Kaixin001 banks on innovative mobile gaming to stave off competition

Social networking website Kaixin001 is banking on innovation to further establish its presence in the Chinese mobile Internet market, and also to shake off the Facebook-clone and casual-game-developer tags that it is currently identified with.

Under the new business-restructuring plan announced last month, the company will look to further leverage its strengths in the mobile Internet market, with innovation being the driving force of such moves, says Guo Wei, vice-president of Kaixin001.

Guo Wei, vice-president of Kaixin001, says innovation will help the social networking website establish its presence in the mobile Internet market. [Zou Hong / China Daily]

"Mobile Internet is a great chance for us to catch up with our competitors," Guo says, admitting that the company is no longer an industry leader as it was in 2009.

Set up in March 2008, the number of registered users on Kaixin001 reached 30 million within a year of its launch, while it took companies like Facebook more than 15 months to attract 5 million users.

Most of the initial gains were largely driven by innovative online casual games, he says. In 2009, most of the users who visited the Kaixin001.com website were those who wanted to play games like House-Garden, the local version of the FarmVille game on Facebook. The game, launched in February 2009, allows users to grow crops in their own farms and also steal friends' crops.

Though innovation will be the main thrust for the future, the company expects to add numbers and drive profits largely through apps for various platforms, Guo says.

While some of the new apps would be offered free to users, a majority would be chargeable and bundled as special apps that make mobile gaming innovative and interesting.

"If we are unable to make profits from any of these games or apps, we will immediately replace it," he says.

One of the main objectives of the new restructuring plan is also to develop new mobile games that are money-spinners in the long run for the company.

The company released its first mobile game, Zoo World, on May 9 in the Apple App Store. The simulation game allows users to feed and interact with different animals in the animal kingdom.

Guo says that more mobile games will be made available in the subsequent months to ensure steady returns. "We plan to launch a new mobile game every month."

To give further impetus to its growth plans, Kaixin001 has set up a new innovation studio, which it hopes will be a vital cog.

"The innovation studio is more like a startup company. It will be manned by small teams that are responsible for their own development, including product R&D, promotion and operations," Guo says. "The products launched by these groups will also be made available for mobile devices."

Beside mobile games, the company has also come up with Meike, a Path-like app for smartphones running on the iOS platform. Developed by Kaixin001's innovation studio, Meike is a private blog that allows users to share photos, locations, status, and music and also interact with close friends and family. Meike, meaning a beautiful moment in Chinese, restricts users to just 66 friends on the social network and is targeted at those who seek private social networks.

Rather than being just copycats of popular Internet products, Guo says the emphasis on products will help the company move onto the next stage of growth. It will also help the company to respond effectively to market changes, he says.

"Before the first half of 2010, we were focused solely on Kaixin001.com (the website). We did not diversify our products enough to cope with market demand and hence lost many consumers," he says.

At that time the company considered mobile Internet only as a supplementary business, and hence just copied most of the website features onto its mobile apps. "But that has changed and we are taking more initiatives to develop the mobile Internet business further."

Though the company has three distinct divisions, the focus of the social networking site is to retain the existing users, while the game department will look to boost cash flows. For the innovation studio, user viscosity is the key indicator for mobile apps, even more than profitability, he says.

"Revenue is not the prime focus of our innovation studio. What we value most is the user activity levels and viscosity, which means how many users will come back to the app after the first experience," he explains.

The company posted a 42 percent growth in revenue last year to 380 million yuan ($59.8 million, 48 million euros). It has 130 million registered users, far less than its major rivals Renren.com's 154.2 million and Pengyou.com's 202.4 million.

Baidu Index, a monitor of online search trends in China, shows that "user interest level" for the Kaixin001 site peaked in August 2009, when it figured in over 800,000 keyword searches on Baidu.

Data from Alexa Internet, a US company that specializes in online data collection and analysis, reveals that the daily time spent by users on the Kaixin001.com website also declined by 28 percent to 18 minutes from 25 minutes during the same period, and the figure now stands at about nine minutes per day.

"Kaixin001 has done well by getting the best online users. They have real names, are well educated and rich, and also come from big cities. Competitors like Renren have always been trying to acquire such user groups," says Dong Xu, an analyst with Beijing-based consulting firm Analysys International.

However, the lack of a clear future plan has inhibited Kaixin001's performance and also cost it its leading position," Dong says.

Regarding Kaixin001's recent restructuring, she says: "Kaixin001 has acted rather slowly in what is essentially a fast changing social network market. The adjustment is a positive change, but it will take some time for the results to bear fruit."

Zhao Fujun, a columnist with iResearch Consulting Group, says: "Gaming is not Kaixin001's selling point anymore. It is facing increasing competition from Renren and others like Tencent's Pengyou.com. There is also competition from Sina Weibo and other Chinese Twitter-like sites They are all attracting more users to their websites."

"Back in 2009, smartphones were not so popular, and there were limited options available for Chinese casual game fans," says Steven Millward, a tech observer on Techinasia.com, a Singapore-based technology news website.

"All of that has changed and millions now have iPhones and Android smartphones. Social games can now be easily found on nearly every Chinese web platform."

Contact the writers at suzhou@chinadaily. com.cn and linjingcd@chinadaily.com.cn