Developed by Japanese gaming company DeNA, Blood Brothers is a popular mobile game that has hit number one place in 33 countries. It is also a mobile game played across most parts of the world except for China, Africa, and Japan.

Tetsuya Mori, managing director of DeNA’s Singapore office, said at today’s Casual Connect conference in Singapore that Blood Brothers is an important case study for developers because it is one of the few games that has won without special device leverage (like Nintendo had in the past) or a Japan-first success (like Rage of Bahamut). Mr. Mori added:

Blood Brothers is interesting because we didn’t even release the game in Japan. We just released the game in the global market and won the world. For that reason, it matters to us [game developers].

While most Japanese game publishers know how to make money in their local market, Mori says that not many know how to repeat the success in the global market. So what is the reason for Blood Brothers‘ success? Mori explains that in-game events have made the major difference.

The secret sauce: Games inside a game

As explained by Mori, events are “games inside a game.” They are usually set within a limited time and gives players rare items. Such in-game events usually double the average revenue per user (ARPU). Examples of an event could be a player versus player (PvP) event, boss raid, or special dungeon mission. Understanding that events are important, Mori shared five key design points on planning an event:

1. Leader-board: A way to spur gamers to climb the ranking ladder.
2. Separation into groups: To create a sense of belonging among gamers. But sometimes a group too big doesn’t provide that sense of belonging. “Divide the pyramid small enough so that players feel they have control,” says Mori. He also shared that a 10-person pyramids are what DeNA finds most effective for Blood Brothers but the team keeps evaluating and optimizing the group based on data they find.
3. Incentivizing effort: Blood Brothers gives one point for the first reward and provides increasing returns of points as users get higher.
4. One day, one match: Developers shouldn’t do events too frequently to ensure that events stay fresh and exclusive. Don’t make gamers exhausted.
5. Rewarding effort: Top players usually feel comfortable being at the top of the pyramid. To keep them working, Blood Brothers provides negative incentive from time to time to keep them on their toes.

Mori also shares the “five don’ts” when designing Blood Brothers:

• Don’t play, get lost.
• Don’t get players overwhelmed.
• Don’t get them bored.
• Don’t get them exhausted.
• Don’t let top players feel too secure and comfortable.

Actively managing games as a service

Mori says that a lot of game developers see a game as a product and leave it there once it is developed. But for DeNA, it is all about actively managing games as a service. “[A game] is art, yes, but it is more science than art,” said Mori (see slide 13).

Part of the work for Blood Brothers is done at DeNA Hanoi, the Vietnamese branch formed through the Punch Entertainment team it acquired 18 months ago. He ended his keynote saying:

Tokyo HQ studios rely more and more on the Hanoi studio. We have another
game called History Attacks. Just through this experience, we are making active transfer of our core competency to Southeast Asia. Not only in Hanoi, but we also set up a studio in Singapore.

UPDATE: To make it clear, Blood Brothers is available in China (on mobage.cn and mobage.tw) and Africa (on Mobage West Network)

Japan-based social gaming platform DeNA (TYO:2432) has just rolled out its Q4 and full-year 2012 financials. After an expensive previous quarter in which profits dipped, the same thing happened again for DeNA in Q4 (up to March 31st 2013) with an operating profit of $184 million, which is down from $216 million in Q3, but up three percent on the previous year.

Quarterly revenue was $528 million (up 22 percent from same time last year), but below Q3’s record-breaking figure.

Things are rosier for the whole of the 2102 fiscal year, in which DeNA brought in a record $2.04 billion in revenues and $775 million in profit. Here’s the key table:

DeNA chose its quarterly highlights as:

• MobaCoin consumption in Japan was 58.3 billion yen ($588 million), 2.5 percent lower than the previous quarter.
• Overseas MobaCoin consumption showed strong and steady quarter-to-quarter increase, approaching $70 million.
• Increased user engagement drove monetization growth. As a result, Mobage titles occupied top ranks in US Google Play’s top-grossing chart.
• DeNA and Nexon formed a global business alliance to bring new Nexon-developed games to Mobage networks.
• Groovy, DeNA’s new music player app was launched in Japan.

For the current Q1 2013, DeNA expects to make $175 million in operating profit (UPDATE: Corrected that figure. It’s for Q1 only, not FY13).

See the full stats on DeNA’s IR homepage.

While Android is on the rise in Southeast Asia, it’s still a very fragmented market. There are lots of feature phone users and browser-based games as well. To discuss this, we have onstage (pictured left to right):

• Tetsuya Mori, managing director at DeNA Asia
• Evan Spytma, regional director at Popcap Games
• Alvin Yap, founder at TMG

All three are good friends of the blog – and important figures in this very mixed mobile gaming landscape. Our guest moderator is Anton Soeharyo, founder at gaming studio Touchten. Here’s the Startup Asia live blog:

#12:17: Mori-san says that, in Southeast Asia, Singapore is “very important and unique” and it’s the hub for the region. A good play for the affection of the local audience! Meanwhile, DeNA (TYO:2432) has been active and acquiring in Vietnam.

#12:19: Evan says that it’s focusing on Indonesia where it’s expanding a lot, and also in the Philippines where he’ll be relocating too. China is a big area for PopCap too.

#12:20: Alvin: Indonesia is number one priority for TMG, and then Thailand, the Philippines, and also India – all major places for finding feature phone users.

#12:21: Alvin: For localization, SEA is a challenge. For example: the Philippines is more like a western market in terms of gamers’ likes and dislikes. For his startup, language versions, especially, Thai, is a difficult aspect to adapt.

#12:23: Evan: For China, they opt to break down the games into in-app sections for easier monetization. Chinese consumers like in-app purchasing so that a game can be free/low cost.

#12:24: In contrast, for Japan, Evan says that PopCap had to focus on characterization in the games – such as the way it put characters into Bejeweled, which included “attractive women – which is needed in a game in Japan”.

#12:25: Mori-san explains that DeNA continuously develops, tweaks, and localizes almost weekly. And, yes, the games do need sexy girls in them.

#12:27: Anton concurs with Evan that cultural adaptation is important, and he targets that aspect at TouchTen as well.

#12:28: As for handsets, DeNA focuses on iOS and Android. Evan says that feature phones are still present, but not in major markets like China. As Evan read here on Techinasia, Android makes up about 86 percent of smartphone sales in China.

#12:30: Alvin says that in his markets, even Android users are on very basic, low-budget phones.

#12:30: So, when to abandon Flash games and not-so-smart-phones, asks Anton. Alvin says there are still users for them to find, and money to make, on feature phones. But he’s still keen to “find his feet” in the regional smartphone sector.

#12:32: Evan: Yes, feature phones are still 60 percent of the market across the whole region, because there’s still a $100 price difference between basic phones and even cheap Android devices.

#12:35: Mori: DeNA has pretty much abandoned feature phones. No ROI in it. He says the tipping point to smartphone domination will happen everywhere eventually. Even India might seem to have low smartphone penetration, but he reckons it’ll happen soon enough. Varies by each country.

#12:36: Evan: We need to think to the next step beyond smartphones – to multi-screens or whatever’s next. Smartphones are a no-brainer. His personal view: more about looking at games that can be used across all platform. That will create new business models, and those can be leveraged in SEA.

#12:38: Alvin: TMG has 2.6 or 2.7 million users, and now boosted by

12►

#12:41: Alvin is now talking about Thailand where’s there’s a high ARPU. It’s the highest ARPU for TMG. India and Indonesia less so.

#12:42: Mori: DeNA is looking at Vietnam more for its team and developers, making games for the Japanese market. The returns could be huge if a game really takes off in Japan. DeNA works with VNG, and VNG even does the Japanese language aspects, so it’s all made with its local partner. He says the results are “impressive”. So “95 percent of the code is done by Vietnamese guys” – but the games are not really made for Vietnamese gamers.

#12:44: Anton asks if the three panelists have any SEA horror stories in terms of developers and biz dev hassles? Alvin says it’s hardest to explain to outsiders how the market works and how he can monetize. Mori-san tells of one Indian game developer who didn’t want to meet in India as he was wanted by Indian police. As for Evan, he finds that being blatantly ripped off in China is a big pain. E.g.: One rip-off company using PopCap artwork explained that if they shut down because of PopCap’s cease-and-desist letter, they’ll get on a bus and drive to PopCap to destroy the company in the same way that the legal threat would ruin the pirate’s company. Stay classy, China.

#12:49: And on that bombshell, that’s the end of the live blog.

This is a part of our coverage of Startup Asia Singapore 2013, our event running on April 4 and 5. For all our newest Startup Arena pitches, see here. You can follow along on Twitter at @techinasia, and on our Facebook page.

When the Japanese social gaming giant DeNA (TYO:2432) rebranded a couple of months ago, it also teased an upcoming social music service. Today it has launched, using the not very groovy name ‘Groovy’. With Spotify still not available in Japan, DeNA will be hoping that its latest social app can provide all the music that young smartphone owners need.

Tokyo-based tech blog Startup-Dating notes that Groovy will hit iPhones soon, but for now it’s only on Android. The service has a million songs in its repertoire, and on-screen lyrics are available for about nine-tenths of those – a good idea for Karaoke-crazy Japanese users.

DeNA’s latest social effort – coming five months after it entered the messaging app battle with ‘Comm’ – was made possible by acquiring an existing music app, Discodeer, at the start of this year. That previous app was very popular, passing one million downloads in its first four months, so DeNA will be hoping for an even stronger performance from its Groovy new product.

DeNA’s Groovy launched today on Android.

Groovy is not free, of course, and users will need to buy virtual credits; each credit allows for a particular song to be listened to three times. It sounds like one credit doesn’t get you much; but 17 credits will cost you just 99 yen (US$1.05). For being social and inviting friends, users will get free tokens. It’s not clear if monthly or annual subscriptions will be available later, but the current pay-as-you-listen model sounds like a bit of a killjoy system, meaning that Groovy is not something you could leave on in the background as you work.

So far, its archives are stocked with music from 39 labels, including Sony Music and Universal.

If you’re in Japan, grab Groovy in Google Play.

(Source: Startup-Dating)

Line app has not just got people talking – it’s got them spending as well.

Regular readers will know that Japanese smartphone owners are great for spending money on apps. Now we have new data from AppAnnie, released this evening, that shows how the app monetization situation is developing in Japan and around the world. The report paints an interesting picture of amazing smartphone growth in Japan and Asia, along with some huge successes for Japanese social apps and games. Some world-beating achievements, in fact.

Cashing in on social

First up, AppAnnie notes that the social app category is third in terms of revenues around the world; social apps accounted for 30 percent more downloads in January 2013 compared to the previous year. Japanese app buyers are now spending nearly as much as those in the US on their iPhones and iPads:

Line app and the messaging explosion

The hit messaging app Line, made by NHN Japan, was the top social app for iOS revenue in Jansuary 2013, pipping Whatsapp to the post. With over 100 million registered users (just under half being in Japan), Line is the most downloaded social app in Japan – plus it’s the top grossing app Japan, Taiwan, and Thailand.

Line is also crowned the top non-game app in terms of monthly revenue on both iTunes and Google Play in January. It is the only Asian creation on the iOS apps list that’s dominated by American apps. Apple’s Pages app is second; Pandora Radio is third.

KakaoTalk comes out fighting against Line in the chat app battle, proving itself to be the third-best app for revenue on Android.

GungHo for gaming

As for gaming developers, Japan was once again on top. GungHo Online, with its 14 games, was the outright top publisher by revenue on iOS anywhere in the world. Its Puzzles and Dragons title was a particular hit, helping to push GungHo’s market cap to US$3.3 billion – higher than that of Zynga, or compatriot gaming rival GREE. As GungHo’s own financials point out, it made $92 million in gaming sales in January 2013 alone – a figure that’s already 30 percent of its 2012 revenue total. GungHo also sells PC games and console games, but the company recently pointed out that it’s now making more from iOS and Android.

Indeed, the report points out that Puzzles and Dragons was the top monetizing game on both iOS and Android across the globe.

Seventh on the top iOS publisher’s list is NHN (which is spread over Korea and Japan), boosted by the huge success from Line app and its social gaming platform. That’s shown with games like Line Birzzle, which rocketed to the top of iOS and Android store rankings across Asia. Let’s look at the scene on the iTunes App Store:

Asian Android domination

Even more Asian developers rocked the Android platform. GungHo was top publisher in Google Play too, with NHN popping up in second place. In fact, all but one of the leading ten publishers by revenue on Android are from Asia – it’s pretty amazing. It also shows why gaming is the best way to bring in the cash:

Other famliar names on the list include the rival social gaming platforms DeNA and GREE. Plus there’s a remarkable performance from Korea’s SundayToz team to make it into the top ten with only one game – that’s Anipang, which has been a huge hit especially on KakaoTalk’s own social gaming platform.

Anipang pops up as fourth in terms of gaming revenue on Android, just below the similar Line Pop title.

Game on for Asian developers

Ultimately, it’s a remarkable performance for Japanese and South Korean developers on both iOS and Android – breaking into social whilst also building up huge expertise in casual mobile gaming.

Japan recently passed the US to become the top country for Google Play revenue, so developers in the region can prosper among their regional audience – and break out across the globe. Well, in terms of monetizing power, if not necessarily worldwide market reach.

The exact selling price will be revealed at close of trading on March 5th, which is tomorrow. DeNA is currently at 2,596 yen per share at the close of Monday’s trading.

Sony’s announcement today, as caught by TheNextWeb, explains that it “is transforming its business portfolio and reorganizing its assets in an effort to strengthen its corporate structure. This sale is made as a part of that initiative.”

The Sony stake in DeNA, which amounts to 17,722,500 shares and 177,225 voting rights, will be bought by Nomura Securities.

Though $438 million is a useful chunk of cash for the struggling firm – which is now down to sales of under two million of each of its gaming gadgets in Japan – it’s not the biggest pile of money that Sony will be getting soon. That’s because Sony has also sold off one of its Tokyo office buildings for a cool $1.2 billion. Sony outlined a number of such cost-saving measures in its recent financial forecast.

Sony lost $5.7 billion in 2011. In 2012 Q1 it saw a less alarming $312 million evaporate, followed by $198 million vanishing into the ether in 2012 Q2.

DeNA, in contrast, is doing well as one of the world’s top social gaming platforms. It expanded aggressively in 2012 yet still managed $216 million in operating profit in 2012 Q3.

(Source: Sony (PDF))

Nexon’s (TYO:3659) Q4 2012 results are just in. In brief, the Korean gaming giant did okay. Last quarter saw Nexon hitting ¥30.94 billion (US$329.29 million) in consolidated revenue which was up 24 percent compared to the same quarter last year. Operating income increased by 25 percent from the same quarter last year to ¥9.8 billion ($104.1 million) .

[UPDATE: An editorial slip-up turned the above two yen numbers into millions when they should be billions. It's all now corrected. Apologies].

Operating income margin was at 31.6 percent as more mobile gaming gave Nexon higher margins. In October last year Nexon acquired Japanese mobile game developer Gloops for a whopping $469 million. It also acquired inBlue for an undisclosed amount.

There’s a net loss of $1 million as Nexon pointed to write-downs of some of its investments and also higher tax expenses due to new Korean tax regulations.

