workforce often lack the practical experiences and softer creative and leadership skills required in the business world, notes an Executive Action report from The Conference Board.

One of the main problems is China's educational system, which relies too heavily on memorization. Companies need people with creative writing and speaking skills, teamwork skills and leadership ability, which are not yet taught well in most of China's universities and graduate programs.

China's rapid economic growth — the fastest in the world for the past quarter century — is fueling extensive foreign investment, with many companies setting up branch offices, regional headquarters, and factories in the country. One effect of this economic transformation is that demand for highly talented employees in China, especially people with local and international managerial skills, now exceeds supply, which is driving up some of the compensation packages for top talents and managers to global levels.

"Making the talent search more difficult is the fact that the more experienced managers are in short supply and command high salaries," says Judith Banister, Director of Global Demographics at The Conference Board. Banister co-authored the report with David Learmond, Executive Fellow and Program Director for The Conference Board Asia-Pacific Council on Talent, Leadership Development and Organizational Effectiveness. "For multinationals, it is now a challenge not only to recruit the best people, but also to develop and retain them," says Banister, who is based in Beijing.

Young Adult Population Shrinking

China's population is aging rapidly, but the expanding number of people aged 40 and over is not well educated and does not constitute an adequate pool of talent for companies. Conversely, the number of people in their 20s and 30s is shrinking over time, but this is where the talents are located in China today.

Fortunately, China's steep fertility decline has been accompanied by a sharp rise in the "quality" of children in terms of improved health, chances of survival, and levels of educational attainment. These young people are often hungry for responsibility, position, and the trappings of success in order to support not only themselves, but also their aging and large extended families.

Says Banister: "A lot of young Chinese managers bear this burden and will readily move between employers in order to get a bigger salary, more status and more opportunities. This is one of the reasons why staff turnover rates are often very high in China."

China's Education System Still Evolving

The Chinese government knows it must increase the number of educated people if it is to compete economically. The fact that a lot of young people want to work for multinationals — mainly because of the high status it gives them — has persuaded some multinationals to forge links with universities to bring about change that otherwise might happen very slowly. In some universities, this approach has been well received and multinationals are reporting success in getting whatever skills they want.

"It is an approach that should be mutually beneficial because it allows students to be trained in a way that is useful to the multinational," says Banister. "Those students then have a fast track into a job with that multinational when they graduate." However, the practice sometimes falls short of this expectation as there is still a strong tendency for the university system to rely on "learn by rote" techniques. "Teamwork and creativity are qualities still in short supply among Chinese managers," says Banister.

Bridging China's Talent Gap…

Positive qualities of educated Chinese workers:

Young, bright, urban.
Recently educated at university.
Eager to work for multinationals or for top domestic companies.
Hard working, ambitious and dedicated.

Common problems:

Foreign-language skills, especially spoken English.
Education often too theoretical rather than practical.
Inexperienced, but expect good salaries and rapid advancement.
Frequent job-hopping (with annual talent turnover in some companies 10-30%.)

Source: Bridging China's Talent Gap
Executive Action No. 221, The Conference Board

Here is Frank Mulligan's take on it

The report was completed by two pretty serious heavyweights, with specific knowledge of China, so it is worth reading. But if you don't have the time here is a bulleted summary, with additional background data of my own:

The authors of the report are David Learmond, the former Unilever VP HR for China and Dr. Judith Banister, Director of Global Demographics for The Conference Board.
The report starts by saying that number of young people earning university and graduate degrees in China is increasing rapidly. That's the good news.
The bad news is that the new crop of graduates often lack the practical experiences and softer creative and leadership skills required in the business world
The source of the problem is China's educational system which relies too heavily on memorization.
On the other hand, companies need people with creative writing and speaking skills, teamwork skills and leadership skills. These are not taught well in universities in China. (Surprisingly, in some places they are not taught at all.)
On the back of high Foreign Direct Investment and 9% annual economic growth, experienced managers are in short supply and command high salaries. By implication they are not a solution to the talent problem. Their numbers are too small and they do not have the time to train the new entrants.
Recruiting is a challenge and always has been since the country opened up in 1979. Now retention and development join recruitment as a big challenge. An integrated Talent Management approach is advisable.
China's population is aging rapidly, but the expanding number of people aged 40 and over is not well educated and does not constitute an adequate pool of talent for companies.
Conversely, the number of people in their 20s and 30s is shrinking over time, but this is where the talents are located in China today. (This cohort is the most desired by companies and their average tenure is a scant 18 months right now.)
The "quality" of children in China, in terms of improved health, chances of survival, and levels of educational attainment, has increased rapidly and they are often hungry for responsibility, position, and the trappings of success.
The solution that has proven successful is for companies to forge links with universities to bring about change that otherwise might happen very slowly. (In China this would equate to 'help them to help you'.)
The positive traits of new graduates are that they are young, bright and urban. They are eager to work for multinationals or for top domestic companies, and are also ard working, ambitious and dedicated.
The downside is that they often lack foreign-language skills, especially spoken English. Their education is often too theoretical. They are inexperienced, but expect good salaries, training and rapid advancement because the economy is so strong. They frequent job-hop, and there is a good deal of the Peter Principle here, with 26 year old professionals already achieving managerial level in companies, long before they have the maturity to handle it.

