http://yzd.iteye.com/blog/838518
Mochi is the English name for 麻球，which is an American company founded in 2005. In fact, this second-generation model has already appeared in the United States. The core of the second-generation model is user-generated content and user sharing of content. You might be familiar with 起点，where all novels are created by users, and the readers are mostly grassroots. In this model, 起点 does not write novels itself or buy novels; it simply allows authors to upload their works for users to share. Mochi allows developers to create their own games, and Mochi promotes these games across various platforms for users to play, generating revenue for developers through an advertising revenue-sharing model. Essentially, Mochi can be seen as a starting point for games. 起点 has a low barrier to entry, while games have a slightly higher barrier. Flash games have a lower barrier, requiring only some basic drawing skills and basic programming knowledge to develop Flash mini-games. Since its establishment in 2005, the company has grown to have 200 million users, with rapid user growth, 20,000 works, and 1,500 developers, and at that time, there were 30,000 channels.
Shanda also wanted to create an open platform. We believe that Shanda Games only has large games and not mini-games, and it focuses more on MOBA games, with less involvement in casual games. From the perspective of the 2.0 business model and the concept of completing Shanda's product line, Shanda acquired Mochi for 80 million dollars this year. In addition, we hope to develop the overseas market in the United States, as the majority of Shanda Games' users are from China, and we are also interested in Mochi's 200 million overseas users, which is very attractive to us. Therefore, we acquired it at the beginning of this year. After acquiring Mochi, we entered China and gave it the Chinese name 麻球. After entering China, Mochi developed even more rapidly after being acquired by Shanda, with the number of games doubling to 40,000, increasing by 500 each week, while the number of developers and channels also increased by over 10,000.
Next, I will introduce the specific content of Mochi. First, there are FLASH games. Have you played FLASH games? In fact, FLASH games are mainly featured on platforms like 4399 and 7K7K in China. What are the characteristics of these games? First, they do not require downloads; you can play them directly on the website. They are not standalone games that need to be downloaded; FLASH games are browser-based, so as long as you can see the webpage in the browser, you can play.
Secondly, the user base for FLASH games is very large. I mentioned earlier that there are 200 million users worldwide; can you guess how many users there are in China? The number of users in China, as of the end of July, is 70 million. Even Shanda's MMO games combined do not have this many active users. The top MMO games have a high ARPU, while the number of FLASH game users is enormous. The second point is the business model of FLASH games. Mochi's FLASH game model relies on advertising. For these mini-games, we manage the large games in China, where the cost of converting a user is between one to two dollars, meaning the cost of acquiring an effective registered user is one to two dollars, while other ads might cost tens of dollars. This is because people who play mini-games also enjoy large games, resulting in a very high conversion efficiency.
This is the homepage of the Mochi website, which provides a platform for third-party cooperation. The main focus is on developers, as it provides a tool platform for developers to create games. After developing a game, they can load advertisements, leaderboards, automatic updates, and Twitter connections into the game. Our Sina Weibo also appears in our EPA. You can sell props through this platform, and developers can easily add advertising functionality to their games with just a couple of lines of code, achieving monetization capabilities. Developers receive 50% of the advertising revenue, and good developers in the U.S. can earn up to $180,000 a month, making this income quite substantial for some excellent developers, and this is just from advertising revenue.
The second important group is our advertisers. In the U.S., we find advertisers through our advertising agency. Our advertisers come from various sectors, including the U.S. government, which has run recruitment ads on Mochi, for example, in shooting games. Government recruitment websites advertise on our platform, and game ads can also be serious in nature.
The third important group is our channels. You can think of all mini-games as being hosted on our website. Before Mochi entered China, Chinese mini-game sites had already become channels for Mochi by illegally copying content. After Mochi entered China, there was no need for piracy; we could offer more than just content, including revenue sharing. The more users play Mochi games, the higher the advertising effectiveness, and the higher the revenue share for both channels and developers. Mochi, a small company with 20 employees, has rapidly expanded using this successful revenue-sharing business model. Its user count and game count are absolutely the highest in the world. Currently, we estimate there are about 110,000 mini-games globally, with over 40,000 on the Mochi platform. Mochi only provides its own developer website, but it has the most users because all mini-game websites, even non-mini-game websites, can freely take games and display them on their platforms. This model is also quite suitable for China, as Chinese users prefer free content and are willing to take without any commitments. Therefore, we also encourage our partners in China to connect with their websites, allowing them to take our games while keeping the revenue for themselves. We have now become formal partners, allowing them to take our games and share in the revenue, which has led to rapid growth in China. From April, we had over 30 million users, and by July, we had reached over 70 million users, with estimates that we will exceed 100 million users next year.
