SGN launches Cookie Jam into China: it was not easy

by Garrett Reim
December 16, 2014

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Fresh off being named Facebook’s Game of the Year, Cookie Jam is looking East. In hope of finding even greater revenue, the game’s creator, Los Angeles-based gaming studio Social Gaming Network (SGN), has partnered with Chinese Internet company NetEase to tailor and launch the popular matching game into China.
 
“It’s becoming an incredibly important market to penetrate,” said SGN CEO Chris DeWolfe. “It’s a market that you can’t ignore.” 
 
However, recognizing China’s potential is one thing. Making money off it is quite another.
 
“The app ecosystem is completely different than in the United States,” said DeWolfe.
 
Launching mobile games in China requires local expertise. Unlike North America, which is dominated by just two app stores­ – iOS and Android­ – China is made up of 15 app stores: one for iOS, and 14 more for Android. That makes launching a whole lot more difficult.
 
To accommodate those customizations and to properly market to China’s many app stores, SGN partnered with Chinese Internet company NetEase, who already distributes and markets games for Activision Blizzard. 
 
“They’re a little more well known for their content and PC business, but they are getting more well known for their mobile gaming business,” said DeWolfe.
 
NetEase is publically traded on NASDAQ, with a market capitalization of $12.8 billion.
 
To make Cookie Jam fit Chinese tastes and devices. NetEase has reworked the game in a number of ways including graphically making it look more Chinese, sizing the amount of Chinese characters on every page, making it work on phones that aren’t as powerful, and making it work with weaker Internet. 
 
All of those customizations and the marketing done to launch Cookie Jam in China means SGN’s margins are being cut down a bit, but given the market size the company is happy to share revenue. 
 
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SGN’s partnership with NetEase comes as American companies remain wary of partnering with Chinese companies. Many worry the Chinese government’s lax enforcement of intellectual property rights and rampant corporate theft means that entering into China could give away the store. 
 
That may be changing. When large and publically traded Chinese companies, like NetEase, partner with American content creators they have an incentive to see the Chinese legal system uphold intellectual property rights and they operate under the scrutiny of American stock markets. Moreover, they are responding to Chinese demand for original American-made content. 
 
“It feels like all the data points [are] pointing towards being a lot more amendable towards U.S. content,” said DeWolfe. “It feels like there is a big appetite for American culture in China.”
 
Another Chinese company, Tencent, for example, recently brought over mobile game Candy Crush, something DeWolfe said made NetEase interested in partnering with Cookie Jam. Tencent has also just signed a music distribution deal with Sony. As Chinese appetites for American-made goods continues to rise there will be many more partnerships coming.
 
Though launching in China may require special partnerships, the revenue model for mobile games like Cookie Jam will likely remain the same. To make money in China, SGN will stick with its freemium model, allowing players to play for free, while selling them premium items to enhance game play. DeWolfe also said SGN was working with NetEase to add local branded content into the game. 
 
In the future, SGN is interested in launching more games in China, but DeWolfe wants to see how Cookie Jam plays first. “I think we need to spend more time over there,” said DeWolfe. “For our first game we are getting a lot of good learning under our belt.”
 
The North American market still holds the most potential for SGN’s mobile gaming business. “The North American market is sufficiently big. We know it is sufficiently better. We have great platforms and relationships here,” said DeWolfe. “We’re always going to go big here first and then distribute world-wide.”
 
But, “We’re definitely long on China.” 
 
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