Vol.50 – Facebook’s Potential as Infrastructure of Online Businesses and Services

Zynga has already started providing social gaming leveraging Facebook, which has become a success, and Japanese gaming companies are to follow such a trend. Nikkei, Japan’s leading newspaper specialized in business and economy reported in its evening newspaper on February 12 that leading Japanese social gaming companies are to leverage Facebook in providing their gaming content to worldwide online users.




1. What is the potential of Facebook?



This implies that Facebook, a global SNS, has potential of becoming an infrastructure of online businesses services including social gaming and many others instead of being simply a SNS, leveraging its core competence of SNS “sharing information online”.



In a way, it is like Google, which has become an infrastructure of online businesses and services leveraging its core competence of search “finding and accessing information online” and expanded its product line-up and businesses domain.



It is quite possible that Facebook would further expand its product line-up and business domain and many other online business and service companies leverage Facebook as their online business infrastructure. To the author, this is one reason why many experts predicted that in 2011 Facebook will become Google (and Google become Nicrosoft).



2. What is the reason for Japanese companies now starting leveraging Facebook one after the other?



It is because Japan domestic gaming market had been growing rapidly but the growth has slowed down recently. Therefore, Japanese gaming companies need to look for other market or create other businesses to grow their overall business.



The former, i.e. look for and enter other market leveraging their content and know-how is the first option that is usually taken, and this means globalizing their business, similarly to other industry companies. Thus, many of them are now planning to expand their business globally.



3. Why Facebook is ideal for Japanese gaming companies as well as their counterparts abroad to leverage in growing their business globally?



It is because of the social infrastructure and global network of almost 600 million members. Japanese SNS such as Mixi is the leader in Japan but the members are mostly Japanese and the site and functions are made to meet basically needs of Japanese people only; therefore, leveraging such SNS is not appropriate in expanding their business globally.



In addition, Facebook has been a hot topic in Japan since January 2011, as mentioned in the previous article Vol.49 – Lesson from “Social Network”: Success Requirements in the Internet World. There have been online articles about how companies and business owners, not necessarily of IT industry, could leverage Facebook to drive marketing and business. Thus it is quite logical and natural for gaming companies to leverage Facebook now.



4. Which Japanese companies are to start leveraging Facebook to drive their social gaming business globally?



1) Sega



Sega http://sega.jp/ will start providing social gaming of baseball called Sega Play Baseball to Facebook users in the U.S., Europe and Asia from the end of this month. Online users would make their Facebook friends and play online baseball games with Facebook friends.



Basic fee to play social games is free, but Sega will gain revenue by charging fees for tools and other items to their users that make them advantageous in playing games or that make them more entertained.



2) Tecmo Koei Games



Tecmo Koei Games http://www.koeitecmo.co.jp/ will start providing their new simulation game to Facebook users from this spring. They will first provide to Facebook users of English speaking countries and plan to also provide to Facebook users of Japanese speaking people by the end of this year.



3) Bandai Games Inc



Bandai Games Inc http://www.bandainamcogames.co.jp/english/will start providing 3 social gaming including one of a popular action game in Japan by the end of this year. They have already started providing social gaming leveraging Facebook infrastructure for free as a trial, and plans to officially start the service that generates their revenue by start selling items in the near future.