I have already introduced this, so I won't elaborate further. Mochi is the world's largest online mini-game platform, with 250 million users, and we expect to exceed 300 million next year.
As mentioned earlier, regarding APA, for example, advertising, if your game is played by others, developers can see their data reports on Mochi as long as they register an account. They can track how many times their games have been played. For advertisers, in addition to the larger advertisers we work with, if you want to advertise, you can also self-serve ads on Mochi, starting at $100 in the U.S. If you want to let everyone know about your wedding, you can advertise very cheaply. Many small websites proactively become Mochi partners, and they also share in the revenue. The most important thing is that they can access a wealth of game content that is continuously updated, which is very valuable for attracting and retaining users. The greatest value of the Mochi platform lies not in revenue sharing, but in the content it provides, allowing partners to obtain the latest and best content.
Why do we participate in the GDC conference? Mochi provides the best benefits to developers, offering the best revenue sharing. The Mochi platform itself does not make a profit; it merely maintains operations, with most of the benefits going to developers. Every year, Mochi holds gatherings in San Francisco, which are large-scale events for game developers in the U.S.
This is Mochi's business model, illustrated in a diagram, showing how developers' games, combined with advertisements from advertisers, are promoted through the network of channels, and how revenue from user clicks is shared among advertisers, developers, and Mochi itself, achieving rapid geometric growth.
Why advertise on Mochi? First, the performance of ads is high, and the conversion rate is particularly suitable for what types of ads? In China, the characteristics of Mochi make it especially suitable for MMO ads. The conversion rate for large game ads on mini-games is very high. When we run large game ads, we find that the conversion rate is generally higher than other ad formats, and the cost is much lower than other ads. Why does this phenomenon occur? Because the user characteristics of mini-game players and large game players are similar; those who read and play games are often the same people, resulting in very high conversion efficiency. Secondly, we can target entertainment audiences. Currently, we are also working on more precise targeting and optimizing our advertising system to push relevant ads based on user characteristics. After integrating Mochi's advertising system into Shanda's ecosystem, all user information from Shanda's system enters Mochi's advertising system, allowing us to push corresponding ads based on user characteristics, which is currently under development.
This is a basic form of advertising. We have three basic forms of ads. The first is pre-roll ads, similar to video ads, where playing a FLASH game for one or two minutes requires ten to twenty seconds of ad time. The second form is in-game ads, where if the game scene allows, such as having a wall, you can design ads. We limit the number of ad displays in-game; for example, only one ad can be shown within five minutes to ensure user experience. Additionally, there are post-roll ads that appear after completing a game or at the end of play. Most ad clicks, about 80-90%, occur in the pre-roll section.
In addition to advertising, we have also strengthened the sale of Mochi coins since the end of last year. After Shanda acquired Mochi, Shanda's expertise in selling game props and coins has led us to believe that the profitability of selling game props is much higher than that of advertising. We are leveraging Mochi's copyright advantages and user base to vigorously develop prop sales, and we also share revenue with developers. The sales model for props includes examples such as a shooting game where you might want to buy better weapons for a small amount of money, or sometimes you need to buy an extra life, etc. These are very small amounts, but the user base is very large. Currently, our prop sales revenue is rapidly increasing every week, and we estimate that by next year, prop sales will become Mochi's main source of income.
