Gaming giant Zynga enters China with Tencent partnership

Online games giant Zynga is making moves into the Chinese market with a localised version of CityVille, its flagship online title which the LA Times reports has been played by more than 80 million people across the world.

The game, renamed Zynga City – presumably in order to grow the Zynga name from the get-go – will be tweaked to for the Chinese market and will include local architecture, references to Chinese pop culture and other features relating to Chinese holidays and news. It will be available through Tencent, China’s 65 million plus-member internet portal which includes instant messaging and microblogging among its online services.

The announcement of the company’s plans for China comes as the firm plans for its upcoming US IPO. A successful launch in China would develop Zynga’s international presence and, crucially, provide a foothold in a platform away from Facebook – the long-serving partner which has played a crucial role growing the company, its gamers and profits.

The LA Times provides additional details on the significance of the move:

San Francisco-based Zynga, which has filed papers to sell its stock in an initial public offering, needs to show investors it can grow its audience beyond Facebook, where it already commands a significant share of traffic.

“International and mobile represent two major areas where Zynga would need to go into in order to grow,” said Justin Smith, founder of Inside Network, a market research firm in Palo Alto.

It also recaps the company business model, which has proved hugely successful to date:

For Zynga, recruiting players for its games is just the first step because their games can be played for free. Zynga generally makes money when it can persuade those players to pony up actual dollars, or in this case Chinese yuan, to get special virtual items or to advance more quickly in the games. In the U.S., the percentage of players who pay for social games ranges from 2% to 4%, according to Parks Associates, a market research firm.

Like many other major online firms, Zynga is keen for a slice of China’s lucrative market which boasts 485 million internet users according to new statistics released by the Chinese government below, via paidcontent.org.

485 million active internet users

195 million microblog users (+200% in six months)

140 million (+24.6% year on year) broadband internet subscribers:

While mobile in China will likely become a key target too:

920 million mobile users

80+ million 3G users

100+ million (+257% yoy)

35 million (+195% yoy) mobile payments users

Last year Pyramind Research predicted that China’s online gaming market would grow to be worth $2.5b by 2014. Things have developed at an even quicker pace over the last year and it will be interesting to see not only how Zynga fares amongst China’s gaming-obsessed youth, but how its monetisation strategies fare in a country where consumers are increasingly prepared to pay for technology, such as iPhones, iPads etc.

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