For Nexon’s fiscal year 2012, here are the highlights from its statement:

Nexon revenues by region from its latest financials.

• Total revenues were $1.2 billion for full-year 2012, an increase of 24 percent over the prior fiscal year.

• Operating income was $513 million, an increase of 25 percent over the previous year. Operating income margin was 44.1 percent, slightly higher than the 43.7 percent in 2011.

• Adjusted net income for the year was $297 million, up two percent over last year.

It’s apparent that Nexon is looking to march towards mobile gaming with its Gloops and inBlue acquisition. It has also recently partnered up with DeNA which will see more Nexon games over at the Mobage platform for both Japanese and global users. Nexon forecasted that for Q1 2013, revenue from mobile gaming is expected to increase from $2.39 million to $80 million, a whopping 33 times higher. Seungwoo Choi, President and CEO of Nexon said:

We enhanced our mobile business through the successful acquisitions of inBlue and Gloops, positioning Nexon as the leading third-party mobile game developer globally. Since acquiring these companies, both have outperformed our expectations and each is set to deliver a strong 2013 lineup for the domestic and international markets.

Importantly, through our recent alliance, DeNA is running strong marketing promotions for our games on the Mobage platform. We expect continued strength in our PC business over 2013 as we begin to realize the returns from the large publishing deals we signed in 2012.

For now, Nexon’s businesses are very much focused on China, Korea, and Japan. North America and Europe play a small role in its revenue. Al, there’s no sign of Southeast Asia operations anytime soon.

With the numbers Rick released on mobile messaging apps growth, and Willis’ post on how heated the mobile messaging battle is getting, I thought I’d take a look at the killer features that make messaging apps so strong with younger smartphone users in the region. They’re all a big threat to Facebook Messenger (which seems to be imitating Asian chat apps in some respects) and the newer Facebook Poke.

Why are these apps so hot? It all boils down to the virtual stickers and being so multimedia and immediate. This is where Asian apps are innovating like crazy.

Of course, all messaging apps have a set of features that mark them as messaging apps, so we’ll just note them in a quick list and move on:

• Instant messaging with ‘sending’ and ‘received’ notifications
• Group chat
• Sending a photo or video (WeChat and Zalo are the only ones that offer Instagram-like photo filters)
• Changing your chat area’s wallpaper
• Leaving an audio note or message
• Sharing contact info
• Sharing your location
• Live video or voice calling
• A microblogging feature like Path.

Now, I’ll go through the ten most prominent chat apps in Asia, and show you what each one has that makes them stand out from the others.

Chikka from the Philippines

Released: October 2010
Users: 500,000+

The Philippines, where foreign-made chat apps like Whatsapp and Viber rule the roost, also has its own messaging app called Chikka. The app is currently sitting in 28th position in the Apple App Store in the social networking category, which means it’s had hundreds of thousands of downloads. The app doesn’t have any notable additions beyond the basics. And hasn’t grown much over the past three years.

Comm from Japan

Released: October 2012
Users: ~5 million

Comm, created by social gaming platform DeNa, came out in October last year and already has five million users to date. The app is also the only one in this list that sports a left hand side tab bar, similar to the Facebook mobile app.

Cubie from Taiwan.

Released: March 2012
Users: ~5 million

Cubie centers its chat experience around allowing users to draw pictures (and to add text bubbles to those pictures) and send animated GIFs, which is not a very common function. Cubie also recently added a Snapchat/Facebook Poke-like feature, allowing users to send messages that disappear within 10 seconds. Only Cubie has this among the Asian-made apps, and it’s awesome. Cubie recently raised funding and joined 500 Startups’ incubation program.

GREE Messenger from Japan (only available in Australia, New Zealand, and India)

Released: February 2013
Users: 50,000+

The Japanese game platform juggernaut is stepping up its game by entering the chat app arena. It’s too soon to tell with the numbers, and the app only carries the basic features for now, but it’s bound to start integrating with the backing of GREE’s many game developers and designers.

KakaoTalk from South Korea.

Released: March 2010
Users: 75 million

Kakaotalk allows users to create and schedule an event with friends in the chat window. A feature that surprisingly no one else has. KakaoTalk is open source, thus allowing users to create their own themes. It also allows users to download a separate game app and play with Kakaotalk friends. KakaoTalk has also added localized stickers for Lunar New Year, and even pushed K-pop star stickers into the spotlight. It also has animated stickers and even ones with sound. And the most cool feature of all? The app allows users to buy vouchers for friends that can be redeemed at cooperating merchants. For example, I could buy you a coffee through the chat app, and you could show the coupon, and get it at your local coffee shop. Unfortunately, this has only been released in South Korea.

KakaoTalk also has social gaming integration, though that’s currently only running for users in Japan and South Korea.

Line from the Japanese team under South Korean company, NHN.

Released: June 2011
Users: 100 million

Line allows users to send cards, drawings, pictures, and play games. Games have been a huge factor in drawing users to the chat platform. Unfortunately, these features can only be accessed after users download separate apps. It makes much more sense to me to get them natively in the app. But this hasn’t stopped the chat app from accumulating a massive base of users. The design is really nice and it sells $2 sticker packs. Line also pushes celebrities’, companies’, and even lotteries’ info to users’ chat screens.

Its makers, NHN Japan, plan to focus even more on Line in 2013, and will even spin it off into a separate company.

Nimbuzz from India via the Netherlands

Released: November 2008
Users: 100 million

Although the app is originally a Dutch company, it moved its headquarters to India in mid-2011. The app is relatively simple like Chikka and GREE Messenger but offers integration with online chat applications like Yahoo Messenger, Google Talk, Facebook, and Windows Live Messenger. It also has a feature where users can make international calls. Some might say this is more like an older style instant messenger (IM) app.

WeChat from China’s Tencent.

Released: January 2011
Users: 300 million

WeChat allows users to access add-ons, like Battery Doctor and Find Nearby, which users can install (or disable) just like browser extensions. Plus, WeChat has live video and voice calling, in addition to the option of sending shorter voice or video clips. This is perhaps the most multimedia of all messaging apps.

It also offers a web interface so you can send messages via any web browser – it’s activated with a neat QR code. In its newest update last week, WeChat added song recognitionc (like SoundHound) and voice chatrooms.

Plus, WeChat also has a broader social network inside it, called Moments, which is basically a lot like Path.

WeChat employs a cool feature for users to find new friends by shaking their phones. If I shake my phone and you shake yours at the same time, we’ll be able to chat with each other. Also, it lets users find people by checking who else is using the app within a one-to-two kilometer radius. Alongside its massive user-base and local Chinese advantage, WeChat is taking on Whatsapp and Line in Southeast Asia, and is pushing into global markets as well.

Zalo from Vietnam.

Released: August 2012
Users: 500,000+

Zalo is Vietnam’s homegrown challenger. It’s made by sVNG (formerly Vina Gaming) and has been accumulating users at breakneck speeds. It’s already at the top of the Vietnamese iOS App Store. Zalo allows users to send drawings natively in the app, and allows users to play a Vietnamese version of Draw Something. It’s also got animated stickers with sound like KakaoTalk, featured mainly for Lunar New Year.

Zalo, like WeChat, allows users to find new friends within a five kilometer radius. But, hungry for more users, it also lets users to go into topic-specific group chats to find friends. Built on the still burgeoning forum culture in Vietnam.

Relationship Apps

A special mention goes to relationship apps, which are decidedly niche messaging apps. Given the relative success of these smaller apps and the increasingly crowded space created by the mains apps discussed above, I wouldn’t be surprised to see more “vertical messaging apps” that cater to specific segments of the texting market. After all, we already have flirting apps, and now the “self-destructing” messaging apps. These relationship apps are sort of the opposite of those other apps, and are all about trust and intimacy.

Between from South Korea.

Released: November 2011
Users: 2 million+

With Between, on top of allowing users to text each other as in the big general apps, it also allows users to create albums together, write cute notes to each other, and remember events like anniversaries together.

Between recently raised nearly $3 million in funding.

Lovebyte from Singapore

Released: July 2012
Users: 40,000+ (but apparently enough to crash its servers)

Like Between, Lovebyte also allows users to create albums, notes, save dates, and even add milestones like the first date. Plus, it can store details like a couple’s favorite movie, and even displays how many days you and your loved one have been together. A cool feature that the app has on the side is allowing users to send each other scratchcards. It’s basically a two-sided flashcard that you send to your loved one. You put text on both sides, and your loved one scratches the other side to see a love note that you put on the other side. A cute and interesting idea for young couples in love. Lovebyte launched on Android a couple of weeks ago.

The Innovation Continues

As you can see, this list is jam-packed with innovative ideas for communicating and connecting with friends, family, and loved ones. From KakaoTalk’s mobile payment vouchers to WeChat’s ’Look Around’ feature to Zalo’s version of Draw Something, there are so many cool things that users are able to do in these messaging apps. With the battle raging on, I’m sure companies will be using 2013 to pump out even more cool features, and the user numbers will just keep doubling.

Japanese mobile gaming company, DeNA Co., Ltd. (2432.T), just released its third quarter fiscal result for the year ending December 31, 2012. DeNA hailed a “record” quarter in several respects, including hitting $567 million in revenue which was 52 percent higher than the same quarter in the previous year. Operating profit hit $216 million which was 54 percent higher than the same time the year before.

The company’s financials look healthy, crediting continual growth in overseas markets typically in its Mobage West game platform for the North American market. Several hit titles which helped bump up financials include Blood Brothers, Marvel:
War of Heroes, and Rage of Bahamut. Blood Brothers was the number one ranking game on Google Play’s top-grossing chart in 33 countries and regions. Another record high came in sales of its virtual currency, called Moba-coins, thanks to overseas consumption reportedly approaching $50 million.

During the third quarter fiscal year, DeNA has been active in expansion and partnerships. Last November DeNA purchased 20 percent of Cygames, the makers of Rage of Bahamut. DeNA also partnered with Nexon, Mixi, Yahoo Japan, and Yahoo Kimo. It was also reported that DeNA also expanded its Mobage gaming platform to Taiwan, Hong Kong, and Macau.

DeNA’s $216 million operating profit actually took a 3 percent dip due to its aggressive approach to promoting Comm. DeNA’s Comm is a chat and voice mobile application (who prides itself in providing the best voice calls), and is a direct answer to popular chat apps such as WeChat, Line, and KakaoTalk.

Comm has five million users at last count in December 2012. When asked if Comm is targeting overseas markets, a DeNA PR representative said that the company has test marketed the app in the US with stickers tailored for Western audiences. No other market expansion plan for Comm was revealed.

See also: Japanese Mobile Social Gaming: 2012 in Review

Hot on the heels of last week’s rebranding announcement, Japan’s DeNA (TYO:2432) has announced a major partnership today with game developer and publisher Nexon (TYO:3659). The tie-up will see new Nexon games coming over DeNA’s Mobage platform for both Japanese and global users. DeNA will also provide marketing and user acquisition support for Nexon titles.

DeNA already had a partnership in place with Japanese game developer Gloops, which was subsequently acquired by Nexon last October for the whopping sum of $36.5 billion yen ¹.

According to the announcement, Nexon and Gloops are planning many new English titles for Mobage this year, as well as 10 titles for Mobage Japan. Nexon’s president and CEO noted that the agreement helps in “extending Nexon’s mobile strategy” and “growing its presence in the expanding global mobile market.”

DeNA’s biggest hit on the Mobage platform in 2012 was Rage of Bahamut by far, a title developed by Cygames. Back in December we saw that title surpass the lofty milestone of 10 million users.

Recently we looked back on what was a pretty busy year for Japan’s DeNA (TYO:2432). The internet and social games company has expanded aggressively both at home and abroad. And today the company kicked off 2013 with a few interesting changes, including a brand new logo as you can see on the right, and a new slogan “Delight and Impact the World.” This means that DeNA’s global subsidiaries will uniformly referred to by their region name, i.e. ngmoco in the US will be called DeNA San Francisco. You can see a list of all locations here.

Included in this rebranding are its Bidders.jp e-commerce service, which will now be called DeNA Shopping. It now lives on a new URL, at dena-ec.com. DeNA’s Skygate travel service will subsequently be known as DeNA Travel.

The company also unveiled plans for a new social music called Groovy. It will be available in Japan for both iOS and Android. This comes as a result of DeNA acquiring an existing music app, Discodeer, from Japanese tech company United. Launched in December of 2011, that app once held the top spot in the music category on the Apple App Store, passing one million downloads in its first four months, and 1.5 million after 10 months. DeNA says that it will add social networking and music distribution features and launch the app within the quarter.

More than 20 content partners on board for Groovy, including Sony Music, Universal Music, and EMI Music Japan, and will feature over a million songs. It remains to be seen exactly how the app will be a social one, but we look forward to finding out.

5 Million Downloads for Comm ¶

DeNA also announced that its Comm mobile messenger service has surpassed the 5 million downloads milestone, which is pretty impressive considering that the service only just launched back in October. The app was promoted heavily in Japan with television ads, and that strategy appears to have paid off.

Today’s press conference (in Japanese) can be replayed via DeNA’s Ustream channel.

It has been a pretty busy year in the mobile space in Japan. While the prevailing narrative in most western media has been the demise of Japanese tech companies, it’s important to note that there are some bright spots. Social gaming companies like DeNA (TYO:2432), GREE (TYO:3632), and even NHN Japan with its Line chat platform are all doing really interesting stuff on mobile.

Over the past few weeks, we’ve been looking back at our coverage from 2012. For myself in particular as the Tokyo editor, that means reflecting on a crazy year in mobile gaming. It has been a year of rapid expansion outside of Japan for many of these companies, and we’re seeing some new types of games emerge along with new business models too. For more information on all this, click on over to our special year-in-review feature. It’s by no means complete, but we hope you find it useful:

[2012 in Review: Japanese Mobile Social Gaming & Other Highlights]

I think that game developers all over the world can certainly learn from many of these companies, as they try to push the envelope in the mobile gaming industry both at home and abroad. It will be interesting to watch them in 2013 as well!

Japanese gaming publisher Cygames has announced that its hit mobile social game Rage of Bahamut has surpassed the milestone of 10 million registered users worldwide. This title has been the biggest success abroad for any Japanese mobile gaming company this year, and for DeNA (TYO:2432), who operates the Mobage platform, it has been the highlight in its attempt to spread the Mobage platform beyond Japan.

Rage of Bahamut has been especially dominant on the Android platform this year, spending 28 consecutive weeks on top of the US top grossing charts. It’s Korean launch has also met with success, as the game was quick to reach the one million user mark in that country just a few weeks ago.

Rage also launched in China this year but so far we have yet to hear of any notable milestones on that front, and I don’t expect that we will any time soon. To date, the title is ranked 181st in China’s iOS store, and it’s not doing any better in Taiwan, Hong Kong, or Macau.

As we saw back in November, DeNA clearly has a lot of confidence in its partner publishers Cygames, as it took a 20 percent stake in the company, to the tune of $92 million.

If you haven’t yet tried out Rage of Bahamut, do give it a go. The card battle genre is an interesting one that might catch on further in 2013. Cygames and DeNA have also partnered on Marvel War of Heroes, a title which I’ve been enjoying a lot over the past week or so. Any fan of comics will appreciate all the familiar Marvel characters, while at the same time experiencing the same sort of card battle gaming elements which have made Rage of Bahamut such a runaway success.