Pandamania antidote

2007-06-13T05:12:00Z

I like Pandas but I found this video hilarious. For someone who has traveled to Chengdu, the home of the Chengdu Panda Breeding center in a city plastered with Panda images everywhere, I found Pandas to be well....underwhelming.

"cement box..no sky..no friends..hate life....Please human masters...do what you want with my life...but don't want this hell for baby."

Panda Demands Abortion

The Pace of life between US and China

2007-06-11T04:22:00Z

(If you're in China, you may not see the image above since its hosted on flickr)

Every few months I get a chance to travel to the US between Seattle and Beijing and essentially go through culture shock and jet lag both ways each time. However, the biggest contrast that I see is that the US seems so slow and ....well boring versus life in China Of course, stability, clean air and enforced laws does have its merit but life in the US seems a bit complacent and comfortable for many people.

Working outside my apartment in Beijing, I see people struggling and sacrificing each day to earn perhaps four or five dollars a day. They are not what I would describe as happy (their life is quite hard) but I do see them as hopeful that things will continue to improve for them and their children. Everyone saves saves saves for things like an apartment and a car. They have no where to go but up.

In the US, I sense a feeling of malaise with a bit of insecurity that China and India is fast on the heels of both the US and the EU. There seems to be less options and optimism bout the future.Housing prices are high, fuel costs are skyrocketing, jobs are becoming more service oriented and the source of financial and technology news seems more and more to be outside the US. Athough, people are still well off, there is a feeling that the trend is downward for themselves and their family.

I am most likely biased as well since I have lived abroad for the last 10 years which means I am risk and novelty seeking to begin with. However, when I see stuff like this (Shift Happens) I begin to wonder as well.

comments are welcome

Frank Yu

GDC and WonderCon - Nintendo, Casual Games and China

2007-04-10T08:50:00Z

Get them ready for the facehugger at WonderCon

If you were wondering why this blog hasn't been updated for a while its because I have been travelling in the US for work for almost a month. Its great to come back to China after being away for such a long time and seeing the masses of people everywhere on every corner almost 24 hours. Coming back to the US after 2 years feels like you've been away for only 2 months. However, coming back to China after 1 month feels like you've been away for 1 year. In the next few weeks as I adjust to reverse culture shock, I am getting ready to return to the US for another 3 weeks after the May holidays.

So what did I learn on this last trip from attending Wondercon and the Game Developers Conference in San Francisco? I learned that interest in the China Game market is quite hot. In the US, the Casual Game space is heating up as well with the Nintendo DS, Wii and Xbox Live Arcade opening up whole new markets and revenue sources for independent and casual game developers. When you combine casual games and China in a discussion, people tend to perk up and listen. Everyone knows about World of Warcraft and China but the real excitement for everyone is the casual game industry of China and Korea which seem to be pioneering whole new genres of advanced casual games and business models. not yet seen or tried in North America.

Wheras consoles dominate the games industry in the US, PC based MMORPGS and Casual Games dominate the Chinese game industry since all the major television connected consoles are still illegal in China. The Casual Game audience in the US seems to be driven to some degree by middle age soccer moms and older ...as in retirees...recreational gamers who play online versions of traditional card and board games. In China, the casual game audience is largely under 25 with a higher proportion of women. The model for monetizing casual games in China invoves buying virtual items for your avatars or to micropurchase access to advanced levels and upgrade from the free basic casual games. Standard game genres in China such as kart racing, dancing and music games still remain an esoteric offering in the US. Since these games appeal to a mainstream and large consumer audience, the dollar or Yuan signs should be ringing in now.

As I paraphrase Nintendo's Shigeraru Miyomoto keynote speech at GDC, "our mission as game developers is to create games where we can share the joy and experience of our world with those of our non-gaming friends." He didn't say so but it also implies "do it right and it will make you rich too."

