Industry Analysis of the Social Network Gaming in Turkey

2304 Media Management Group 6A

- The Stardollperspective

Turkey is an interesting market due to the high number of young and educated people – people are interested in social games and are willing to pay for them.

The competition level in Turkish social gaming industry can be regarded as high and is increasing as the market attracts new players of both origin: foreign and domestic. Stardoll is a popular social game operating in the Turkish market. The main threats in the social gaming industry include uncertainty and fast pace of technological changes, governmental regulation as well as difficulty to maintain the leadership position and competitive advantage. Facebook provides a distribution channel reaching the majority of social network users yet poses a threat to independent platform developers. Other opportunities in the social gaming industry of Turkey include the booming fashion industry with partnership and co-creation possibilities related to that.

Executive summary

Mission– Develop a creative environment for everyone who loves fashion, celebrities and all there is to it!

Growth - 20 languages, 80+ million users worldwide, since 2004

Platform – Web based

Business model– Free entry (a small share of userspay a lot plus ads)

Stardoll

The 2nd biggest population of the region (71,158,647 (July 2007) )1, which is young (60% are under 35) and educated.

Turkey is the 3rd most engaged Internet audience in the world.

The Turkish online social games market is one of the biggest in Europe and is rapidly growing.

Average gamer: male (about 60%), age – 18-20 y.o. (27% under the age of 14).

Hours per week spent on games: 3,7 hours (in 2009). Most preferred platform: PC (in 2009). This leaves plenty of room for growth outside of this

segment in the future (for ex.: games targeted to kids, girls and adults).

1 Turkey Population statistics. http://www.irantour.org/turkey/populationturkey.html

Why Turkey?Why Turkey?

Main operators Early entrants: Joymax, K2 Networks and Gameforge.Very successful -> no local competitors.   GameSultan, GGChave started as Internet-café, became local

operators handling distribution, payment systems, localization. (20,000 Internet-café by 2009).

Knight Online earned about $1M/month from Turkish operations.

Metin2 has about 3 Million active Turkish users. New entrants (like Korean publisher NHN) are preparing Turkish

version of their games.

Virtual worlds Virtual worlds are growing

(for ex.: Sanalikagrew to 3Million registered users in 6 months).

General overview of the market in Turkey

Facebook Turkey is the 3rd biggest

country on the platform. More than 18.5M members

(02.01.2010). 44% of users are 18-24 y.o. Popular games: Farmville,

City of Wonder.

Main business models used for social network games:

1) in-game ads; 2) micro-transactions.

General overview of the market in Turkey

Competitive rivalry within social network games industry (high)

Bargaining power of

suppliers (high to low)

Bargaining power of

customers (low)

Threat of new entrants (high

to low)

Threat of substitutes

(high)

Industry analysis of social network games in Turkey using the five forces

Independent game developers - low bargaining power.

Using external platform= High costs of switching suppliers for game developers – when games are adapted to the platform dependency increases. Few number of platforms in relation to the number of game developers

network games

industry

Bargaining power

of suppliers

Bargaining power

of customer

s

Threath of new

entrants Threat of

substitutes

Bargaining power of suppliers

Large customer base – low volumes

Differentiated products

Switching costs could be present (psychological)

Competitive rivalry

within social network games

industry

Bargaining

power of suppliers

Bargaining power

of customers

Threath of new

entrants Threat of substitut

es

Bargaining power of customers

Developing a new platform requires substantial investments.

Strict governmental policies Independent game developers could

emerge at any time Value of product increased by

number of users.

Competitive rivalry within social

network games

industry

Bargaining power of suppliers

Bargaining power of customers

Threath of new

entrants Threat of

substitutes

Threat of new entrants

Many available substitutes from both a narrow and broad perspective

Technological advances may change the future game market

Time spent on Facebook increasing, both threath of substitute (own platform) and

opportunity (usingFacebook)

High taxes on importing video games

Competitive rivalry within

social network games industry

Bargaining power of suppliers

Bargaining power of

customers

Threath of new entrants

Threat of substitutes

Threat of substitutes

Numerous equally big competitors Currently in Turkey there are comparable

few independent social network games Low barriers of exit Commited actors Industry primarily not figthing for monetary

resources, rather people’s time Innovation and first mover advantage

crucialdifficult to maintain leadership over time Aspiration to drive industry change

Competitive rivalry within

social network games industry

Bargaining power of suppliers

Bargaining power of

customers

Threath of new

entrants

Threat of substitutes Rivalry among existing

competitors

The threat of the most popular platform – Facebook◦ Rapid technological changes/updates◦ Dependency on Facebook micro payment solutions (currently

could be seen as an opportunity)◦ Bargaining power of platform supplier, increased dependency

Difficulty to maintain competitive advantage and leadership position – innovation required

Governmental regulations, interventions and restrictions Uncertain and fast-changing industry Increasing density (level) of competition

◦ Foreign competitors with strong financial and IT background, Korean companies entering the market

◦ Domestic competitors with strong competences and know-how of the local market

◦ The potential threat of mobile games (future substitute)

Threats for Stardoll

The market: massive potential◦ Young audience – young market◦ Men

The dominant (standard) platform Facebook – highly used and hence a good distribution channel

The Turkish fashion industry is growing and is hence young and dynamic possibility for Stardoll integrate and leverage

Turkish people willing to pay when liking the game Exploit opportunities in young target groups e.g. Stardoll

merchandise Market becoming more western – chance to anticipate change

◦ Developing high quality games to satisfy increasing knowledge of the European market, Turkey might follow the same pattern

Opportunities for Stardoll

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million-europeans/ Online games in Turkey. http://www.icopartners.com/blog/archives/1044 http://www.programlar.com/makale/oyunlarin-gelecegi-sosyal-ag-oyunlari-ve-5-tahmin.2o.5.1.html http://www.todayszaman.com/news-216390-nascent-turkish-games-sector-emerging-player-in-global-market.html http://www.activegamingmedia.com/media-center/turkey-rising-%E2%80%93-an-interview-with-erkan-bayol-executive-

producer-at-ceidot-game-studios http://www.export.by/en/?act=news&mode=view&page=2&id=12823 http://www.icopartners.com/blog/archives/1044 http://www.alexa.com/siteinfo/facebook.com http://www.bigpoint.net/index.es?action=partner&subpage=partner_developer http://www.activegamingmedia.com/media-center/turkey-rising-%E2%80%93-an-interview-with-erkan-bayol-executive-

producer-at-ceidot-game-studios http://www.appdata.com/ http://kotaku.com/5657969/why-do-people-play-social-network-games www.zynga.com http://www.alexa.com/siteinfo/facebook.com http://www.facebook.com/apps/application.php?id=111596662223307 Porter, M.E:, “The Five Competetive Forces that Shape Competetive Strategy”, HBR, 2008 Prahalad&Ramaswamy, “Co-Creating Unique Value with Customers”, 2004 Guest lecture with ChristerBrjörkman 2011-01-31 MalinStröman, interview 11-01-27 Guest lecture with Linda Hellqvist, Google 2010-11-18 Guest lecture with Stefan Lampinen 2011-02-02

Reference