[Via Gamebiz.jp]

Image: Looops, freshtrax

The folks over at Looops Communications recently put together a good overview of some of the major social platforms in Japan [1]. And there’s a helpful translation here from freshtrax if you’d like to read it in full. It includes social gaming platforms, so there is an element of comparing apples and oranges here – but I think it’s informative, and worth sharing here.

When comparing the revenue of GREE, DeNA’s Mobage, CyberAgent’s Ameba, and Mixi, perhaps the most notable trend is the recent plunge that GREE (in blue, above) is experiencing. We touched on this back in November, citing a company representative who thinks the company is already seeing a recovery trend. Looops cites GREE’s CEO Yoshikazu Tanaka as saying that issues like Kompu Gatcha were a setback, and this of course, affected DeNA and other game companies too.

At GREE booth, Tokyo Game Show 2012

As social games expert Serkan Toto pointed out today, both DeNA and GREE – even with recent setbacks – are putting western counterparts like Zynga to shame when it comes to revenue, profit, and market cap.

The Looops article (and freshtrax translation) has a little more to say on CyberAgent and Mixi too, but I was particularly struck by the above chart which shows exactly how far ahead GREE and DeNA are from their nearest social rivals in Japan.

I should note that NHN’s Line could perhaps be included as one of the social ‘big boys’ in Japan now as well, and it would certainly be interesting to see where its revenue lies these days too. CyberAgent is one to watch as well, as it has dropped some significant ad money on promoting Ameba smartphone services recently on television. And as we have seen in the past in Japan (GREE, DeNA’s Mobage and Comm, Line), TV ad spots can often be a catalyst for a spike in user adoption and public mindshare.

There have been lots of great applications to emerge from Japan over the past year. And while I can’t claim to have that many of them, I have tried quite a few. I thought I’d share five of my favorites for iOS [1], though I’d be very curious to hear which ones you liked as well. Of course, I won’t go so far as to say these are the best, but I certainly got lots of use and enjoyment from them in the past year.

5. Ninja Farm

I’m really not sure why I enjoyed this game so much. I usually despise farming games. But like most people, I do have a soft spot for ninjas ever since Shinobi on the Sega Master System. The idea of planting and harvesting ninjas is a thoroughly ridiculous idea, but somehow the process of leveling up your army and taking them into battle against increasingly difficult enemies made for a game that I didn’t want to stop playing (see my original article here).

The title was made by the CyberAgent’s Gamewave, and if you’d like to check it out, you can find it in the app store.

4. Line Camera

I confess, this isn’t an application that I use a lot, but I am impressed with the photo decoration functions – perhaps more than any other ‘photo-deco’ app I’ve seen to date. Line Camera got off to a scorching start this past summer, as NHN Japan boasted that it reached the 10 million user mark three times faster than Instagram did. It now claims over 17 million users in 210 countries around the world.

In retrospect, looking at the success of the other apps that NHN Japan has distributed via its chat platform, that’s probably not entirely due to the merits of the app alone. But I still think it’s pretty sharp. Check it out over on the app store.

As with many other successful applications, Line Camera has seen imitators spring up as well, most notably (and perhaps shamefully) this crappy Chinese rip-off which has since been renamed.

3. Rage of Bahamut

Perhaps the most successful app or game to come out of Japan in the past year is Cygame’s Rage of Bahamut on DeNA’s Mobage platform. The card battle title has enjoyed huge popularity not just at home but abroad as well, proving that there is some potential for card battle games outside Japan. The game has ranked high on top grossing charts (particularly on Android) and DeNA recently bought a 20 percent stake in Cygames, showing just how much confidence it has in the game publisher.

If you haven’t yet tried it, check it out now on the app store. It’s also available on Google Play for those of you rocking Android.

2. Zaim

This personal finance app is still in the growing stages, but it’s still one of the few apps that I use on a daily basis (see my previous article on Zaim here). You can input your expenses in your preferred currency and according to a range of categories, and pace yourself according to a pre-set monthly budget in each category. Zaim recently pushed its version 2.0 which added support for different types of payment like wallet, credit card, or Pasmo card.

Ideally I’d like to see some sort of data export function in the future for Zaim, although now that I think about it, that sort of thing might be a possibility for a premium version in the future.

Readers may recall that Cookpad recently invested in Zaim to the tune of $512,000, and web and PC versions of Zaim are on the way. You can get Zaim from the app store and give it a try.

1. Battle Cats

I discovered this game just a month back, but I haven’t really put it down for very long since then. It’s a fun tower defense game which pits you and an army of cats against an assortment of enemies. One of the coolest things about Battle Cats is its sense of humor, which rather than getting lost in translation, is actually enhanced in an All-your-base manner, as you can see below from the enemy descriptions. Overall, this game hasn’t been very popular, but I still enjoy the hell out of it, and it’s always making me laugh.

I tried to reach the game’s developer Ponos, in the hopes of interviewing someone at company about Battle Cats – but regretably, they appear less adept at marketing than game development.

If you’d like to try it out, you can get it over in the app store for iPhone or iPad.

DeNA is doing well financially these days, and we’d all like to find out more about its plans for 2013. I attempted to dig up some more information recently at the company’s headquarters in Shibuya, Japan. The good folks at DeNA couldn’t reveal too much. But somehow even when the conversation is going in circles, its new chat app Comm constantly proved a recurring theme.

The app was built not to compete on messaging or texting. Rather, Comm is positioned to have superior voice call quality to compete with other chat apps, a DeNA representative explained to me.

With successful case studies from KakaoTalk and Line that games can thrive on chat apps, it surely has applied pressure on DeNA to rethink where and how people will play mobile games in the future. Mobile chat apps are proving to be one avenue where casual mobile gamers spend time and money. Such apps have an in-built a social graph to keep games casual and viral.

So far, there’s no plan for DeNA to insert games into its Comm app. It’s just too early to do so for such a young app. Here’s our timeline for Comm so far:

• Oct 23: Comm was launched
• Oct 23: Achieved number one on top free on Japan’s App Store
• Nov 14: Hit one million downloads
• Nov 16: Began airing TV commercials, which drove up downloads
• Dec 12: Adds popular stickers/stamp feature, for free

The target for Comm this year is 10 million downloads. I’m not sure how feasible that is but I’m hearing that Comm currently has about five million downloads. A representative declined to confirm the figures but did say that Comm will “play a big role in 2013,” although they didn’t elaborate on exactly how it might do that.

But perhaps the answer is obvious: Build a massive network of users and then distribute games to them. It worked phenomenally well for Line and KakaoTalk so DeNA should excel also if the users on Comm are as active as on competing chat apps.

Japan’s DeNA (TYO:2432) announced today that it will be teaming up with KT Corporation (NYSE:KT) in Korea to ‘mutually exchange mobile social games’ between the companies’ respective networks.

This means that KT will offer selected games from Daum Mobage, which is DeNA’s platform in Korea which it operates with the popular Daum web portal. It will also help out with billing integration for in-game purchases of Daum Mobage virtual currency through its Olleh Market.

Likewise, DeNA will offer selected KT titles on its Mobage platform in Japan, lending marketing and consultation support as well. The cross border partnership will likely serve both companies well.

Back in 2011, when the Daum Mobage partnership was initially signed, the partners set the goal of reaching 10 million user subscriptions by the end of 2012. I suspect they are falling short, since today’s announcement didn’t mention anything about that – but I’ve inquired with DeNA to confirm this point.

DeNA reported in its Q2 financials that Daum Mobage is providing over 30 titles, and that includes its hit game Rage of Bahamut which surpassed the one million user milestone in Korea earlier this month.

DeNA (TYO:2432) and Square Enix (TYO:9684) are partnering to bring the first free-to-play, English Final Fantasy title to mobile phones in the US and Canada. Final Fantasy fans now can pre-register for the game’s release (which the announcement says is coming soon) over on ffairbornebrigade.com.

DeNA’s executive games director Kenji Kobayashi noted in the announcement that this year is the 25th anniversary of the Final Fantasy franchise, and that his company was “very proud to offer [fans] our own take on the themes and ideals of the series.” The first incarnation of the game was released all the way back in 1987.

It’s good to see Square Enix doing a Final Fantasy title that’s free to play, as the company has come under fire of late for its unusually high price mobile titles. Recently the company had said that it would be reconsidering its pricing strategies.

The game will be released for both iOS and Android, and fans who pre-register will get a free in-game card of Cloud, one of the franchise’s most popular characters.

Readers may recall that DeNA and Square Enix also teamed up this past summer to bring Final Fantasy Airborne Brigade to South Korea via Daum Mobage.

Japanese social giants Mixi (TYO:2121) and DeNA (TYO:2432) announced today that they will form an alliance that will see their respective gaming networks share the same game development platform.

This will go into effect in January, at which point developers will be able to use a single platform to develop and distribute games to both the smartphone version of Mixi Games and DeNA’s Mobage network.

Mixi currently has 14 million users, a figure which has plateaued in recent months. But the portion of people accessing the network via smartphones is growing, sitting at 8.63 million for the month of September.

Whether or not it can continue to grow at a significant pace is another question, but with decent games offerings it should stand a chance. In the chart below, you can see a clearer picture Mixi’s smartphone adoption over time.

DeNA’s Mobage network, meanwhile, has over 45 million registered users and over 2,000 game titles under its belt.

This is not the first time that Mixi and DeNA have joined forces. Back in January of this year, the two companies got together to announce an e-commerce partnership.

[Download image version of chart]

Yuriko Yoshitaka

We previously told you about DeNA’s new voice and chat application, Comm, which launched about a month ago. The iOS app debuted well at number one on the free app charts, and while it didn’t stay there long, a marketing push last week that included a new television commercial has brought the app into public view in Japan, and put it back in the top spot last Friday according to figures from App Annie. As for the Android version of Comm, that has been performing well also, though it sat in the second spot on Google Play yesterday.

The new commercial launched last week, featuring actress Yuriko Yoshitaka, and is just a short 15 second spot which you can check out below. The commercial was in heavy rotation on Japanese television over the past weekend, and it will be interesting to see if DeNA stays aggressive in marketing the app.

There’s also a behind-the-scenes clip on Comm’s YouTube channel if you’d like to check that out as well.

As we noted when the app first launched, Comm is aiming at a global audience by making the app available in 204 countries. Just just as Line did when it enlisted TV personality Becky in its commercials, expect Comm to pick up some steam in its home market as a result of this exposure as well.

DeNA (TYO:2432) points out today that its mobile RPG Blood Brothers reached the top of the Google Play top grossing app charts in the US over the weekend. The fantasy RPG has been doing well for the past few months, gradually climbing up in the top ten until it briefly took the top spot this past Saturday (see chart below).

Interestingly, the app that Blood Brothers knocked out of the first spot (temporarily) was another Mobage title, Rage of Bahamut. That game held that position for almost six months. DeNA’s executive games director Kenji Kobayashi is pleased with the success of this up-and-coming title:

Following the success of Rage of Bahamut, we are delighted to see Blood Brothers also gaining remarkable popularity in the U.S. and other countries. […] In Japan, DeNA has accumulated extensive know-how on rapidly iterative game design, where we constantly and quickly incorporate user feedback to our games. We see Blood Brothers’ success as another solid proof point that the model works across borders, not just in Japan.

source: app annie

And indeed, Blood Brothers has been very popular in a number of regions, becoming the top grossing app in more than 22 countries, including France and Canada, plus India, Indonesia, Thailand, Hong Kong, Singapore, Malaysia, and the Philippines here in Asia.

How’s Blood Brothers doing on iOS? That version of the game launched back in August, and ranks as a top ten top grossing app for the ‘role playing’ and ‘adventure’ categories. The app claims over 150,000 downloads to date.

Check out the trailer for Blood Brothers below.

Today Japan’s DeNA (TYO:2432) has announced that it will be expanding its PC social games alliance with Yahoo Japan (TYO:4689) to include smartphones and smart devices. This will begin in the spring of 2013.

The PC gaming platform Yahoo Mobage, just celebrated its two year anniversary on October 7, and boasts over 9 million registered users. It was also mentioned in today’s announcement that Yahoo Japan and DeNA plan to interconnect user ID and loyalty point systems on smartphones, which should make things a little easier for users.

Yahoo Japan also announced a smartphone partnership with DeNA’s rival GREE yesterday. But yesterday CNet Japan cited Manabu Miyasaka, Yahoo Japan’s president and CEO, as saying that their Yahoo portal is not exclusionary, and that the company hopes to partner with companies who can offer quality services.

Overall, Yahoo Japan has more than a few gaming partners, and the existing DeNA/Yahoo Japan partnership isn’t affected by the smartphone deal/discussions with GREE.

While Yahoo Japan is increasing its focus on smartphones, its biggest asset is still its PC portal with more than 26 million active user IDs.

DeNA recently reported its Q2 financials which saw it post a whopping $626 million in revenue. This week also saw the company bust open its piggy bank to buy up 20 percent of Cygames for $92 million. Cygames is the developer behind the hit Mobage game Rage of Bahamut as well as the recently released Marvel War of Heroes.

We’ve written much about the success of Cygames’s card battle game Rage of Bahamut both in its home market of Japan, as well as abroad. The title has been perhaps the biggest global hit to date on DeNA’s (TYO:2432) Mobage platform, having ranked number one on the top grossing charts for Android and iOS in the United States.

As of this past July, Rage had racked up over two million users outside of Japan, and since then it has also launched in China as well as Korea. It’s overseas users in total now exceed 5 million [1].

Today DeNA is announcing a capital and business alliance with Cygames, whose majority owner is CyberAgent (TYO:4751). The agreement will see DeNA acquire 500 shares (or 20.03 percent of outstanding shares) of Cygames for 7.4 billion yen, or about $92 million. The transaction is expected to be completed in December.

Cygames is also the publisher of the recently released Mobage title Marvel War of Heroes (pictured right), which is another card battle game that was released just a couple of weeks ago. Most likely, today’s agreement will mean even more collaboration and exchange of know-how between DeNA and Cygames moving forward.

This is just the latest example of big money being spent in the Japanese mobile social gaming space. DeNA’s rival GREE recently spent $173.8 million to acquire game publisher Pokelabo. And in early October Nexon picked up game developer Gloops for the astounding sum of $469 million.

For those of you out there crying about the lack of innovation in the Japanese tech industry, you might want to consider looking past electronics manufacturing — it’s a pretty hot space right now.

DeNA also announced its second quarter earnings yesterday, with a whopping $627 million in revenue, which was 45 percent higher than the same period the year before.

Japanese mobile gaming giant DeNA (TYO:2432) has reported a whopping $627 million in revenue in its second fiscal quarter, 45 percent higher than the same quarter last year. DeNA also saw an increase of $254 million in operating profit, which is 38 percent higher than the same period the previous year.

DeNA credits its financial success to the increased consumption of its virtual credits, Mobage-coin, which brought in $700 million in consumption worldwide.

The company says that focusing on bringing in good games, introducing new in-game events, and fresh gaming elements have helped the company reach new heights.

