Digital East Asia

by Doug Herman

After months of speculation leading U.S.-based social games developer Zynga has partnered with Chinese Web giant Tencent Holdings Limited (HKG: 0700 | (ADR) PINK: TCEHY) to launch a localized version of CityVille in China. This is a smart move for Zynga which recently filed for a much anticipated IPO but has been criticized for being too dependent on Facebook, its primary distribution platform, which accounts for the overwhelming majority of the company’s users and revenues.

By entering China, Zynga can demonstrate that it is diversifying into foreign markets that have social gaming communities not dependent on Facebook. The Chinese government bans the use of Facebook on the mainland. The real question is whether a game by Zynga will have any impact in a Chinese markeplace which already offers a tremendous number of clones of popular U.S. social games.

According to reports, the new game will be distributed through Tencent’s Pengyou, a socialnetworking platform that was only launched in the past year and has more than 100 million active accounts.  After a softlaunch on Pengyou it is very likely that Tencent will eventually offer it to users on its primary gaming platform, Qzone, which has over 500 million active accounts.

The new localized version of the game will be called Zynga City, and is being developed by members of Zynga’s Beijing office.