At the same time, we are vigorously promoting Mochi's business model in China. In fact, regarding mini-games, we believe that globally, China is not a profitable market for mini-games; the profitable mini-game market is still in the United States. According to our analysis, first, the U.S. respects copyright. We have tens of thousands of games that have no significance in China because they will be copied the next day after being uploaded. To be honest, I am too lazy to sue; I can't afford the energy for lawsuits. However, in the U.S. and Europe, they respect copyright, which has a legal foundation. Secondly, and more importantly, Western audiences differ from Chinese audiences; Chinese people prefer MMOs, while Westerners enjoy mini-games, and there is a large paying audience with a high ARPU. Additionally, the U.S. has open platforms, such as Twitter. In China, developing mini-games and community games is very difficult to profit from because the platforms are not open or do not allow you to earn more than they do. This is a phenomenon based on our cultural environment. Therefore, given the national conditions, Mochi is rooted in the U.S., and we primarily focus on the U.S. market. We hope to bring works developed by Chinese developers into the U.S. market, allowing the U.S. market to provide higher returns for developers. This is also a reason for our future expansion in China, as we believe it effectively complements Shanda Games' user base, which has many MMO players but fewer mini-game players. The age range of Shanda Games' users is primarily 20 to 30 years old, which is the white-collar demographic. For younger and older audiences, MMOs are not suitable, while mini-games are more appropriate. In the U.S., we focus on profitability, making the platform more profitable to provide developers with more revenue sharing, allowing them to earn more money. In China, we focus on attracting users, drawing more players to the Shanda platform to play their favorite games. Therefore, in China, we focus on user acquisition. On July 30, we launched a Mochi game competition primarily to promote the Mochi brand and advocate for a healthy and positive environment for developers to profit. Before Mochi entered China, developers of mini-games faced significant challenges; they would upload their games on the first day and face piracy the next day, earning nothing. After we entered China, attitudes changed; developers began to require payment for their mini-games, which was previously unheard of. We set an example, and others followed suit, which is quite positive, I believe.
In July, we held this competition with low expectations, thinking that if we received over a hundred games in three months, it would be great. In reality, the results far exceeded our expectations, with around 360 games submitted, and the quantity and quality of the works greatly surpassed our predictions, featuring many excellent pieces. Many developers submitted works they created specifically for foreign game websites, achieving great results in this competition.
Last week, on December 5, we held the award ceremony at the International Financial Center, inviting Intel and Great Wall to participate in this event. Notably, the youngest participant in this competition was only 12 years old, a middle school student from Shanghai, demonstrating that the barrier to entry for developing animated games is very low and suitable for the 2.0 model.
The first place winner was the game "Monster Tower Defense," which received a million-dollar order. We adopted a purchase model to feature this game on Mochi. The second place winner was "Call of the Bossa," which received 30,000 yuan. We also offered a 200,000 yuan annual salary prize; if a developer creates a good game, they can receive this salary, which is actually much higher than 200,000 yuan. If they are willing to join Shanda Games, they will receive a salary from Shanda Games. We also established a campus club at Tongji University, the first domestic company to establish a campus club with a university, a developer club. Previously, campus clubs were often established by companies like Google. We also established a club with the university, receiving strong support from the Tongji University administration because we believe we need to consider not only current developers but also future developers. Next year, we plan to establish clubs in 11 universities to cultivate Flash developers.
This is our Mochi forum, which currently does not have high traffic, but we believe it will gradually increase, as this platform can truly bring benefits to developers.
Currently, we are focusing on two aspects in China: attracting developers and channels. We have established 5,000 channels, with important ones being 4399 and Sina. We have also set up a Mochi section with CCTV, the China Internet Television Station. Next, 3766, Tencent, Baofeng, and Sohu will also establish Mochi sections because we are a completely open platform. At the GDC conference, I happened to sit next to colleagues from 9City and Giant. I told them that if they have large games to promote, they are welcome to advertise on Mochi, where ads are very cheap. Open competition is not about being open; true openness means welcoming competitors. If you don't have this mindset, you won't succeed. Therefore, we now talk about open platforms; the issue with Mochi is not whether it is open or not; Mochi is already a very open platform. The challenge is how to implement a more reasonable business model that can bring more benefits to developers, enabling sustainable and larger-scale development. Currently, everyone is talking about open platforms; NetEase and Tencent are also getting involved. How do we compete among open platforms? The key to an open platform is truly serving developers, not copying and profiting from their successful creations.
At the same time, we are also looking for breakthroughs in the mobile market. Flash mini-games have an inherent characteristic: Flash is cross-platform. Flash can run on TVs, PCs, and mobile devices, with different control methods, but the basic game elements and presentation can be achieved through the Flash platform. Mochi's cross-platform capability is natural. In the U.S., we held a game competition, and on the Mochi platform, there are 40,000 games, with two to three thousand directly suitable for play on the platform, requiring only minor adjustments. We believe the mobile market is a new opportunity that can bring more benefits to developers. We hope developers will create more games for mobile platforms, and we expect to see more excellent Chinese games emerge on this platform. Mochi's main work in this area is to create a business model that allows you to earn money efficiently and incentivizes you to continue developing. This is the key concern for Mochi, as through advertising and prop sales, we want to ensure that you can make money. As for game content and what types of games players enjoy, that is up to the developers to consider; I believe developers' creativity is much richer than our own.