Like in many other industries from the US, many game companies and studios want to come to China but remain terrified of the startup and/or joint venture cost and invesment that it will require. Most of all they have no idea who they can trust to help them navigate the seemingly fickle regulatory environment for games and online entertainment. The current and future size and revenue coming from the Chinese gaming industry proves too irresistable to ignore for some and many people from both big and small companies would come up to me during the conference to ask me about China and what we as MS are doing with Casual Games in China. I really couldn't answer them except in the most abstract way but my usual reply was..."a lot."

-Frank Yu

Does China have too many online games?

2007-03-02T13:32:00Z

I'd rather be a night elf

Online games continues to be big business here in China but the ripples on the water are starting to bubble up now. So the answer to the question is yes and no. Yes, there are too many similar online games. No, there is still potentially a larger market for more innovative and groundbreaking games.

Blizzard's World of Warcraft has changed this market forever as well as dispelled several old myths about the industry:

1) Games from western companies cannot succeed in China

2) Chinese players want relevant historical context like Chinese history in their games

3) Chinese players like 2D

4) Westerners do not understand Asian gamers

In the beginning I would have to agree with all four myths myself but Blizzard's World of Warcraft has made me a believer that it is possible to break the myths here. China's gaming landscape is evolving into a more advanced environment than in the west (or even Japan), particularly in the casual game business models and game play. However, I still feel that the other shoe still needs to drop for local Chinese game companies. WoW was and is still disruptive as a wake up call in the China gaming sector. New technologies from the west coupled with new business models for games in China will be an awesome combination to behold..but only for some companies. The bar for graphics, game play, design and now service continues to rise in China. Can local game companies keep pace with this advance or will they require both capital and technology from western companies?

Given the sudden correction in the Chinese stock market (and the US markets) there are jitters as well by investors that a lot of the Chinese technology and game companies have to come back to Earth. I wrote this 2 years ago on chinatechnews.com and I still think its going to happen. Speaking of games, if you are at GDC and want to meet send me a mail at onebill@microsoft.com .

Frank

Collapse, Death And Re-Birth In The Chinese Online Game Market

March 24, 2005

Chinese online gaming seems for many investors a potential goldmine of ever increasing revenue and growth. Everyday we see news of some Chinese company making millions from their latest online game or perhaps buying up (or being bought up) by one of the emerging game companies.

The news and momentum of the game industry seems to be shouting growth while the greedy little imp whispers to investors to buy now and ride the tiger to IPO on Nasdaq. Chinese tech companies that have never made profit from productivity software now see red (the color of the 100 renminbi) from the profits of licensing or developing their own games in China.

Like Red chips, real estate companies, and internet portals before, Chinese Game companies seem to be the newest flavor to excite investors with the "if everyone in China played online games mantra". Although it does seem that this industry in China is just starting and that the potential remains unrealized, the Video Game industry is actually quite mature in various parts of the world. What seems new is that the online games for many investors appear to be a bombproof revenue generator since it seems resistant to traditional CD-Rom piracy. Even as this market grows and new users sign on each day to more and more online games, the seeds of destruction have already been planted.

The Video Game industry is a little like evolution. Although the number of game players and the size of the market increase each year, there have been several mass extinctions of whole industry segments in the world of video games. One of the most notable meteors to cause one of the largest die-offs was the demise of Atari, Mattel Electronics, Coleco and even Commodore during the 1984 industry crash. Overnight, what seemed to be a growing new market crashed with truckloads of "ET: The Extraterrestrial" cartridges having to be dumped in landfills. However, as American console makers began to wither, the Japanese console makers like Nintendo, Sega and NEC began to flourish. It's as if the American reptiles on land were now being replaced by Japanese mammalian game companies for dominance of the still growing industry.

As PCs began to become an alternative gaming platform to consoles, companies like Broderbund, Origin Systems and Infocomm rose to dominance to take advantage of the new markets. Years later these companies would be gone or bought out by larger companies such as Electronic Arts, THQ, and Activision as dominant players for videogames even as the markets got larger. Of the three major console makers today, only Nintendo is a medium age veteran. Sony and Microsoft are relative newcomers in this industry.

The lesson to take away from this short history flashback is that the Video and Online Game industry in China will continue to rise and proliferate even as some of the major online game companies in China will no doubt collapse, be bought out or quietly close their doors. The Honeymoon period of Chinese online gaming is almost over and a shakeup seems inevitable in the next few years as users, companies and the industry matures.

Risk: Currently, many of the more popular online games in China are licensed from Taiwan and Korea through local portals and game companies. As the drive to develop domestic production increases and foreign firms set up development shops in China, so does the risk and financial requirements for creating a full cycle game development operation from scratch. Two or Three dud or mediocre releases is all that it takes to shut a game company down. Licensing, although a more conservative approach for getting to market, will increasingly be discouraged by the powers that be to promote local development.

