I spoke to Rekoo’s CEO Liu Yong last week.  He studied at Beijing University  and graduated with a degree in Physics.  Later he went to the United States for further study.  He first got a master degree in computer science from the University of Illinois at Urbana Champaign, and then, a MBA from Kellog School of Management in Northwestern University.

After working a few years, he returned to China and started his first venture in 2003.  eFriendsNet is a social networking focus on dating services.  At its peak, it had 5 million visitors per day.  Liu sold it to a  French public company in 2006.  And by 2008, he was ready to started another venture.  And this time, he started a social game company – Rekoo.

“It is easier to find business model for a game company,” said Liu.  Oh yes, people like games and pay for them.  Games are the largest revenue sources for Chinese internet companies.  And social games was the upcoming trend in 2008.  He started with China market, but very soon, find it much easier to develop overseas market.

“Problem with Chinese market is that the SNS operators are game developers themselves.  There is conflict of interests.  If your games are popular, they not only not helping you, but even put pressure to squeeze you out,” said Liu.

There are at least 4 popular SNS in China – Renren, Kaixin, Tencent’s QQ and 51.  And each with its own rules.  In 2008, their platforms were not completely open for third party game developers.  Kaixin, in particular, depended on games (its own) to build its popularity and was not ready to opening it for other game developers.  Moreover, people don’t want to pay.  “Chinese gamers has been playing online games for over 10 years.  They are spoiled.  They won’t pay easily,” said Liu.

In March 2009, Rekoo started to land on Facebook and very soon, found it had hit a gold mine.  By third quarter of 2009,  Rekoo was the top 10 game developers on Facebook, with its Sunshine Ranch and Animal Paradise.  It had 3 million daily visitors on Facebook and was earing a revenue of US$ 1 million per month.

(At the same time, it had 10 million visitors per day in China, but only Rmb 1 million revenue per month.)

He also entered Japan in August 2009.  “In June 2006, Japanese social network, Mixi, got listed.  We know each other and I thought it was a good opportunity.  Our games work in Facebook, and they should  work in Mixi,” said Liu.  Sunshine Ranch and Animal Paradise were launched.  Then, Sunshine Deep Sea.  They became very popular.

“It is easier for us to understand the Japanese culture.  Many of us grow up reading Japanese comic book.  We know their culture and aesthetic standard.  For the U.S. market, most of the time, we can only guess what they like,” said Liu.

Liu found out the Japanese market is as big as the U.S. People are as willing to pay.  And there are much less competitions.  At that time, Zynga in the U.S. was growing strong, with Farmville and other social games.  Farmville is very similar to Rekoo’s Sunshine Ranch.

In third quarter of 2009, Liu decided to focus in Japan market.  “We are a small company.  We could not spread our resources over too many places,” said Liu.  Besides, China, U.S. and Japan, Rekoo was also in Korea at that time.  “I started to learn Japanese.  We set up a local office in Japan.  Start hiring local Japanese,” said Liu.

Today, Rekoo has a 30 person office in Japan – most of the staff are game designers, game producers, customer service, marketing and business development.

Rekoo soon became the most popular game developer on Mixi.  It also launch its games on Gree, a mobile social network.  And lately, it cooperated with KDDI, Japanese 3rd largest mobile operator, to form a mobile social game platform together.

Today, Rekoo has 2-3 million visitors per day in Japan market and earns several million USD per month.  Its performance on Facebook, however, has since decline.  It has only 200,000 visitors a day and earns about Rmb 1 million a month.

Author of Red Wired: China's Internet Revolution, the first book to completely survey the nature of China's internet. (http://redwiredrevolution.com/) She previously was the lead China technology reporter...

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