DeNA also has some good news to share with regards to its overseas market expansion. To date, DeNA claims that Mobage-coin consumption is about $30 million outside of Japan. Mobage West (which includes the U.S. and European markets) has six titles which rank in the top 30 on Google Play’s top grossing leaderboard. These games generate about $1 of average revenue per daily active user (ARPDAU). Overall, Mobage West has over 80 games for Westerners to choose from. Its biggest hit is perhaps Rage of Bahamut from Cygames, which started hot at home in Japan before making it big in most parts of the world. Rage of Bahamut was also recently launched in Mobage China too.

DeNA also recently introduced its Comm messaging app, an intriguing new candidate in the increasingly crowded chat app space.

Overall the news looks good for DeNA. While the company took a hit after ‘Kompu Gatcha’ was declared a violation of the law in Japan, DeNA appears to have recovered fast. A person familiar with the mobile game business tells me that unlike other game companies, DeNA didn’t rely too much on Kompu Gatcha for revenue so it wasn’t hurt too badly. Given these recent financials, that appears to be the case.

Japan’s DeNA (TYO:2432) is announcing today that it has released a new fantasy title, Hellfire, on its Mobage platform. The game was developed by the ngmoco studio, under the oversight of Takeshi Otsuka, the creator of Kaito Royale, one of the biggest Mobage hits thus far. Hellfire will be his first international title.

Players collect and evolve creatures in keeping with the card battle model, with the kind of artwork that we have come to expect from the genre. But there are interesting 3D battle scenes as well that implement unique touch controls. Clive Downie of ngmoco explains that in this way the game “innovates on the traditional card-battle game by adding an entirely new layer of gameplay strategy with the flick mechanism.”

The flick motion on a touch screen is almost the sort of gesture you’d expect to see in an air hockey game. But instead you can use it to launch attacks upon your enemy, and admittedly, it makes things a lot more fun.

The game is available worldwide for both Android and iOS. Give it a try and let us know what you think.

The deal will mean that Mobage mobile apps for iOS and Android will be made available via the games icon at the top of Yahoo Kimo’s mobile portal (see the games page, pictured below). The Mobage titles that are currently available in traditional Chinese include popular titles like Ninja Royale and Cygames Inc’s Rage of Bahamut.

Interestingly, Yahoo Hong Kong’s mobile site will also feature a mobile games option from which users can then arrive at this new Yahoo Kimo games section. So DeNA is actually reaching more than just Taiwan here. Yahoo Kimo’s managing director Frank Chen noted in the announcement:

With the combination of internationally popular games brought from DeNA and featured content compiled by Yahoo!Kimo editors, we’ll bring our users the best mobile social gaming experience.

As we have mentioned before, DeNA has been quite active in mainland China over the past year, with similar Mobage partnerships with companies like Renren, Kaixin001, and lots more besides.

Just two weeks ago, the wildly popular Rage of Bahamut was launched on Mobage China as well.

Oh yeah... and Facebook might be affected too: http://bit.ly/RSnwJb

Chat apps are everywhere now in Asia. But why is everyone doing that? I have a hypothesis. That is, everyone is looking to be the next big mobile platform.

Yesterday we saw DeNA launch a chat app named Comm. While Rick pointed out that DeNA describes itself as an internet company, it is essentially a gaming company. It makes more than 90 percent of its revenue through games. And according to someone close to DeNA, the Japanese gaming company isn’t one that is looking to diversify much for now.

Maybe that is changing, but I believe that DeNA is looking for an alternative way to capture smartphone users, as the company indicated to us today. Texting over data is a basic function for smartphone users, and there are bazillions of options to choose from. But DeNA reckoned that it is worth a try anyway.

As people use the app more frequently, it becomes a habit and will eventually become a norm, just like how we head to Google and Facebook when we’re on a PC. But when we’re on a mobile, these chat apps are probably among the more frequently used apps on your phone. Why? It could be for any number of reasons. But for me, it’s because I want to save on text messages and be accessible on a consistent channel even when I’m overseas.

So the game plan for most companies launching chat apps seems clear to me: Build a huge user base and social graph, open up the platform, create applications/plug-ins, and monetize. So for DeNA, it might just slot in mobile games onto Comm (just like KakaoTalk) since that is its core money machine.

That future has already been highlighted by WeChat, LINE, and KakaoTalk. Though they are focusing on user growth rather than monetization, they’re building out broader mobile platforms. For example, in Korea, the top Android games in the country are increasingly ones that integrate with KakaoTalk’s social gaming features.

But can chat apps really turn into a mobile platform filled with applications? And would people use third party applications within a chat app? My guess is yes, as we increasingly rely more on chat apps for mobile-to-mobile texting and voicing.

Japanese social gaming giant DeNA (TYO:2432) has just launched its very own voice/chat application called ‘comm’ (at co-mm.com) The free application is available for both iOS and Android and is available in 204 countries/regions. It allows users to make free voice calls, and also includes chat features and photo sharing.

We’ve written much about the recent rise of mobile chat applications in Japan and around Asia, most specifically NHN Japan’s Line and KakaoTalk out of Korea. Both those companies have expanded their services to include game platforms, and given their rapid user acquisition they may pose a threat to the current mobile gaming incumbents, GREE and DeNA. So it’s really interesting to see DeNA join the chat app party at this point in the game.

Of course, DeNA is not only a social games company (it does e-commerce as well, for example, and describes itself as a “global internet company), and I’m told that Comm is “not a reactive measure” but rather a way to reach out to new users that it might not reach with Mobage. Nonetheless, it’s fascinating to see such overlapping competition in the mobile space these days.

Upon sign-up, Comm asks for your real name and phone number, sending you an activation code via text message. Users can also sign up with their Facebook accounts, if they choose. From there, you add or search for friends and see who else is using Comm.

I initially thought that this would be a service that DeNA might tie up with its Mobage gaming platform. But the company notes that this is a stand-alone service that will not connect with Mobage or its other services.

We also understand that there is no immediate plan for monetization or advertising, but that DeNA will look into that later on.

Tokyo Game Show 2012

Zynga’s (NASDAQ:ZNGA) recent reversal of fortunes brought up several questions about the social gaming and virtual goods model. The company’s growth is so closely linked to Facebook (NASQAQ:FB) that it is often indistinguishable which of the two was riding on the other’s growth. In any case, Zynga was the first application to leverage Facebook as a marketing platform at such a large scale and with such success. In doing so, it also heralded a wave of social gaming that shook traditional gaming companies into rethinking their offerings.

Zynga’s recent fall has simultaneously exposed the chinks in its strategy (which was leveraged by other players) and highlighted a growing trend among similar players in the social gaming space who are running into similar problems.

Over-reliance on a foreign user acquisition engine

Social gaming is a great example of user acquisition based not on relevance to target users, but on repeated incentives to current users to send invites to new users. There are two interesting points about social gaming in its current state:

1. Viral acquisition: Social games rely heavily on virality. This is often baked into the game mechanics. Users can acquire time (faster leveling up) or resources in the game by inviting their friends. The entire game is built around users calling other users in. This virality is NOT word of mouth; it has nothing to do with a positive experience that users may have had on the game.

2. Cross-promotion: Social games rely heavily on hits and cross-sell. Whenever Zynga puts out a new game out, it acquires users from existing games (cross-sell). However, this has a lot to do with momentum. If a game falls through in between, the audience carry-over suffers. In general, social gaming companies maximize revenues by making users play more games, thereby creating more monetization opportunities.

The two factors above imply that social gaming, unlike every other form of gaming, can scale well only on an underlying user-acquisition platform. Facebook, of course, was perfect as a user acquisition platform. The problem, though, was that this made Zynga and others over-reliant on the Facebook, and hence, over-exposed their business to any policy changes that limited the use of the platform.

Piggybacking on another network

Zynga and Facebook, not best friends anymore

Zynga’s growth strategy was piggybacking on Facebook’s growth. Networked businesses often ride the success of another network. Paypal rode eBay’s growth and YouTube was helped by MySpace’s growth early on. The key driver for success in piggybacking on another network’s growth is the ability of the overlying network to add value to users of the underlying network. Paypal provided eBay users a method for instant payment. Youtube provided Myspace (and later Facebook) users a way to easily share videos.

The problem with some of the social gaming companies piggybacking on Facebook, though, was that the many invites sent to users actually depleted value for users on Facebook rather than enhance it.

They did add value to a certain group of users otherwise we would never have had this segment of 50-something women petting puppies on the internet. But in doing so, they spammed another whole set of users, repeatedly sending irrelevant invites.

Facebook itself, over time, has taken progressively greater measures to curb the level of spam on its network. Zynga obviously gained a lot of traction because it was among the first to show up at the party. The restrictions started coming into play only later. And with the restrictions, Facebook has become sub-optimal for user acquisition of this sort.

Facebook was never optimized for social gaming

The viral invite mechanic on which this model of social gaming works fails because of two reasons:

1. Not every user on Facebook is genuinely interested in playing or trying a social game. That’s not the primary use case of the network, since Facebook is first a publishing platform and then a marketing platform. Good content goes viral on the platform because it adds value to the users, who are largely out there looking for good content. Facebook is optimized for good content, not for game invites.

2. The underlying network is based on real identities. As a result, users are more sensitive about spamming their friends and creating poor experiences for them. As with any other technology experience, users don’t necessarily differentiate negative behavior (spam) from day one and gradually acquire the sophistication to avoid spamming.

The social invite mechanic should be native to the underlying platform

This is where Asian gaming platforms are fundamentally different. A characteristic that differentiates some Asian gaming networks like GREE (TYO:3632) and DeNA (TYO:2432) from other social gaming companies is the fact that their user acquisition and cross-promotion is built on a native gaming platform. Users often have an avatar-based gaming identity rather than their real identity. With gaming being the core function of the platform, the risk of spam gets mitigated. And since people aren’t their real selves on the platform, the propensity to mass-invite will be that much higher.

The current breed of social gaming companies that have optimized and perfected the art of acquiring users on Facebook and other non-native viral platforms are now faced with an additional challenge (since Facebook’s policy tightening) with which they have no experience: Building a user acquisition platform where they own the users across games. Companies which have already built a user acquisition engine on a native platform have a headstart here.

The smaller screen problem and ‘unbundling’

Every web-first company seems to be up against this challenge. Mobile gaming comes with three unique problems:

1. The small on-screen real estate limits monetization options.

2. Mobile has a history of unbundling horizontal platforms into vertical services. Facebook.com is a single web destination for multiple use cases (communication, hosting pictures, sharing stuff, playing games etc.). But Facebook itself has multiple mobile apps for communication, photos, etc., and faces stiff competition from services like Instagram (pre-acquisition) which would not have been a direct competitor in a desktop/web-only world. This unbundling could also raise challenges for social games which depend heavily on cross-promotion and could come in the way of porting users from one game to another.

3. Mobile brings a different game dynamic with it as well. Mobile games tend to have high engagement per session. Social games on Facebook, on the other hand, have lower per-session engagement and are often played more in maintenance mode where a user logs in, completes a few tasks and then finishes up.

Being mobile-first, Asian gaming giants again have a headstart, especially in the region’s more mature mobile markets. GREE’s acquisition of OpenFeint clearly marked their intentions towards investing in a cross-platform mobile gaming experience.

It’s ultimately the money, honey!

Social gaming ARPUs globally are still not at the level that they are in Japan. Despite the fact that Zynga had 10X the number of users that GREE had in late 2011 (Zynga was still on a roll), GREE had higher quarterly revenues and both GREE and DeNA had more than 10X the profitability of Zynga. Of course, this all works very well when you’re targeting the affluent Japanese market. But two significant reasons for Zynga’s low profitability have been it’s high customer acquisition spend and the 30 percent revenue share with Facebook. Acquisitions spends are controlled to a much greater extent on an owned, native platform, which contributes to DeNA’s high profitability.

Of course, there’s always the off-chance that the rest of the world may be different. Social gaming, mobile gaming, and virtual goods were all first implemented on a commercial scale in Asian markets, particularly in two two markets (South Korea and Japan) characterized by high disposable income, technologically-advanced consumers and high average online spends. Both markets, however, have historically been very insular. Korea’s Cyworld hasn’t really broken much ground in its global expansion quest. And Japanese consumer tech products continue to be very inward focused.

The challenge for these companies lies in their ability to execute in foreign, especially non-Asian, markets with different customer tastes. Can they figure out the global consumer? If they do, they might just ring in a new phase of international success for Japanese internet companies.

After all the coffee, snacks, and code-crunching that more than 600 developers went through at the 24-hour hackathon at Startup Asia Bandung, came the highly-anticipated demo day. All the developers had the chance to present their products to the 11 challenge sponsors, and the top teams then did a 90-second pitch in front of the whole audience – and our judges – at the Startup Arena segment.

And here are the winners for the Startup Asia Bandung Hackathon in each of the many API-oriented challenges that were set:

East Ventures Alpha, Tiket, and Softlayer Challenges

Aqsath Rasyid, Azby Luthfan, Tito Daniswara, and Puja Pramudya (Team 6) impressively became the only team to win three sponsor challenges: ones from East Ventures Alpha, Tiket, and Softlayer. So we’ve grouped those three challenges here. The team built a Windows 8 app [Updated: correction!] for collaborative trip planning.

Lazada Challenge

There were two winners of the Lazada challenge, which tasked teams with building a Lazada Indonesia native design for Blackberry.

• 1st winner: Bilhasry Ramadhony (Team 38).
• 2nd winner: Basytyan Kardinal Pratama, Lailatuzzahro, Lutfiah Hayati, Aonillah, and Jade Marsha Pricillia (Team 13).

GEPI Challenge

The idea behind the GEPI challenge was a bit different to all the others – to fight piracy using any kind of mobile app and platform. The winners for this unique challenge were Lugas Adhi Prasetyo, Aulia Ahmad Nur Utomo, Setyo Artanto, and Aprianto Dwi Atmaji (Team 33). They built a ‘spot the differences’ Windows Phone game called “KW12.” The game tells a story about a burglar who stole and copied different kinds of products, and the police must now uncover which products are genuine and which are fake.

Teamie Challenge

William Sanjaya, Indri Yunita, and Chandra (Team 54) won this education-oriened challenge. They built a Blackberry app that enables users to create and learn through flashcards. An honorable mention goes to Takdir, Amir, Ana, Vendi, Fahmi, and Bayu from Team 35 who were really close to winning this challenge.

Sent.Ly Challenge

Deni Lukmanul Hakim, acting as a one-man team, won this challenge with his web-based app. He made GroupsBe, which enables users to better control their mailing lists by doing things like controlling the messages they want to receive.

SixReps Challenge

Team 32, which consists of Walesa Danto, Arif Setiawan, Dian Hadiana, and Widhian Bramantya won this challenge with their mobile app called “BodyGuide.” The app will help suggest and schedule the kind of workout that you need, based on your body height and weight.

DeNA Challenge

DeNA chose Annas Armanto’s and Hendra Gunawan’s (Team 41) Android zombie game as the winners of this challenge. Uniquely, you need to unleash some rapid finger swiping actions to kill each of the zombies. Toshihiko Suyama from DeNA thought that the swiping concept was really interesting.

Cacoo Challenge

Tri Sundara chose to undergo six challenges alone at the Hackathon, in the end winning one of them, which is the Cacoo challenge. He built an Android app to help people play Futsal together. The app allows the user to invite people to play together, and to also work on the team formation and strategy using the Cacoo API.