Game Lifecycles: All games will eventually become old and boring to some degree. What once excited you in the past seems pure repetition now. The challenge is gone and the sense of wonder in exploration and discovery is lost. The key is to make your game last long enough to recover your costs and keep subscribers playing until you can transition them to a newer version or your next big game release. Will it even work on the next version of Windows?

User Lifecycles: Users get old as well. When those students graduate and start families, they soon will need to budget not just their wallets but also their time to playing games. How can you ensure that your game will attract new users and get them hooked enough to keep coming back. Even hardcore male game players go through phases where they just grow tired of playing games and discover things like girls or sports instead. Perhaps the gamer will instead just play a different game and never come back to yours again.

Lower Quality knockoffs: As Chinese game companies become awash with cash investors, there is a lot of dumb money chasing a small tiny pool of competent game developers. This situation will attract shoddy game start-ups who will release me too clones or just plain terrible products to soak up the influx of private and government seed money. As the quality of games degrade, users will become disgusted and be turned off games in general which is what happened in the Atari Crash of 84.

Price Erosion: As more competitors enter the field chasing new users with low cost subscription and free play, the market pricing will erode. In desperation, failing companies will dump products, even at a loss, to recoup some of their investment from development and start-up cost of running servers, distributors and online help systems. For MMORGs to work, they require a certain critical mass of users to help defray the cost of monthly operation. If you can't hit that bar early enough, you might as well close and stop the bleeding.

Cheating: The biggest threat to the online game industry is not piracy but cheating. Players can still enjoy playing a pirated game but an online game where other users cheat or undermine the experience of game play will see their user base run away as fast as their mice can click onto another of the many other games that are now launching or have launched in China. Game developers fear this threat more than anything else. However, with the increasing sophistication of users and hackers, cheating will become an ever increasing issue. For the worst case is not if a user just leaves a game, they may be so disillusioned by cheating that they will no longer opt to play online games at all.

Many of these issues have led to the cycle of death and rebirth in the game industries around the world. China's market still needs to undergo that cycle of a thinning of the herd of weak and diseased companies to ensure that the quality and experience of the industry in general continues to increase. Yes, there is money to be made in China's online game market in the future but the question is if any of the companies that can be invested in now will still be around to give you a return on your investment.

-Frank Yu

"The Blood of Yingzhou District" wins an Oscar

2007-02-27T06:29:00Z

My friend Sharon who just returned to Australia worked as a production coordinator here in Beijing for a documentary filmed here in China. She just found out that the film had won the Oscar for Short documentaries a few nights ago. The documentary had the backing and approval of the government which is an amazing feat in itself considering the subject matter. I asked Sharon how the flim makers ever got to the point of being allowed to film a topic that only a few years ago was considered forbidden to discuss in the media. She said, "we created public service messages announcements and warnings for the government on AIDS and slowly we began to have more access to the real story."

So congratulations to Sharon and to the two film makers for creating a very unique documentary on the side of China that few foreigners see or hear about that along the way won an Oscar.

Oh yea, part of the funding for the film came from the Bill and Melinda Gates Foundation.

from Silverdocs:

"Extend your arm, bear the pain of a needle. Then flex your arm, 50 Yuan is earned."
This was one of many jingles created by blood banks in China, which rural people committed to memory. But due to unsafe practices, thousands of impoverished Chinese contract HIV and other diseases through contaminated blood, often leaving behind orphaned children to raise each other or depend on compassionate families for support.
Hong Kong-born filmmaker Ruby Yang and award-winning producer Thomas Lennon followed these orphans in the rural villages of Yingzhou District for one year. One of them, Gau Jun, was abandoned by his family and refuses to utter a word. He is a victim of social stigma and a government that has failed to support its citizens. Neighbors prevent their children from playing with him, and his own extended family rejects him, fearing their own children will be isolated.
THE BLOOD OF YINGZHOU DISTRICT is a stunningly shot, sensitive portrait of a hidden AIDS epidemic in a country not commonly associated with the disease. The film follows Gau Jun silently as he becomes part of a family and is accepted for the first time as the beautiful, wondrous child that he is.

Youtube clip here

Wash. Post writeup here

from the oscars.org

Best documentary short subject
	“The Blood of Yingzhou District” A Thomas Lennon Films Production Ruby Yang and Thomas Lennon
	“Recycled Life” An Iwerks/Glad Production Leslie Iwerks and Mike Glad
	“Rehearsing a Dream” A Simon & Goodman Picture Company Production Karen Goodman and Kirk Simon
	“Two Hands” A Crazy Boat Pictures Production Nathaniel Kahn and Susan Rose Behr

Here is more information about the group and the various roles they play on getting public awareness of the problem in China

China Aids Media Project