New York 2006

Chapter 160 The Emergence of Competitors

“Boss, Myspace, Hi5, and other social networks all began to follow Facebook’s example and opened third-party developer platforms two months ago. We have ported games such as Holi Texas Hold’em and chess to their platforms. But……"

On December 2007, 12, in the office of Holi Games in New York, company president Yang Jian reported to Luo Ji the company's situation in the past few months.

"But what? Be straightforward."

Yang Jian said: "Myspace and other platforms take a 30% commission, but Facebook only takes a 10% commission."

In OMI, channel fees are generally 30%, such as movie distributors, Steam game sales, and iTunes music sales.Facebook’s 10% commission for third-party platforms is unusual. It may be related to the business war of social networks. They want to attract third-party developer platforms.

Luo Ji thought for a moment and said, "We can't control these things. We just need to do a good job porting the game."

"it is good."

Yang Jian continued: "Third parties such as Facebook, Hi5, and Myspace provide their friend networks, allowing us to build social games. We automatically generated a Holi game account based on the relationship list of these friends. In the past four months, our number of users has reached 300 million, of which 250 million are Facebook users, and other platforms account for 50. Facebook, a social network that is closely related to reality, seems to be very suitable for social games."

Luo Ji nodded: "They registered based on their email address. In reality, email addresses are usually only owned by friends, so it's not surprising."

Yang Jian continued: "But now we have 300 million users, and the game content of these accounts is all stored on our servers. In the past four months, our revenue from social games has reached 500 million yuan. But the revenue cannot be offset at all. The consumption of servers and personnel wages, if this continues, our company's cash flow will soon be exhausted."

Luo Ji wondered: "How many servers can two million accounts consume?"

Yang Jian opened his mouth and explained: "This data is actually not much. It mainly depends on the layout of the data center. We must ensure the timeliness of user access speed, so we must deploy server nodes all over the United States. Facebook is also expanding globally now. Maybe At that time, we will have to deploy server nodes globally, which will be too expensive."

Luo Ji thought for a while and said, "What suggestions do you have?"

Yang Jian said: "Boss, I don't know if you have heard of Amazon Web Services. They have deployed servers around the world and have a lot of spare space for rent. If we store the data on their global servers, we can use it to Make it accessible to users and save a lot of money.”

Luo Ji intuitively felt that this was inappropriate: "Then our user data is in their hands. If they analyze our user data, they may cultivate a new competitor at any time."

Yang Jian rolled his eyes and continued: "But our competitor Zynga is using their servers. Although Zynga lags behind us, they can save a lot of money for publicity by using Amazon's services. Maybe someday we will They overtook us."

Speaking of Zynga, Luo Ji felt a little headache and angry.

After Luo Ji learned about Tencent's model, he also learned that Facebook had opened up its third-party platform.All kinds of coercion and inducement make the company's employees work overtime to seize the opportunity.As a result, half a month after the launch of his Texas Hold'em social game, Zynga also launched a Texas Hold'em game.

It cannot be said that the effects between the two are not much different, they are exactly the same.

Forget about plagiarism, they are still like candy. In the past three months, they have spent money everywhere to promote it. In order to keep the first place, Holi Game Company had to follow up.

Luo Ji even wanted to take legal action, but this was a real casino game and there was no way he could sue.During this period, in addition to building server nodes, a lot of funds were spent on advertising.

"It still doesn't work. We can't hand over the data to others. This is a non-negotiable issue." Luo Ji continued: "How many months do you expect the funds to be burned?"

"At most, it will be February next year. If the stand-alone game is successful, it will probably last until April next year."

Yang Jian then said anxiously: "Boss, the company still has many problems. The game involves the sale of virtual props. Paypal only provides a recharge channel, but they do not guarantee the safety of the props and coins in the game. We are responsible for network security. .During this period, our servers were attacked many times by hackers, who wanted to tamper with the amount in users’ game accounts. During this period, the pressure on the security department increased greatly. There were almost problems several times.”

When Luo Ji heard this, he thought it was good news, so he said, "Being able to be attacked by hackers proves from the side that the virtual props in our game have real value."

"How to deal with it?" Yang Jian asked.

"Keep recruiting people."

Luo Ji continued: "We also need to establish our own gold coin system, just like Tencent's QQ coins, let's call them Holi coins. Holi coins can be used in our games in the future."

Yang Jian's face turned red and he said angrily: "Will the funds be too tight? If we recruit more people, the company will go bankrupt! I still recommend storing the data on Amazon Web Services, so that the money of the security department employees can be saved." Save it. Then the hacking problem will be all Amazon’s problem.”

"You..."

Luo Ji looked at him, said nothing, and couldn't help but fall into thinking.

Yang Jian used to be a technical geek. Although he was a bit arrogant, he never dared to lose his temper directly to Luo Ji. Today was his first time.

Luo Ji looked for the reason. He was now a shareholder of the company, and his position had changed.He has to consider the future of the company, and the two of them now have differences in the management of the company.Such differences still need to be resolved through communication.

"I firmly object to putting data on other people's servers."

Luo Ji explained the reason: "Social games have some barriers for ordinary people, but for capital it is not a problem at all. The technical threshold is not that high. It is very simple to copy. If someone else gets hold of our data, they will You will know in which scenarios users are willing to pay and the intensity of their willingness to pay. It can be easily copied in another skin. So we must get the data in hand."

Yang Jian compromised: "Okay, but the problem still needs to be solved. There are not enough funds."

“Then let’s start Series A financing.”

Luo Ji continued: "In my name, I can use my reputation as an investment genius. By the way, also contact Tencent. They know this industry best and the valuation should be higher." "Okay." Luo Ji added Said: "By the way, remember to submit an equity plan and I will review it."