Softlayer Challenge

There were three winning teams for the Softlayer challenge. The challenge required the participants to develop products using Softlayer’s infrastructure.

• 1st winner: Yudhi Karunia Surtan, Bramantyo Dony Aribowo, Dwi Priyohutomo, and Ferdhi Adrian (Team 4).
• Runners-up: Deni Rohimat, Daeng Rosanda, Ibnu Sina Wardy, Rahadian Ahmad, and M. Ray Rizaly (Team 106) and the same Team 6 that won both the Tiket and East Ventures Alpha challenges.

Kotagames Challenge

Kotagames gave away three Macbook Airs as prizes to three teams yesterday. The winning teams made interesting feature phone games, they are: “Battle of The Bands” by Team 20, “Tatao” by Team 31, and a historical game to fight off the invaders from Indonesia made by Team 39.

Team 20 consists of Ecky Putrady and Dimas Tri Ciputra. The four-man team of Jason Christian, Ericko Yaputro, Thomas Simpson, and Michael Setiawan Suhardjono formed Team 31. Vicky Falurrahman, Dennis Adriansyah, Supradi Sitepu, and Damas Nawanda made up Team 39.

Startup Arena

Besides the sponsor challenges, we also held our trademark Startup Arena competition. This time, each finalist only had 90 seconds to pitch their products. In the end, everybody took more than 90 seconds to speak their mind on the stage, but we’re cool with that. Three winners were chosen by judges Andy Zain from the Jakarta Founder Institute, Hera Laxmi Devi S. from XL Axiata, and Toshihiko Suyama from DeNA. Here are the winners:

• 1st winner: Taisuke Oe (who flew all the way from Japan!), R. Alviyan, Jayadiars, and Juni Putra (Team 56). They built an Android game called “Finger Twisters.” The game’s title echoes the gameplay concept very much, as it’s a Twister game played with your fingers. Interestingly, this game is meant to help users to ‘touch hands’ with their potential significant others.
• 2nd winner: Edwin Lunando, Samuel Enrico Wijaya, Georgius Rinaldo, and Unggul Bhakti Muhammad (Team 28). They built an Android-based game called “Startup Story,” in which the users will build their startup with their friends in the game. Interestingly, this game also tried to tackle the GEPI challenge, where the users could opt to buy genuine or pirated products to run the company. The choice will then be automatically shared via social networks so that everyone will know what products you bought in the game.
• 3rd winner: Ecky Putrady and Dimas Tri Ciputra (Team 20). This is the same team that won the Macbook Air from the Kotagames challenge. So it was a good day for these guys.

Congratulations again to all the winners – we’re very proud of you! We would also like to send our warmest gratitude to all participants, spectators, crew members, judges, and media partners and sponsors for making the hacking experience even more awesome.

We hope to see you again at the next Startup Asia!

[Related: Hackathon at Startup Asia Bandung: 600 Developers, 128 teams, 24 Hours of Fun ]

Disclosure: East Ventures Alpha is an investor of Tech in Asia. See our ethics page for more information.

Rage of Bahamut, the wildly popular mobile game from Cygames, has just been released on Mobage China. The title in Chinese is a pretty literal translation, as the game is dubbed 巴哈姆特之怒.

The game is getting its own space on Mobage China as well, at bahamut.mobage.cn. Rage of Bahamut has also been given its very own Sina Weibo account, from which it conducted a promotional pre-registration campaign with an iPhone 5 as its top prize for one lucky winner.

Currently Rage of Bahamut for Mobage China is only available for Android, but it looks as though iOS is on the way soon as well. You can check out a short video teaser below, as well as some promo images from Mobage China’s announcement.

Interestingly, as Serkan Toto pointed out back in August, Mobage China has over 5 million users in China, with Ninja Royale accounting for half of those [1]. Expect Rage of Bahamut to help significantly boost this total, as it will likely surpass all other Mobage games to date, if its performance elsewhere is any indication.

Battlefield for Startup Asia Bandung 2012, our first ever open platform Hackathon, is ready for you, the developers and designers. It has been more than a month since our last update as we are hustling to prepare the best experience for you to enjoy the event. With this post I would like to update you guys on some important things:

• Judges: We have a great group of judges here: Andy Zain (the director of the Jakarta Founders Institute), who has been in the mobile industry for a god amount of time here in Indonesia; Hera Laxmi Devi (senior manager of portal and digital assets at PT XL Axiata, Tbk) will judge based on the content and what a telco would think of an idea; and Toshihiko Suyama (market development director DeNA Asia) will be a great help to us when great games are made here!
• FAQs: We have added answers to some of the questions many of you have been asking. I would recommend you check it out first, and if you have any more questions you can always e-mail us and we will respond within 24 hours.
• Challenges: Since our API partners announcement, we have added six new challenges with interesting prizes, namely: KotaGames (3 Macbook Airs), XL (a Samsung Galaxy S3 and further support), SoftLayer (an iPad, iPod Touch, and $36,000 worth of credits), Cacoo (a Samsung Galaxy Tab 2 10.1 and IDR 10,000,000, or $1028), DeNA (a new iPad), Vserv (will double your revenue after wrapping your app with its API for one month), Teamie (a Samsung Galaxy Note 10.1), GEPI (a Google/Asus Nexus 7), and Lazada Indonesia (a Samsung Galaxy Note 10.1 and an internship opportunity). For details on how to win, please go to the Challenges/Prizes page.

Along the way while preparing the hackathon, we announced our first ever roadtrip through six cities. That was a great experience for us to meet and chat with communities outside the capital city. We are six days away from our first ever Startup Asia in Bandung and we have butterflies in our stomach. How about you? See you soon!

Tokyo Game Show 2012

I had a chance to visit the Tokyo Game Show over the weekend, and as many have pointed out the event is seeing smartphones and social games moving in on territory previously dominated by console gaming.

Looking at the breakdown of games by platform, you can see that smartphones by far make up the lion’s share of games exhibited [1]. Perhaps part of this is due to the fact that you can display a mobile game in far less space than you can a console game. But surely it represents a passing of the torch as well, as exhibitors like Nintendo and Microsoft no longer have dedicated areas at the game show [2].

Like last year, GREE was the biggest exhibitor of mobile social games with a huge booth that was perhaps only rivaled by game developer and operator Gloops. Readers may recall that on Thursday, Gloops struck a deal with DeNA to bring new titles to North America, Europe, China, and South Korea in the coming years [3]. GREE still drew much attention with prominent displays for games like Wacky Motors, Metal Gear Solid, and the upcoming title War Corps.

[Download image version of this chart]

And while the big names in mobile gaming were certainly fun to see, I was pleased to see game companies from other countries around Asia representing at the show. An Indonesian booth highlighted notable gaming companies from that country (Agate Studios and Altermyth), and even Malaysian game companies made an appearance.

Chinese game developers were in attendance, but not particularly active with a number of empty chairs in front of most of the booths I visited [4]. Surprisingly, Taiwan had an active presence with Art and Mobile Entertainment leading the way showing off a number of games across many platforms.

There was also a big representation of student game developers at the show, and we hope to follow up with them soon and bring you more details on what they are working on, particularly in the space of mobile games.

You can find more photos from the 2012 Tokyo Game Show over on our Facebook page.

We received news this afternoon that DeNA has partnered with Gloops to bring games into the U.S. and also other parts of the world, including China and South Korea. Gloops is one of the largest game development firms in Japan with offices in the U.S. and Vietnam.

The statement reads:

Under the agreement, Gloops plans to provide five titles in 2012 and another five in 2013 to the Mobage network mainly targeted for North America and Europe, including one game based on a popular American franchise.

In the first quarter of FY2012, DeNA’s revenue hit $609 million with over 45 million users in Japan and China. The U.S. still holds a very small percentage as DeNA is still figuring its footing there with Mobage, its social gaming platform. But there are signs of hope as one of its games, Rage of Bahamut, maintained number one position on Google Play’s top-grossing chart in the U.S. for over 17 consecutive weeks

The last we saw Mobage expanding and making deals, DeNA’s gaming platform was getting a tie-up with Daum, Korea’s web portal giant.

There’s an interesting piece from Kyoto news today about how many Japanese companies are increasingly moving headquarters or operations to Singapore. With a more favorable tax rate, Singapore is, so far, the preferred outpost for many Japanese companies looking to expand beyond domestic borders.

This is a phenomenon that we have written about many times in the past with the number of big name internet companies setting up shop in Singapore over the past few years.

Perhaps most notable is the Crosscoop facility on Robinson Road, apparently the default landing ground for Japanese companies in Singapore, which hosts DeNA [1], GREE, Recruit, and @Freaks. KDDI’s advertising unit Mediba is one of the latest companies to set up shop there in October of last year. It also hosts startups as well, which is a big attraction given that Singapore is such a friendly place for entrepreneurs.

Back in May of this year, advertising giant also Dentsu announced the opening of a Singapore office with the goal of expanding into Southeast Asia’s mobile advertising markets.

Kyodo cites SMU’s Toru Yoshikawa who explains some of the advantages of being in Singapore:

Japanese companies want to globalize their operations by hiring staff with diverse cultural backgrounds, and while Japan may have highly competent engineers and managers, they don’t have much experience operating in multicultural environments, so Singapore is an ideal location because they can hire English-speaking staff.

As nearby Southeast Asian markets continue to grow, we can expect to see more companies take advantage of Singapore’s unique geographical and cultural position.

DeNA just announced its 2012 Q2 (aka Q1 FY2012) results and things are looking good. This quarter marks the highest revenue ever achieved by the Japanese mobile gaming company at $609 million, a 37 percent increase compared to Q2 2011. Operating profit is at $235 million. It looks like Japanese regulator’s crackdown on “Kompu Gacha” purchases hasn’t hurt DeNA that much.

In Q2 2012, $689 million worth of Moba-coin, the company’s virtual currency, was purchased. Out of which, $10 million of that was purchased in Mobage West (North American and Europe). A DeNA representative told us that Mobage now has over 45 million users in Japan and China. 40 million of them are from Japan and 5 million from China. DeNA declined to reveal user numbers on its Mobage West and Korea platforms.

DeNA has had a couple of hit games in the last quarter, namely Rage of Bahamut, Blood Brothers, and Ninja Royale. Rage of Bahamut maintained its number-one position on Google Play’s top-grossing chart in the U.S. for over 17 consecutive weeks, and Cygames just announced it has passed 3 million users outside Japan. As for Blood Brothers and Ninja Royale, they have reached an average revenue per daily active user (ARPDAU) of around $1.00 during the quarter. DeNA now has over 50 titles across Android and iOS platforms. Isao Moriyasu, president and CEO of DeNA said in a statement:

We are squarely focused on our goal of building the world’s top social games platform. We will achieve this by continuing to refine our technology, building the strongest game portfolio through internal studios as well as third parties and great IP partners, and serving our customers through our platform worldwide.

Cool wallpaper and rare cards... Boys' soft spot.

The digital card game Rage of Bahamut was obviously a success. So more digital card games will arrive on Mobage. The next big title to launch will be Marvel’s War of Heroes, which should be coming soon. We are not sure how soon is soon. But pre-registration is now up, starting today. Rob Steffens, EVP Operations & Planning of Marvel Entertainment said in the statement:

Marvel is always looking for new and innovative ways for our fans and gamers to enjoy our characters and stories. By teaming up with DeNA, a proven leader in the mobile game space, we’re able to deliver a premium and action-packed mobile gaming experience.

The War of Heroes game’s storyline promises to be original so that makes it even more worthwhile to pre-register. You can do so here. Fans who preregister will receive an exclusive rare card and wallpaper. I know this because I’ve already preregistered; I love Marvel.

Japan’s DeNA (TYO:2432) is announcing today a deal with Seiyu, a Japanese subsidiary of Walmart, to create online shopping services for the retail store group.

For readers of this blog who are primarily familiar with DeNA’s work in the mobile social gaming space, it may come as a surprise that the company is also active in e-commerce – indeed, its roots are in e-commerce. You can see a breakdown of its e-commerce sales for 2011 in the chart below [1].

DeNA hopes to leverage its knowledge in online shopping, redesigning Seiyu Net Super online supermarket, creating an improved interface for both PC and mobile. There are also future plans to integrate Seiyu’s online IDs with DeNA’s e-commerce services.

We should also point out that DeNA announced a B2B e-commerce service called Zerostore (zerostore.jp) earlier this month. The service lets users create their own e-commerce storefront for free with a WYSIWYG interface. There’s a handy video explainer (in Japanese) over on Youtube.

Kyongwan Son, Daum; Ichiro Hazama, Square Enix; Steven Yang, DeNA Seoul

Some of our readers may recall last February when Japanese social gaming giant DeNA (TYO:2432), in cooperation with Korean web portal Daum (KDQ:035720), launched its Mobage gaming platform for Android in Korea. And now the past few days have seen some new developments from DeNA in its quest for the Korea market, with Daum Mobage recently launching for iOS as well.

DeNA set out with big ambitions for the Daum Mobage partnership, aiming for 10 million users by the end of this year. The company tells us today that the first half of this year has been mostly a testing period as they see what works in the Korean gaming market, and that full-scale marketing is not in effect yet. I would assume we’ll see far more regarding Daum Mobage in the second half of the year once things get rolling. But are they still on pace to hit its 10 million user milestone by year’s end? I’m told that this target remains unchanged.

In fact, today DeNA and Daum announced a new high-profile title that just might get the ball rolling in Korea. Final Fantasy Airborne Brigade will be available for Daum Mobage on Android beginning in August. According to the announcement, the Japanese Final Fantasy Brigade from which this derives is one of the most popular games for Mobage in Japan, with over 2.5 million registered users.

DeNA has high hopes for this title in Korea as the Final Fantasy franchise is quite popular there. Indeed the title is pretty popular the world over, so it will be interesting to see if it expands to other regions as well.

You can check out some screenshots for Final Fantasy Airborne Brigade below.

Cygames, the company behind the popular Mobage title Rage of Bahamut (see our review here), is announcing that the popular card battle game has surpassed two million users outside of Japan as of July 10, this since its February overseas debut.

The game has been performing well on the top grossing charts of both the Apple app store and the Google Play app store. As you can see below, it has done especially well on Google Play, holding the top grossing crown for 14 straight weeks. Social games expert Serkan Toto recently cited a Nikkei report that Rage for Android made $1.3 million in monthly sales during April, and could be making just as much on iOS [1].

Whether Japanese mobile social gaming companies (and indeed Japanese internet companies in general) can truly succeed abroad is an interesting drama to watch. Personally, I’m rooting for some Japanese company to produce an iconic Angry Birds-like game that can take the world by storm in the same way that the Mario or Final Fantasy franchises did.

But from a business perspective, seeing how these companies make money using a free-to-play model is an instructive case study for others who want to make it in the industry. While global consumers may not yet be as willing to part with their cash using a mobile device quite as willingly as Japanese people are, the trend is moving in that direction.

Rage of Bahamut, Google Play Store, Top Grossing (App Annie)

Rage of Bahamut, Apple App Store, Top Grossing (App Annie)

Japanese mobile social gaming giant DeNA (TYO:2432) is announcing this morning that it has come to an exclusive three-year agreement with Hasbro to publish titles based on the popular Transformers franchise.

