DeNA, Mobage, GREE: Demystifying Japan’s Social Gaming Market

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This is an edited version of a presentation on Japan's social games market I gave a few weeks ago.

This is an edited version of a presentation on Japan's social games market I gave a few weeks ago.

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  • 1. DeNA, GREE: Demystifying Japan’s Social Gaming Market By Serkan Toto, PhD Twitter: @serkantotoImage credit: GREE International
  • 2. About Me• Tokyo-based web, mobile and gaming industry consultant• Advisor for startups in Japan, Asia and the US• Japan contributor for TechCrunch.com• Personal website: www.serkantoto.com
  • 3. Contact InformationTwitter: http://twitter.com/serkantotoLinkedIn: http://linkedin.com/in/serkantotoEmail: totoserkan AT gmail.com
  • 4. Visit My Website For Free Information On Japan’sSocial Game Industry (http://www.serkantoto.com)
  • 5. AgendaI: Structure Of The Domestic MarketII: Japan’s Social Games Vs. The WorldIII: Future Trends In Japan’s Social Gaming Industry
  • 6. I: Structure Of The Domestic Market
  • 7. Japan‘s Unique Social NetworkingLandscape•  Basic structure: real social graph vs. virtual social graph•  3 homegrown social networks with roughly 25 million users each: – Mixi (real/80% mobile social networking) – GREE (virtual/mobile social gaming) – Mobage (virtual/mobile social gaming)
  • 8. Fragmented Industry Structure•  Hundreds of social application providers•  2 dominant companies double as platform and game providers: GREE and DeNA (“Facebook+Zynga in 1“)•  Mixi as latecomer•  Rekoo only really successful foreign player
  • 9. Dominant Duopoly
  • 10. Size Of Japan‘s Social Gaming Market•  Annual sales of DeNA and GREE combined reach over $2 billion•  Different sources offer different numbers: – Video game magazine publisher Enterbrain: $0.3 billion in 2009, $1.45 billion in 2010 – Market research firm Seed Planning: $1.46 billion in 2010
  • 11. II: Japan’s Social Games Vs. The World
  • 12. Key Peculiarity: Gaming Nation Japan•  Taito‘s Space Invaders kicked off the gaming industry as a whole in 1978•  Nintendo‘s Famicom revitalized industry after the big crash 1983•  Japan has 10% share ($6.5 billion) in global video game market•  Games enjoy greater cultural attention in Japan than elsewhere•  higher payment walls for progressing in social games are accepted
  • 13. Key Peculiarity: Mobile •  Social games (and the web at large) are consumed mainly on mobile phones •  Yahoo Mobage only PC-based social gaming platform worth noting •  virtual item payment via carrier billing as catalyst •  GREE/Mobage pre-installed on handsetsImage credit: KDDI au
  • 14. Key Peculiarity: Facebook Japan•  Active Facebook members (potential social gamers) in Japan in September 2011: 5 million•  ⁓5% of web population (in the US: ⁓68%)Source: Socialbakers
  • 15. Key Peculiarity: Special Genres•  Some social gaming genres are as popular in Japan as elsewhere, i.e. – farming – pet-breeding – city-building – restaurant management etc.•  But some are especially popular over here
  • 16. Key Peculiarity: Special Genres•  Example 1: Manga-based social games•  Gundam Royale racked up 1 million players in 6 days
  • 17. Key Peculiarity: Special Genres•  Example 2: Social RPGs•  Square Enix‘ Gleipnora is exclusively available on Mobage
  • 18. Key Peculiarity: Special Genres•  Example 3: Social dating and love simulations•  Renai games are especially popular among female users•  Andamul‘s Delicious Kiss is popular on GREE (below)
  • 19. Key Peculiarity: Special Genres•  Example 4: Social idol-raising games•  Goal: Train and guide girls on their way to become an idol (star)•  Love Kyun! Idol Battle was launched on GREE in May 2011
  • 20. Key Peculiarity: Special Genres•  Example 5: Social collectible card games•  Konami‘s Dragon Collection has been #1 on GREE for over a year straight
  • 21. III: Future Trends In Japan’s Social Gaming Industry
  • 22. Growth Is Expected To Continue•  Growth in the domestic social gaming market has slowed down, but still ongoing•  Projection by Mitsubishi UFJ Morgan Stanley Securities: US$5.2 billion in 2013
  • 23. Growth Is Expected To Continue •  Yano Research: $406 million in 2009, $900 million in 2010, $1.4 billion in 2011:
  • 24. Japan‘s Mobile Future Is All Smartphones •  GREE CEO Yoshikazu Tanaka: “By 2015, feature phones in Japan will vanish.“ •  iPhone and Android set to dominate in the futureSource: The Nikkei / MM Research Institute
  • 25. Video Game Makers Going Social•  Many Japanese video game makers starting to produce social games•  Konami alone expecting to generate $390 million in fiscal 2011 with social games•  A lot of high-quality IP still untapped
  • 26. GREE: Internationalization•  More cautious approach•  US office in January 2011•  Offices in Seoul, Dubai, London, Singapore...•  Focus on partnerships: – South East Asia: mig33 – China: Tencent•  Only one sizeable acquisition abroad so far (Openfeint for $104 million)
  • 27. DeNA: Internationalization•  DeNA‘s 3-market approach with Mobage for Smartphone: – Japan – China – Rest of the world•  Aggressive M&A: – Ngmoco $403 million – Gameview Studios, Rough Cookie, etc.•  DeNA failed twice on a global level: – MiniNation (WAP) – Mobamingle (iOS)
  • 28. Future International Positioning ForGREE And DeNA •  Tens of thousands of free/cheap games in the App Store and Android Market •  Promising social layer services for smartphones already available: – Apple‘s Gamecenter – Scoreloop – Gamewave •  Facebook‘s Project Spartan just launched •  Indifference from users abroad?
  • 29. Thank you for listening!
  • 30. Contact InformationTwitter: http://twitter.com/serkantotoLinkedIn: http://linkedin.com/in/serkantotoEmail: totoserkan AT gmail.com