"OK."

Luo Ji couldn't help but smile as he looked at Yang Jian's back as he walked out happily.The shares of Yang Jian and team members will increase accordingly according to the number of financings.It's no wonder he's so happy.

Serious Business startup garage in San Francisco. Company founder Chen Siqi is still working at the search engine company Powerset. Today he had a day off, so he came to the garage.

He looked at the game "Friends for Sale" uploaded to Facebook last month, where friends buy and sell.

Just one month after uploading, with no publicity funds, just free recommendations on Facebook and rewards for making friends, the number of users has reached 20.

Chen Siqi looked at the black partner next to him and asked, "Should we resign and start a business?"

"Are you crazy?"

The black partner continued: "How are we going to make a profit? Just rely on advertising? Our profit is only enough to pay the rent of the server."

Chen Siqi logged into his Facebook account on his computer, opened Holi's Texas Hold'em game, pointed at the screen and said: "Look, this is a game developed by Logic Games. There are no ads in his game. The only way for users to obtain virtual rice is You can get money through recharge, daily login, gifts to each other, game time and inviting friends to play. I have several friends around me who invite me to play together, and some of them even recharge money, which proves that there are still people buying virtual props. "

"You mean, our game can do the same?"

Chen Siqi demonstrated on the computer: "Yes, you see, the first thing I saw when I entered the Texas Hold'em game was the ranking list of Facebook friends' net worth. This is also a way of comparing each other. Everyone wants to be The one with the highest net worth, although this is just a game. But it is also a means of comparison and can be used to show off. In reality, rich people will definitely be willing to spend money to recharge to increase their net worth."

Chen Siqi paused and continued: "The social interaction attribute of our friends' buying and selling is even stronger than this. If virtual props are added, many people will definitely be willing to spend money to buy them. As long as one percent of people pay one per month Mi Dao is much more profitable than advertising. Not to mention that our number of users is still growing."

The black partners started thinking about technical issues: "Add virtual props, add social connections to the game, and improve the code. The two of us can probably do it in a month."

"Done?"

"Done!"

The two immediately high-fived and celebrated.

At the same time, not far from them in San Jose, Zynga game company rented an entire floor in an office building.Much more generous than the two garage entrepreneurs just now.

The founder of the company is Mark Pincus, who, like Musk and Bill Lee, was a famous pioneer during the Internet bubble of the last century.He has founded three companies, all of which were successful, and his net worth exceeds [-] million US dollars.He has also invested a small amount in music piracy software Napster, social networking site Friendster and Facebook.

Zynga is his fourth company. In the company conference room, several founders were sitting inside, looking at Mark Pincus angrily.

Mark Pincus also knew his situation. He felt like he was back in his third company when he started a business, and he was almost kicked out by investors.

But he didn't panic at all. He learned his lesson this time and no one could drive him away. The design of AB's equity gives him more than 80% of the voting rights.

He asked: "Do you know the current number of Texas Hold'em users of Holi Gaming Company?"

The company's data director said: "I'm not sure. Their servers are self-built, and only people within their company know the specific number of users. But I found out from Facebook that their Facebook platform now has 250 million users, with daily active users." 20. They are six times more than we are.”

Pincus said loudly: "Do you still need to talk about daily actives? Facebook announces every week that their game is now ranked No. [-] in the program, and you can see it on the homepage of the third-party program."

An investor of the company said: "One step is slow, each step is slow. They are half a month ahead of us. If we had not worked overtime and learned to imitate them, the development time would have been longer. No one expected that developing a Social games can actually crash.”

Another investor in the company said: "In a social relationship, if a few people play Holi's poker games, the rest will not play our games. So now we are in an embarrassing situation, and we have been burning money during this period. Competing with Holi Game Company for the Texas Hold'em game, millions were spent on promotions, but the number of user growth was simply not comparable to theirs. If the competition continues, users may still be lost. I feel that our strategy three months ago was wrong. Let’s develop other games. This market has just emerged, and we can develop other games, so why should we stick to one game with them?”

"No! There is nothing wrong with my strategy."

Pincus explained seriously: "What we didn't expect was that in this emerging market, there would be companies like us that also made such heavy bets. In the past three months, we have burned millions. Holi Game Company We also burned millions. We thought they would back down. Moreover, their game was half a month ahead of ours and ranked first in the program rankings. Many users would be curious to join. So we spent money and did not compete with them. If it were any other start-up, they would have been defeated a long time ago if we were burning so much money.”

"What should we do now?"

An investor in the company said: "The boss of their company is Logic, who is not short of cash. He has sold 1000 million records this year alone, and his cash flow is very sufficient. Moreover, he was in the media more than a month ago. I have once said that I am very optimistic about the social gaming industry. If we continue to compete, both sides will suffer losses."

It's not hard for Mark Pincus to admit defeat.Many times of starting a business made him understand that it is a good way to stop losses in time.But he had some inexplicable feelings and just didn't want to give up.

Another investor continued to advise: "Pincus, Logic is only 17 years old, and he is still a big mouth. If the competition continues like this, he may become impatient. Be careful that he criticizes you in the media. The props in our game are indeed borrowed from We adopted their design and just changed the name. Let’s develop other games. We still have a lot of cash, which is enough.”

Pincus looked up at the ceiling, and finally sighed: "Okay, let's withdraw the promotion money. We will focus on developing the next game."

After Pincus finished speaking, his eyes became sharp and he looked at everyone and said: "In the next game, we can only succeed, we are not allowed to fail!"

(End of this chapter)