The company notes that the first of these will be for iOS and Android, for global release on the Mobage platform later this year [1]. It will be interesting to see exactly what kind of games DeNA can turn Transformers into, or if it will experiment with different genres such as card battle games.

It’s important to note that in China, where DeNA has been making a significant push over the past year, Transformers is wildly popular. So I can’t help but wonder how much that factored into DeNA’s motivation to make a deal with Hasbro. The CEO of ngmoco (DeNA’s U.S. subsidiary), Neil Young, noted:

Our global platform has continued to thrive and grow, and we’re now investing in major entertainment IP. […] Transfomers is a highly beloved brand, with dynamic characters that are universally cherished by fans. We are excited to bring the Transformers world to life for mobile gamers

Readers may recall that DeNA also made a deal back in the spring with Disney (NYSE:DIS) to make games based on Disney and Marvel characters. Those games should be coming soon, as they were scheduled to come out in the summer.

Japan's DeNA has been pushing Mobage hard in China (photo from Tokyo Game Show)

Research firm Niko Partners has announced their new report, China’s Mobile Games Market 2012, teasing some interesting figures about how mobile games are progressing in the middle kingdom thus far.

Perhaps most remarkable is their claim that mobile gamers will soon surpass the number of PC gamers in the country, with the total expected to reach 192 million in 2012 alone. The company’s managing partner, Lisa Cosmas Hanson notes:

[We project] fast growth in mobile games revenue in China led by rising adoption of 3G usage, soaring sales of smartphones from a wide array of vendors, and the desire to play entertaining, inexpensive games on these smart mobile devices

As you well know if you follow this blog, we regularly talk about mobile gaming players from Japan (see GREE, DeNA) perhaps more than any other mobile gaming companies. But in contrast to Japan, Niko Partners notes that the Chinese mobile games market has no clear market leader at this point.

I can’t help but wonder how much share of a company like Japan’s DeNA (TYO:2432) has in China, since it has been pushing Mobage China quite hard in the past six months with a number of important partnerships.

China’s Tencent is currently the nation’s online gaming king – but that’s mainly via desktop games. It has a lot to lose, potentially, in the shift to mobile gaming.

Cygames Inc. and DeNA are announcing today that their social card battle title for iOS, Rage of Bahamut has reached number one on the US top grossing app chart. This makes the title a cross platform success, as the Android version has been number one on Google Play’s top grossing chart for over six weeks.

Last week we noted that the iOS version of the game was rising pretty steadily up the charts, so this isn’t entirely a surprise. But it certainly marks a great milestone for both Cygames and DeNA to have the top grossing title on both major smartphone platforms. DeNA’s representative director and president, Isao Moriyasu, commented on this in the announcement:

Having reached the number-one spots on both Google Play and the App
Store, Cygame’s Rage of Bahamut is officially America’s number one
mobile app. […] This achievement clearly shows that truly compelling game
designs can be enjoyed by people across cultures, and across different
devices on our Mobage platform.

It’s important to note the the title is not sitting on top of the overall app charts (see below for June 12 rankings). But I guess if I was in the games business, top grossing would likely be my primary target too! In any case, it’s good a made-in-Japan game like this one do so well in the US market.

Rage of Bahamut, iOS, as of June 12

Japanese social gaming giant DeNA (TYO:2432) is announcing today that it is allying with Chinese social networking site Renren (NYSE:RENN) in an effort to bring more mobile games to the service the Mobage social gaming platform. Renren had about 154 million users as of March 2012.

According to the announcement, this will mean that Mobage will get a dedicated section inside the Renren Android application, thus further increasing its visibility in China. It also means that Renren users can sign into Mobage with their Renren ID, accessing its wide range of games. The company previously partnered with China’s other big social networking site Kaixin001 in a similar tie-up.

It should be noted that DeNA China has been pushing hard to make partnerships over the past year, since Mobage launched in China in July of 2011. In addition to Renren and Kaixin, here’s a quick rundown of some of the internet and mobile companies it has made deals with:

• In December, DeNA made a deal with Alibaba Cloud Computing to get Mobage on Aliyun OS.
• In January it partnered with online game developer NetDragon to localize non-Chinese social games for the Chinese market.
• In February it partnered with security software company Qihoo 360 to provide a sort of ‘corner’ in which Mobage China for Android can be downloaded. Also it February, DeNA managed to put Mobage on Huawei smartphones, and brought it to Baidu Yi smartphones too.
• In March it signed deals with China Mobile, China Unicom, and China Telecom to get Mobage China games in each carrier’s app store. It also formed a partnership with Sina to make Mobage more accessible to Weibo users.

So as you can see, DeNA has been quite busy in China. From our point of view this makes an interesting contrast with its Japanese rival GREE (TYO:3632) who appears to be putting its current focus on the North American market. DeNA of course has activities there too (Rage of Bahamut is doing well), but it’s certainly interesting to compare how these two giants approach global expansion.

A few weeks back we told you about how Cygames Rage of Bahamut had become the top grossing Android app in the US. Well, it seems that since the game’s iOS release, RoB has been steadily rising up the US charts to its current position at eleven on the top grossing iPhone game list. In the games category, it sits as the eighth top grossing title.

The game is a card battle title, and it follows a free-to-play model with in-game purchases available. In addition to being the eleventh top grossing app in the US, It’s currently ranked third on Singapore’s top grossing app list, and 14th in Canada. In the ‘Strategy’ category RoB reached the third position yesterday, and now sits in the fourth spot.

I enjoyed the Android version a lot (see my short review here) and I’m looking forward to trying it out on iOS soon [1].

Check out the chart below that shows the titles progress since its launch. Note the green line that indicates the ‘top grossing’ ranking, which I expect the folks at Cygames and DeNA are pleased about.

You can download Rage of Bahamut for iPhone from iTunes.

Rage of Bahamut - US app store rankings

Serkan Toto, expert on social mobile gaming in Japan, has been kind enough to share with us a presentation that he gave recently on the success of social gaming giants in Japan, with specific focus on GREE (TYO:3632) and DeNA (TYO:2432).

He outlines 14 reasons why these companies monetize better than Zynga (NASDAQ:ZNGA), and given the fact that these companies have been so profitable so far, anyone involved in the social gaming space would be wise to pay attention.

The entire presentation is below (or available here on slideshare), and I encourage you to check it out in its entirety. I was particularly impressed by a couple of points though, most notably that up to 70 percent of the top 20 games on GREE and Mobage currently are social card battle games. Serkan notes that these titles are big money makers, and it will be interesting to see how much these companies push card battle games in their expansion abroad.

Indeed DeNA has already seen some success with Rage of Bahamut, as and GREE’s Zombie Jombie recently passed the one million download mark, which is not too shabby either.

The old guard of Japanese gaming, Nintendo, just unveiled new social features for its upcoming Wii U console. But its hard to imagine that its conventional console gaming business model can be as lucrative as what these two newcomers have brought to the gaming industry.

pictured: Kompu gacha explained in TV report

The Japanese mobile social gaming space has experienced quite a rollercoaster ride over the past week or so. It was one week ago today that GREE (TYO:3632) acquired game developer Funzio for the astounding sum of $210 million dollars. Its rival DeNA (TYO:2432 ) was ostensibly also feeling pretty comfortable in its fancy new digs with a top grossing Android title under its belt in Rage of Bahamut [1].

And then the proverbial poop hit the fan this week when a weekend report about a practice called ‘Kompu Gacha’ (which is used in GREE and Mobage games as well as those of other companies) indicated that Japan’s Consumer Affairs Agency saw it as a violation of law [2]. Kompu Gacha encourages players to buy a series of items, promising the possibility of later winning a very rare prize.

On Monday in the wake of this report, the stock of GREE, DeNA and many other companies (including Konami, CyberAgent, and Bandai Namco) took a collective nose dive to the tune of $3.8 billion in market cap. Serkan Toto, as usual, is providing great commentary on this space, noting yesterday that GREE and DeNA stabilized yesterday, only to dip again today, GREE taking the worst of it, dropping 9.64 percent.

In the middle of all this, both GREE and DeNA have released their their financials for the third quarter over the past two days, showing that the two gaming giants are – if nothing else – making crazy amounts of money. DeNA’s quarterly net sales totaled $529 million (up 32 percent on the same time in the previous year) while GREE’s net sales were $580 million (up 182 percent from a year before) [3].

So what about Kompu Gacha? Both companies are reportedly going to back away from the practice. DeNA’s president noted in an earnings briefing that the company is to gradually phase out Kompu Gacha from Mobage Games. When we got in contact with DeNA directly this evening, a representative essentially pointed out that its business is far from a one-trick pony:

Social games are not finished products but services. So even if we are to phase out complete gacha, we can implement many other types of in-game events and game mechanics, and we have the know-how.

Late this evening, DeNA also released a note on its website saying that the consortium including itself and GREE, as well as NHN, CyberAgent, Dwango, and Mixi have all agreed to phase out Kompu Gacha by the end of the month in titles they develop and operate.

Personally, I can’t help but wonder if the Kompu Gacha mechanism is such a lucrative practice, will we see it turn up in many games outside of Japan? And will other countries struggle to regulate it as well?

For us here on the sidelines, it’s certainly more than a little confusing to watch this drama play out. Both GREE and DeNA are in the process of expanding their businesses abroad, and it will be interesting to see if they can translate their respective successes, or if either over-extends their capabilities.

[Image: matome.naver.jp/odai]

GREE is one of the companies under scrutiny

Japan’s Consumer Affairs Agency has reportedly concluded that the practice of ‘Kompu Gacha’ is a violation of the law. Kompu Gacha, or ‘complete gacha,’ requires that players collect a series of items before being rewarded with a rare prize – and the process can cost as much as hundreds of thousands of yen in some cases.

The story was reported over the weekend in Japan’s Yomiuri Shimbun, citing “sources close to the agency,” and you can find the English version of that article here. The agency is to soon release its views about the issue, so stay tuned [1] for more information on that front.

The report says that the law in question is the “law on unjustifiable premiums” [2], and that kompu gacha is a questionable sales practice that takes advantage of user’s “gambling spirit.” It adds:

[T]he number [of complaints or inquiries concerning high charges for gacha games] surged to 58 in fiscal 2011. […] In one case, a middle school boy was charged more than 400,000 yen in just one month, while a primary school boy racked up 120,000 yen in charges over three days playing the games.

Serkan Toto has been watching this issue closely for some time now [3], and noted that some companies have already introduced restrictions in recent months in response to increased criticism, such as spending restrictions on minors. If you’re following this issue, keep an eye on his updates.

Blogger Chiyo Komoriya also wrote her thoughts on the news, noting that even though the practice of kompu gacha has been around for some time, it is only now being regulated (by officials who know little about the industry) because Japanese social gaming has become so popular and profitable.

The biggest players in Japanese social gaming were down on the Tokyo stock exchange in the wake of the news, with GREE (TYO:3632) and DeNA (TYO:2432) down 23.25 percent and 20.08 percent respectively.

Yomiuri Daily's explanation of 'Kompu Gacha'

Last week we told you about the card battle game Rage of Bahamut by Cygames, which had hit number one on the list of top grossing Android apps recently. I’ve been playing with the game a little bit, and it’s pretty clear to see why the game is doing so well. The title does have a few flaws in my opinion, but allow me to give a general overview before I get into that.

Starting out with the game, I made use of one of the friend codes left by our readers in the comments of our last post about Rage. This one entitled me to 100,000 rupees and a “rare” angel card [1], although at the start I was a little confused as to how I would use either.

There’s a handy tutorial which goes over how you can ‘evolve’ and ‘enhance’ your cards, and as you move through quests you’re rewarded with new cards that you can collect and merge to create new unique ones. You can also win points when you add ‘fellows’ or get rewarded by sharing messages about the game to Twitter, for example.

Rage, despite the choices that you make in merging your various cards, does have pretty linear game play with not really a lot to do besides tap your way into, through, and then out of quests and battles. This part I found a little bit boring, but the desire to improve your card deck is enough to keep you pushing further. Eventually you run out of stamina, and you’ll have to put down the game for a while until it replenishes [2].

But if you have ‘cure water’ in stock (or if you buy it with Mobacoins [3]) you can replenish it. In the battles you take on other players on the platform, and ideally you’ll want to play someone at or around your own level in order to be competitive.

The part that I didn’t really like about Rage was its UI, which contrasted greatly with the beautiful character artwork. While the cards and characters themselves were beautifully designed, the games user interface was often a mess of red and yellow text that looked like it might have been created in the days of Geocities.

But as I kept playing, the game’s design eventually came to be less offending to the eyes. I got more and more wrapped up in how I might evolve and enhance the cards in my deck, and I started checking out the characters other evolved as well. Unlike many free-to-play games, the game remained fun after a lot of game play, and I haven’t run into any big obstacle yet that threatens to kill the fun unless I pay up. So in that respect, Rage looks like a really fun game that’s accessible to everyone. And I think that’s important.

In any case, if you’d like to try it out for yourself, you can find it here on Google Play [4].

According to Japan’s DeNA (TYO:2432) and Cygames [1] have announced that the social card battle game Rage of Bahamut for Android smartphones hit number one on Google Play’s top grossing chart in the US this week.

It’s interesting to see a game from the card battle genre find success like this overseas, as this type of game was perhaps only really proven in Japan so far. DeNA’s representative director and president, Isao Moriyasu, spoke on this point:

Rage of Bahamut demonstrates that Japanese developers’ expertise in social games can be applied effectively overseas … The success that the title has achieved also shows that a browser-based game can generate a remarkable average revenue per user in the West with the right game design and the savvy in introducing apps to the marketplace.

Rage of Bahamut currently sits in in the number two position on the top grossing list (behind Live Holdem Poker Pro), but it also ranked high in Sweden (second), Canada (sixth), and the Netherlands (seventh).

It’s billed as a fantasy adventure game where you collect and battle men, gods, and demons. Apparently it has been given a bit of a Western design twist, in comparison to the Japanese original. I confess I have yet to try out this game myself, but I’m looking forward to checking it out.

Photo: TM & © 2011 Marvel & Subs

Recently it seems that all we’ve been hearing at DeNA (TYO:2432) is regarding its push into China, particularly a couple of days ago when the company snagged China’s three largest mobile carriers to deliver Mobage via their respective app stores. But today the mobile gaming giant announced a collaboration with Disney which will bring some of the world’s most recognizable animated characters to mobile social games.

Speaking as a Marvel Comics fan, I find the most interesting part of today’s news that a free-to-play social card battle game featuring Marvel characters game is coming to Mobage in Japan this summer. There doesn’t seem to be any name finalized yet, but I’m always more than willing to try any game that has Spiderman in it. As many of you know, Marvel was acquired by Disney back in 2009.

DeNA and Disney have already launched Disney Party for Mobage in Japan on March 28. That particular title is a social party-simulation game, that features Mickey Mouse, Donald Duck and other Disney characters (see screenshots below). Disney Fantasy Quest is the other title in the works, a social card-collection game where players have to compile “magic books” (screenshots also below). Both titles are free to play but have in-game virtual purchases.

Localized versions of these titles will be coming after July as smartphone apps to Mobage in North American, Europe, and China, as well as Daum Mobage in Korea.

While the game models here seem to be very much in the Japanese style, particularly the social card games, the characters in these titles have universal appeal, and certainly won’t be foreign to any audience.