We are also striving for breakthroughs on television platforms. We have contacted many TV manufacturers, and we are testing our games with the Shanghai Film Group. Our games will also be available on television platforms. For us, the television platform, like the mobile platform, is important because the transaction method is very convenient with a remote control. We are also considering how to establish a sustainable business model on these platforms. We hope that developers will create their own content rather than us producing it. Therefore, we aim to create a business model that promotes your games to a wider audience, allowing Mochi to reach more users and create more benefits for developers.
We welcome you to become our fans. Mochi is already on Sina Weibo, and we have a very close partnership with them. Users on Sina Weibo can directly promote Mochi games, and we have deep cooperation with Sina Weibo.
Thank you all.
Do you have any questions?
Question: Hello, Mr. Huang, are your developers mainly individual developers or developers from small companies?
Huang Xiaohu: In fact, individual developers make up the majority. The most important thing is creativity. In terms of quantity, individual developers are more common, but high-quality games, like those developed by small teams overseas, are often created by small teams. Generally, a standard team consists of two to three people, while a larger team has four to five people. If a team has dozens of people, it is quite a powerful studio. We have interacted with many such studios, and their work efficiency is also good. In the U.S. market, Mochi can be seen as a major promotional channel. If you develop games in China, uploading them to the U.S. can be quite cumbersome, but using Mochi as a channel makes it easy, and the revenue sharing is transparent. You can see how many plays your game gets weekly and daily. We are currently very encouraging Chinese developers to create games suitable for the U.S. market, as there are many users and money in the U.S. market.
Question: On our platform, advertisers have opened interfaces for ad placement. What exactly do we offer to advertisers? Are the ads targeted?
Huang Xiaohu: The simplest form is display ads, CPM, where each play counts as one, and CPC, which is click-based, where payment is based on effectiveness. In China, CPA is more common, where a user must register to be counted. We support these three methods and offer different sizes and formats for ads.
Question: I mean, are the ads targeted based on personal preferences?
Huang Xiaohu: Regarding personal preferences, we have made some rough determinations. For example, Chinese ads might be displayed after English ads; we first show Chinese ads. However, we have not yet implemented precise targeting; that is our goal.
Question: Thank you.
Question: Hello, Mr. Huang. You mentioned that Mochi strongly encourages domestic developers to release their games in the U.S. market. Do you have any statistics on what types of games are popular and generate high revenue in the U.S.?
Huang Xiaohu: Card games and action games tend to generate higher revenue in the U.S. Real games may cross cultures, but based on my communication with the U.S., poker is quite popular in the U.S., similar to how Chinese chess is popular in China. The gaming demographic in the U.S. consists mainly of white-collar workers, while in China, it is primarily middle and high school students. Chinese games often focus on quick reflexes, while American games emphasize strategy and thought.
Question: How can we increase exposure for newly launched mini-games and ensure more people engage with them? Also, does Mochi only support Flash, or does it support Java development as well, since many games are developed using other programming languages?
Huang Xiaohu: Currently, Mochi only supports Flash because it is the most standardized. To implement a 2.0 model, having too many standards makes it challenging to provide good support. We focus solely on Flash to ensure stability and smooth ad playback. Currently, we only support Flash, but we will definitely expand in the future to include other technologies.
Host: Due to time constraints, we will take one last question.
Question: Hello, Mr. Huang. I want to ask about the localization of Flash games developed by Chinese users for the U.S. market. What should developers pay attention to regarding software localization? For example, regarding text on the game interface, should developers create just one version or multiple versions?
Huang Xiaohu: We recommend that Chinese developers create both Chinese and English versions, as this is easier. The English version can generate revenue, while the Chinese version can attract users. For example, when developing an English game, we are also forming a team to guide Chinese developers on how to create games suitable for the U.S. market. The game design may be more appealing to American audiences, and we will provide assistance. If your English is not strong, we can help translate Chinese into English, and we also serve the U.S. market by converting English games into Chinese games.