Disney Party screenshots, © Disney

Disney Fantasy Quest screenshots, © Disney

DeNA (TYO:2432) has been building a range of partnerships in China over the past few months in order to help expand its Mobage China social gaming platform. Today the company’s Chinese subsidiary is announcing perhaps its biggest partners to date, as it has signed deals with all three of China’s major mobile carriers, China Mobile (NYSE:CHL), China Unicom (NYSE:CHU), and China Telecom (NYSE:CHA).

This means that Android users in China will be able to now find Mobage China games in each of the carrier’s official mobile app stores. This is especially important given that Google’s own app store, Google Play, is not supported in China presently. You can check out the screenshots provided by DeNA below.

If you look at China’s three major carriers, they collectively service about a billion subscribers. But as for 3G customers, the most recent figures we’ve seen show that China Mobile leads with 56.59 million, followed by China Unicom and China Telecom with 45.89 million and 41.15 million respectively.

Its activity in China is a big part of the company’s global Mobage push, which also includes a relatively soft rollout of its first iOS games on Mobage Global (or ngmoco’s English-language Mobage). Meanwhile its rival GREE has been busy releasing the first few titles from it’s North American studio, in Zombie Jombie and Alien Family.

China Mobile

China Telecom

China Unicom

So yesterday it was announced that the joint venture between Japanese social gaming company DeNA and Namco Bandai, previously called BDNA, would be rebranded as BNDeNA. Putting the companies and their respective businesses aside for a moment, this is a truly atrocious name. I mean, capitalizing all letters in a company name is bad enough by itself. But look at that poor little ‘e’ in the middle!

I shouldn’t single out this example, as strange capitalization of company names seems almost epidemic in the Japanese tech space. Take for example Docomo, which refers to itself as ‘DOCOMO’ in all its press materials. This is perhaps not as bad as the camel-cased ‘DoCoMo’ which I (thankfully) don’t see written in the press as often as I used to. But there are lots of others too: Japan’s other social giant GREE (although this is short enough that it almost looks like an acronym), fashion startup COODE, and even the afore-mentioned Namco Bandai refers to itself as NAMCO BANDAI in its English press materials.

Here’s some food for thought from UX Movement:

When is it okay to use all caps? All caps are fine in contexts that don’t involve reading, such as logos and acronyms. But when your message involves reading, don’t force users to read it with bad shape contrast. The caps lock key is a key that designers should rarely use. In emails, using all caps is a sign of bad manners. In design, using all caps is a sign of bad readability.

And then there are companies who go all lower case. Take ad company ‘mediba’ for example, which never capitalizes its name. From an editor’s point of view this is a bit of a dilemma when you want to start a sentence with ‘mediba.’ It was also the case with DeNA’s ‘mobage,’ although I see now that the company itself now will use ‘Mobage’ in press materials.

Normally here on this blog, we’ll try to ‘normalize’ things if at all possible. In English after all, writing in caps often corresponds to shouting on the internet. And we’d prefer not to throw such jarring text at our readers if we can help it.

But of course, weird capitalization of company names is not unique to Japan. I can think of a few examples like eBay or iPhone off the top of my head. And don’t get me started on punctuation in a company name (I’m looking at you, Yahoo!). But while we write about companies the world over, Japanese companies are the only ones who we receive mail from, often insisting that a strange all/no caps name be adhered to in accordance with their wishes. Of course, most of them understand our dilemma when we explain it, and are pretty understanding about it.

Perhaps I’m making too much of this, and maybe there’s some good reason that I’m missing why many of these Japanese companies feel the need to be referred to consistently in all caps or no caps. If you’re a company with no aspirations of business outside of Japan, maybe it’s perfectly fine. But now that more and more companies are looking abroad, this is a minor (but important) style point that I hope aspiring startups will consider when promoting their brand.

DeNA onstage at Net Impact in Jakarta.

CyberAgent Ventures Indonesia held its Net Impact Conference less than a week ago in the Grand Hyatt hotel, Jakarta. It is CyberAgent Ventures’ initiative to help improve the local startup ecosystem and to share knowledge between successful foreign companies and Indonesian entrepreneurs.

Big names from Japan such as DeNA, GREE, and of course CyberAgent itself were present, while Vietnamese companies such as NCT, Teamobi, and VNG were also there – since CyberAgent Ventures has a big presence in that country. What was different about this event was that Tencent and Sina, two of China’s biggest social media companies, were speaking for the first time in Jakarta.

Some key takeaways:

DeNA has a $5 billion market this year which is very high growth. It took only four years to do that. Top 20 titles from Mobage, the DeNA platform, see $1 million per month in sales. The company aims to boost its platform by focusing on certain regions, like China. Yesterday it recruited Sina Weibo as a distribution and login partner on its Mobage platform.

GREE is pushing its Gree Global Platform (GGP), which is the culmination of last year’s OpenFeint acquisition. The new platform puts its social games, mobile social games, and social networking service on one platform across multiple devices. It has partners in China and Korea, as well as game developers like Ubisoft and Gameloft, to name just a few.

With 190 million users in more than 100 countries, GREE aims to formally launch the GGP in April or May of this year. The company also shared some know-how at the Jakarta event, such as how it bases every decision on raw data, and how it updates games every week (day or even night, since these are online games not console-based ones). It also aims to spread profitable game-building know-how over the years as it grows; it currently has 1,200 employees and more than 12,000 global developers.

Tencent is an all-round internet giant in China: it has news, email, a search engine, online games, QQ browser, and the QQ IM which is being used by 380 million folks across all major platforms. Tencent also has its eye on Indonesia with an aim to get people onto its Qute (a group messaging app for feature-phones that’s said to be better than WhatsApp or Blackberry Messenger), and also its QQ Browser for mobile.

Sina onstage at Net Impact in Jakarta. Click to enlarge.

Sina might have gotten lucky with its Weibo service, which started as a simple Twitter clone, but it’s definitely not just a regular clone. Grwoing to about 300 million registered users in just two years, it now encompasses online browser games, a virtual currency, online storage, brand pages, charity pages, online polling, and so much more. Sina representatives in Jakarta revealed they will have a $200 million developers fund, enhanced Weibo for enterprise, and a plan to build an online payment platform as well (as its virtual currency is now tied to third-party solutions).

Vietnam’s NCT shared about how it started as a music website and then evolved into a platform where you can find services like matchmaking, e-commerce, social networking, or even online payment. VNG is also doing what all the major social games companies are doing – making itself into a social games platform.

Net Impact was definitely one of the best conferences in Jakarta yet (I’m stressing that last word), but it definitely was not perfect either. Most of the keynotes felt like they were hard sells for the company, whereas what I think we need is to learn how we, as Indonesian entrepreneurs, can take in their experience and build our own success stories. Still, props to the CyberAgent Ventures team for holding this Net Impact Conference.

Continuing its recruitment drive of China Mobage partners, Japanese social gaming giant DeNA (TYO:2432) just announced what may very well be its biggest partnership in the country to date. The company has struck an agreement with Sina (NASDAQ:SINA), a social giant in its own right, and the operator of the popular Sina Weibo microblogging platform.

For DeNA, the deal means that Mobage China will be more accessible to Weibo users, who currently number over 300 million. It also means that come this April, Sina will establish a new Mobage website under its domain where users can download gaming apps to their Android phones.

As with its recent partnership with Qihoo 360 in China, users can login to Mobage China with their existing Weibo IDs and passwords.

Of course, Sina Weibo has its own games platform (at game.weibo.com), and is apparently doing quite well with it. Ostensibly Sina didn’t see any clash between its own platform and the mobile-based Mobage platform, and it will be interesting to see if that’s indeed the case.

Since Mobage China launched last year, DeNA has also partnered with a wide assortment of Chinese internet and mobile entities, including Huawei, Baidu, Alibaba Cloud Computing, social network Kaixin001, and online game developer NetDragon.

“Do you know about Vietnam?” This is a common question I get recently, telling of a growing interest about the country. We see gaming companies like DeNA (TYO:2432) taking an extra interest in Vietnam. It acquired Punch Entertainment and is also working closely with VNG for mobile games production for its Mobage plaform. Tetsuya Mori, managing director at DeNA Asia, clearly loves Vietnam as he shared previously at our Startup Asia Singapore conference.

The Vietnamese are hard working, passionate about games, and also able to monetize good content. These points were repeated again when Mori discussed the Vietnam market at CyberAgent Ventures’s Net Impact conference in Jakarta just two days ago.

One additional insight which Mori shared was Vietnam’s internet speed and mobile penetration which make the country even more worthwhile to invest in. According to him, Vietnam’s 3G speed ranges from 500 kbps to 2 mbps, compared to Indonesia which is about 300 kbps to 1 mbps the last time he checked. (Yeah the figure on the slide – pictured below – for Indonesia data speed is outdated, as he pointed out). And in terms of wi-fi, Vietnam has a free-to-use hotspot at every 50 to 100 meter radius in Ho Chi Minh City, which is better than the situation in Jakarta, which rarely has free wifi in cafes unless you know where to go to.

Mori also threw out some numbers on game monetization. In Vietnam, the top PC game makes $1 million per month, and the top mobile game makes about $100,000 per month. According to the We Are Social research deck on Vietnam which we shared a couple of months ago, the country has a whopping 100 percent mobile penetration with 130 million mobile subscribers. The population is at 86 million which means, on average, each Vietnamese is carrying about 1.5 phones.

Vietnam is more than just delicious pho, coffee, and gaming. The internet industry there is picking up pace, attracting investment from investors in mobile content, online bookstores and music websites. And more and more investors and companies are also eyeing the Vietnam market for deals as the country is oozing with potential.

We’ve recently told you about DeNA’s (TYO:2432) multi-pronged efforts to push its Mobage gaming platform in China. It was just last week that we saw the company partner with manufacturer Huawei (SHE:002502) to put Mobage China on Huawei smartphones. And now the company has just announced [1] a partnership with Qihoo 360 (NYSE:QIHU), China’s largest security software company.

The partnership will gives Qihoo 360 users a sort of Mobage China ‘corner’ through which Mobage China for Android can be downloaded. According to Qihoo 360’s recent quarterly results, the company has 400 million monthly active users – so for DeNA, this should mean significant exposure for its mobile gaming platform.

In addition to downloading the app via 360, users can login with their existing IDs to Mobage China, which – for security-conscious users – makes the experience a more trusted one.

In addition to Qihoo 360 and Huawei, DeNA has also previously partnered with Chinese companies Baidu, Alibaba Cloud Computing, social network Kaixin001, and online game developer NetDragon.

Having launched Daum Mobage in Korea earlier this week, DeNA (TYO:2432) just announced that it will be bringing its social gaming platform to Huawei smartphones in China now too.

This means that the Chinese version of Mobage will now be listed in Huawei’s (SHE:002502) ‘HiSpace’ app store. There are also plans for a link to HiSpace’s list of Mobage games on Huawei smartphone homescreens. You can check out some of the screenshots below.

Readers may recall that this is not the first partnership that DeNA has made to push Mobage further in China. The Japanese social gaming giant has also partnered with Baidu and Alibaba Cloud Computing to bring Mobage to their respective mobile operating systems, and it struck a deal with social network Kaixin001 back in December.

According to the announcement, Huawei had shipped about seven million smartphones in China last year. The company is moving up quickly among the world’s top smartphone makers, along with domestic rival ZTE. It’s now gearing up for MWC 2012, where it is expected to unveil its MediaPad 10, which chairman Richard Yu says is the “most power tablet that ever existed.”

A partnership that was first announced back in November has formally taken off today, as ‘Daum Mobage’ has been officially launched by Japan’s DeNA (TYO:2432) and Korean web portal Daum (KDQ:035720). As indicated in November, the two companies are targeting 10 million users in the first year of operation in Korea.

Like the Mobage platform in general, Daum Mobage has an assortment of free-to-play games for smartphone users, as the platform and gaming apps are now available on the Android Market, with iOS in development. Users will be able to login using existing Daum credentials, and pay for in-game purchases using the Daum Billing mobile payment system. Daum’s director of new initiative(s), Kyongwan Son commented:

We expect Daum Mobage to quickly become South Korea’s most popular mobile gaming platform … By integrating DeNA’s Mobage platform with Daum’s services, including its influential mobile advertising network and mobile messenger service, we will strive to stimulate this new market and gather more than 10 million users with aggressive marketing and developer support.

DeNA hopes that it can capitalize on the ever-growing smartphone market in Korea, which has grown as large as Japan’s, but where social/mobile games have far more room to grow.

DeNA’s announcement today includes a game release schedule for 2012, which we’ve included below, along with some screenshots. More titles are expected to be added to this list later on. Developers who create games for Mobage in Japan can localize for the Korean market as Daum Mobage uses the same API.

Screenshots:

Last year DeNA announced that it would be bringing Infinity Blade to its Mobage platform as a social game in Japan. And today it’s finally here. Officially titled Infinity Blade Cross, the title is a free-to-play iOS Japanese-language game that comes as a collaboration between Epic Games, its studio ChAIR Entertainment, as well as Japan’s iNiS Corporation.

Infinity Blade has been wildly successful on iOS so far, as the original version became the fastest growing app back in late 2010 upon its initial release, with $10 million in revenue in its first six months and $30 million in total. That was a paid app, and it will be interesting to see how Infinity Blade Cross fares in comparison using the free-to-play + virtual goods model.

I’m looking forward to giving this a test run later on, but if you’d like to give Infinity Blade Cross a try yourself, it’s available for download in the Japan App Store. You can check out the trailer as well as screenshots below.

There have been a flurry of financial reports over the past week, giving us insight not only into whether or not companies are profiting, but also how they are growing – and in the case of GREE, DeNA, and Mixi, fighting for the the attention of users. I’d prefer not to compare their users directly, because after all two (GREE and DeNA) are mobile social gaming players, and Mixi is a social network [1]. And while there is certainly some business overlap between the three, I’d like to just take a look at the trends surrounding each of these Japanese juggernauts.

Japanese social network Mixi (TYO:2121) has announced its Q3 2011 report [2], and since we last looked at the company’s user numbers, it seems that its growth has hit a distinct plateau since early last year. Expert on all things social on the Japanese web, Serkan Toto, who we interviewed on stage at our recent Startups in Asia event, finds it interesting that the network has stayed above over 15 million, in the face of challenges from Facebook and Twitter.

Mixi has been trying to fit itself into many of the businesses where its competition has succeeded, for example rolling out Facebook-like pages this past year (now more than 160,000 in total), brushing up its smartphone UI, and expanding its games offerings. Mixi also recently cooperated with DeNA in a social commerce partnership.

GREE’s (TYO:3632) most recent user numbers are nearly at 190 million, although the majority of that is Open Feint which it acquired last year. In Japan, GREE says its users are 15.3 percent of that total, putting them in the ballpark of about 29 million. This is according to GREE’s most recent published data [3].

GREE of course is growing globally, with nine offices opened around the world. Net sales are at about $539 million according to its Q2 FY2012 financial report, up 190 percent on the same time last year.

Meanwhile DeNA (TYO:2432) just reported that its Mobage social gaming platform has reached nearly 36 million users. While I don’t have monthly user data for Mobage, you can get an idea of the platform’s long-term growth in the chart below. Like rival company GREE, DeNA has been expanding abroad with a number of global subsidiaries and partnerships. Note that the figures below don’t include Mobage Global or Mobage China, nor does it include Ngmoco’s Plus+ network.

As for profit, the company reported about $448 million in net sales for the quarter ended December 31, 2011, which is a 16 percent improvement on the year before [4].

How are foreign players Facebook and Twitter doing in Japan? Currently Social Bakers puts Facebook user numbers in Japan at about 6.8 million, but the social network is growing very fast, which should perhaps worry Mixi more than anyone else. As for Twitter, it has a much firmer foothold having started in Japan far earlier than Facebook. French company Semiotics estimates that Japan is the third most populous Twitter nation with about 30 million user accounts.

Not long after DeNA Asia’s managing director Tetsuya Mori left the stage at our Startups in Asia event, we received word from DeNA’s home office back in Tokyo that the company has opened yet another subsidiary in abroad. The new office will be in Vancouver, Canada, and this follows on significant expansion abroad the over the past year.

The new wholly-owned subsidiary will be called DeNA Studios Canada Ltd, and will include design, development and operation support for companies under DeNA’s (TYO:2432) larger umbrella. The initial capital for the subsidairy will be about CDN$600,000 (or US$602,000).

DeNA Studios Canada will be headed up by Irfan Virk, who is the CEO of DeNA subsidiary Gameview Studios [1] in California. He commented on the new expansion:

We are excited to begin operations with the great talent in Vancouver… DeNA anticipates the new studio will meaningfully contribute to augmenting the whole group’s game development and operating capabilities.

Meanwhile, DeNA rival GREE announced a number of partnerships this morning that will help support its upcoming global platform this April.

This post is a part of our coverage of Startups in Asia (Singapore), Penn Olson’s first tech conference. Our full coverage of the event can be found here, for our RSS feed, click here.

Summary

Tetsuya Mori (pictured above on the left), managing director at DeNA Asia (and ex-VC at Mitsubishi UFJ Capital) joins us to give us his insights on the social gaming market in Southeast Asia. He’s based here in Singapore, not his native Japan, leading his company’s outreach across the continent.

Liveblog

#13:55: And after some closing quips, the coffee chat is over. Thank you, Mori San! (Next up is a love-blog of DeNA’s equally giant rival, GREE).

#13:53: “You can make a million dollars per month,” says Mori. Wow, I’m in the wrong job…

#13:49: “Games speak a lot,” Mori notes, and so a great game is key. “Excellent artwork is very important,” he says, and so he looks for those qualities in the many great game devs he meets in SE Asia, and he then wants them help to come to (aka: launch in) Japan and make money from their title.

But it’s not so easy. Even what’s considered cute – kawaiiiiiiiiii – differs across countries. It’s 80 percent different, that perception, between Japan and Indonesia, he says by way of example. Thinking of Moe, the anime character that’s so popular in Japan, Mori says that game developers should make characters as cute as Moe so as to capture the imaginations of Japanese gamers.

#13:47: Does Mori do any personal angel investing? “It’s a difficult business,” he says, which is not just about the return, but also “your own willingness to help.” But, alas, he says he doesn’t personally invest.

#13:42: GREE. The elephant in the room. It’s DeNA’s major rival (and the next coffee chat guest at 2pm) which has also set up an office in Singapore. Mori admits they’re very similar. Plus, it has GREE Ventures, which is treading on DeNA’s toes by hooking up some great gaming startups.

How about the ongoing GREE vs DeNA lawsuit? Mori says he was surprised to see the news of that, and then chuckles. “What we do is entertaining people, so this is entertainment too. It’s a game.” Oh well, it’ll pan out in the end.

#13:40: Who, asks PO’s Willis, is DeNA actually working with in Thailand? “Well, we have many friends,” says Mori. “And now we’re going through multiple channels” and looking at some developers, but he can’t elaborate further right now.

Korea is still a major focus, where online gamers are more numerous – and, I should point out, wealthier as well.

#13:38: Turning to Thailand, Mr. Mori says that the users there are a bit more mature in terms of being prepared to spend money online. Also, startups in Thailand are blossoming.

#13:36: Vietnam is awesome! That’s the gist of what’s being said – they know how to scale, and have great developers who’re passionate about games. “And the pho noodles are great,” jokes Mori. That’s why the Japanese firm has been looking so closely at the emerging Vietnam. But not just that country. Its mobile gaming platform Mobage is spreading across Asia, being launched in new nations. Plus, a backup for its data centres is a concern – SE Asia would be a safe backup, especially after the massive earthquake last year. “SE Asia is a great place to be.”

#13:28: “We’re sowing the seeds for the future,” says Mr. Mori, because social gaming is so huge and still growing. It’s so lucrative and profitable for developers, DeNA is encouraging more devs to get into this.

#13:30: Southeast Asia is a huge focus for DeNA. But first, says Mr. Mori, talent is key. Developing is not hard in itself, he notes, but it can be tough to get all the people on board. That’s why DeNA has been looking at Vietnam, where they’ve made some strategic investments and partnerships.

#13:32: After acquiring Punch Entertainment a while back, do DeNA plan to buy any more? But Tetsuya demurs. So that’s top secret, then. But he admits they’re “scanning Thailand, Malaysia … India” and lots more places. Willis gets Mr. Mori to say that they’re keen to acquire if the price is right.

Photo: Asahi.com

After DeNA (TYO:2432) finally closed the deal on acquiring a majority stake in Japanese baseball team, the Yokohama DeNA BayStars, many people were curious as to how much exposure the mobile gaming giant would get in return for its investment. In addition to getting ‘DeNA’ inserted into the official team name, the team’s new uniforms were just recently announced, which also integrate the DeNA company name.

You can see the uniform design below, which still focuses on the ‘BayStars’ team name, with both ‘DeNA’ and ‘Yokohama’ emblazoned in smaller lettering along the top. The situation is similar in the team’s official logo (see bottom left of uniform).

Perhaps it’s not a fair comparison, but I can’t help but compare these new uniforms with those of the Tohoku Rakuten Golden Eagles, of course owned by e-commerce giant Rakuten. Here the Rakuten name gets great exposure, particularly in the away uniform where the brand is front and center (see right).

Photo: Wikipedia

But speaking of e-commerce, an additional benefit for DeNA that I didn’t foresee is that the company will operate the BayStars official online shop on its own bidders.jp ecommerce platform. So for any of you fans in Japan who would like to buy one of the team’s new uniforms, or any other team merchandise, it’s all available there.

The strength of Mixi is its real life social graph that extends over 25 million users as of September 2011. According to Mixi, people in their 20s account for about 50 percent of its total users. That breaks down to 29.3 percent for users age 20-24, and 22.1 percent for users ages between 25-29 (see interactive chart below). Most active users access Mixi from mobile which accounts for a whopping 80 percent of the total traffic.

DeNa (TYO:2432) is no stranger to online shopping, as it operates a huge shopping and auction website called bidders. It sells over 8 million items ranging from fashion, cosmetics to gourmet. Bidders is available for featured phones and PCs, and is also optimized for smartphone as well. It allows users to shop using points and coins collected from the gaming platform Mobage.

Even with the rise of Facebook and Twitter, when it comes to friendships based on real-life relationships in Japan, Mixi is still without a doubt THE social network. It is having difficulty with retention of users due to new and more open competitors though. But for younger generations, it is still a place where they exchange messages everyday with friends.

The biggest annual campaign thrown by Mixi is its “mixi christmas” campaign, where users ring each others Christmas bells to earn points which allow them to decorate their Christmas stockings and win presents. The 2010 campaign gathered more than a million mixi users within 58 hours of release, and the total number of users surpassed 3 million within 25 days. But one challenge for mixi is the lack of buying experience by the users, who are not used to spending money on the site. Hopefully this new partnership with DeNA will help to solve this issue.

Planned for late March, the two companies will open an online mall within Mixi. Prior to it’s release, big companies such as Lawson HMV entertainment, Sanrio (famous for Hello Kitty), and Cecil McBee (a very popular apparel brand that can be found in 109 stores in Shibuya) have already signed up to join the mall.

We have covered many other social gaming platforms like GREE, DeNA, and mig33, but admittedly, we haven’t written too much about PapayaMobile (from now on we will). So when PapayaMobile’s co-founder and CEO, Shen Si and I briefly met at Beijing a couple of months ago, I thought it would be great to work on an interview to learn more about her experience and ventures.

Unfortunately, Shen Si [1] couldn’t meet up with me at the time, but we still managed to shake hands and exchange business cards. With our face-to-face interview called off, Shen Si has now taken time to share her thoughts with us in written form.

She shared several cool statistics, including PapayaMobile’s 50 million user milestone and its whopping average revenue-per-paying-user of $22. Other interesting insights include PapayaMobile’s expansion plan for 2012. For all the details, here’s the interview in full:

Could you briefly tell us, what is PapayaMobile?

Shen Si of Papaya Mobile

This is difficult because Papaya means so many different things to so many different groups of people. Web and mobile game developers love us because we offer a diverse tool set (Social Game Engine, Social SDK, Social Splash) to get their games created, ported, or connected to the best social network on the planet.

Our users love us because we have designed a network that makes it easy to make new friends and share lives and gaming experiences with each other. For me, however, Papaya is part of who I am and it continues to evolve everyday. It has always been about offering the best possible experience for mobile users and developers. We won’t quit even after we’re the last social network standing.

How is it different from GREE and DeNA?

We put developers first. I could point out dozens of differences between our platforms but at the end of the day this is what separates us from the competition. GREE and DeNA are both in the game publishing business and that’s what their investors are concerned with. Third party developers on their platform will always take a backseat when it comes to promotions and traffic.

We, on the other hand, are not a publisher and are solely concerned with offering the best possible social platform for developers and users. This shows in everything we do. Our developer relations teams advises third parties on social design tweaks to increase virality, put together a stellar promotional package, and drive traffic to those games.

Our product teams continue to churn out awesome new social features like picture and voice messaging that keep our users engaged longer. Our marketing teams work with popular game review sites to add extra promotional channels. The sum of all these efforts is a better experience for our developers, higher ARPU’s, and a vibrant community of users who love to play new games with their friends.

Besides China, what other markets are you exploring?

We are heavily focused on Europe as well. Throughout 2012 we will be localizing our social network for all major languages across the continent. We also have South America on our radar. There are many impressive studios in places like Brazil and Argentina that expressed interest in our tool-sets and we intend to work with them in the future.

Can you share any interesting statistics or milestones with us?

Well the first one off the top of my head is we just reached 50 million users last week. In the last six months we’ve doubled in size. Another stat is our very high average revenue per paying user of $22. However, my favorite is the most spent within a single third party game using our virtual currency – $36,000!

What is your revenue model? Are you profitable?

We don’t disclose financial information but let’s just say we’re in a very healthy place right now and are able to maintain our independence. We generate our revenue from the sale of Avatar virtual goods and take a share of the revenue from third party game’s virtual goods sold using our virtual currency. As more and more third party developers are moving to a freemium model we are seeing a larger share of our revenue come from these games.

What are some of the big hit games on PapayaMobile?

It depends on how you define big hit. Our most popular arcade style casual games are Paper Toss, Office Jerks, Ninjump, and Burn the Rope with millions of combined installs. Social games are really the big hitters when it comes to engagement and virtual good sales though. Some of the more successful social games on our network include Fallen Realms from SEGA, X-City, Zombies…OMG!, and Mafia Farm [2].

Do you have any future plans that you can share with us?

We have some very big news that we are planning to announce sometime during Q1, so stay tuned.

Paper Toss	Ninjump
Office Jerk	Burn the Rope

Japanese mobile gaming company DeNA (TYO:2432) is starting off 2012 with more overseas partnerships on top of its busy year in 2011. The company has just announced a partnership with Chinese online game developer NetDragon. The two come together in a joint venture to develop and operate mobile social games for China.

This is not the first time that the two companies have done business, as the Mobage China app has previously been made available via NetDragon’s store. But this joint venture announced today, according to DeNA will “localize non-Chinese social games” for Chinese consumption.

This move is the latest step in DeNA’s push for the Chinese market. Back in December the company partnered with Alibaba Cloud Computing to bring its Mobage platform to Aliyun OS smartphones. Mobage only officially launched in China back in July of last year.

As for NetDragon, readers may recognize it as the company behind the 91.com gaming platform, and more recently, its Transformers Online game from this past year. The company also recently partnered with the Cartoon Network to launch a gaming portal for kids in China.

Tetsuya Mori, Managing Director of DeNA’s Singapore office

The social and mobile gaming industry in Southeast Asia has seen a recent boom, which explains why DeNA (TYO:2432), a mobile gaming company from Japan is actively exploring opportunities in this space.

Southeast Asia might be fragmented but companies can still find gems in each country. DeNA, for example, has been very busy in Vietnam. It acquired Punch Entertainment last year, and had also recently announced a partnership with Vietnamese game studio, VNG, who will help create games for its Mobage platform.

Tetsuya Mori, managing director of DeNA’s Singapore office, is the mastermind behind DeNA’s Southeast Asia movements. While his office is based in Singapore, he often has to travel to Vietnam. Some of you might be curious to understand exactly what it is about Vietnam that has attracted DeNA to the country.

Vietnam is a big market which many of us would love to understand. So we are glad to invite Mori to one of our coffee chats to share his experiences with us. Plus, I will also pick his thoughts and opinions on social gaming startups in Southeast Asia.

Previously Mori was stationed in California for ten years, having contributed much to Nintendo and Sun Microsystems during that stint. At Sun, he was one of the co-inventors of Java 2 Micro Edition and established the de-facto standard for the mobile downloading application as director of J2ME business development. Prior to his DeNA’s appointment, he was a venture capitalist for Mitsubishi UFJ Capital, where he invested in startups.

You can catch Mori’s coffee chat with me live on stage on February 2, 1:30 – 2:00pm.

The folks over at Japanese social gaming giant DeNA (TYO:2432) just made their holidays a little bit happier by announcing a partnership with Chinese social network Kaixin001. In an effort to boost its Mobage gaming platform in China, DeNA is leveraging the 120 million registered users on the Kaixin network in the hopes that many will play Mobage games, and tell their friends as well.

As a part of the cooperation between the two companies, Kaixin users will be able to access Mobage China with their own Kaixin logins. In addition, the Mobage China mobile app will feature ‘share on Kaixin001’ and ‘back to Kaixin001’ buttons. For DeNA this means that its games have a chance to spread among friends on the Chinese social network.

As for Kaixin, the share buttons mean a boost in traffic, which appears to us to be much needed. Earlier this year we looked at user traffic to the site, which had dropped significantly since early 2010 by a couple of different metrics. Kaixin enjoyed great popularity when it first started out, and I remember wasting more hours than I care to remember on Parking Wars (I just checked back in and my Maseratis are still there!). But the rise of microblogging (particularly Sina’s and Tencent’s Weibo) most likely have resulted in a corresponding decline for Kaixin, and its social games too.

We haven’t heard any details about Kaixin’s active user base in a long time, and I suspect that this is no accident. Just like Mixi in Japan, it would probably be in Kaixin’s best interests to ride that 120-million-registered-user figure for as long as it possibly can.

Three of my five virtual Masaratis. Thas right bitches...