NEWS ANALYSIS: SOCIAL MOBILE TURF WAR THE BATTLE FOR MOBILE SUPREMACY
The Japanese mobile giants DeNA and GREE are splashing the cash in a bid to conquer the West and attract struggling console publishers. But even with their deep pockets and huge development talent, success is no sure thing. Christopher Dring investigates
A WAR has erupted in the mobile games space, with two Japanese giants hoping to buy their way into the hearts of Western gamers. DeNA and GREE may not be household names in the US or Europe, but they are the two most lucrative firms in mobile games. The pair are ‘Social Networking Services’ (SNS). They build their own games and let third parties develop games for their mobile social networks – think Xbox meets Facebook. And they are hugely successful. GREE generated $560m during Q1 this year, while DeNA – which runs SNS platform Mobage – reported revenues of $529m. In comparison, EA’s mobile division recorded revenues of $87m for the same period. And Asia Pacific research firm Macquarie Securities says more money is spent on games via these Social Networking Services than via Apple and Android. So it is no surprise that third party publishers – particularly those from Japan – have jumped on board. Particularly as the console games space becomes an increasingly hostile market to operate in. Konami is one such publisher, which has seen its profits in its last financial year more than double on the back of SNS mobile games. “With the increased
popularity of SNS sites, opportunities to reach an even greater audience are increasing,” a Konami spokesperson says. However, GREE and DeNA are approaching market saturation in its home territories. Meanwhile
8 June 22nd 2012
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If the right firm comes along for the right reasons at the right time, we will always consider acquiring it.
Eros Resmini, GREE
a lucrative revenue stream for their games dubbed ‘complete Gacha’ – which is a system that requires users to buy multiple virtual items from an in-game slot machine on the chance of unlocking a rare item – has fallen foul of Japan’s regulators, causing concern to SNS shareholders. As a result GREE and DeNA have set their sights on the rest of the world.
GOING WEST
GREE and DeNA have been splashing the cash in their bid to conquer the West.
GREE has acquired California-based OpenFeint ($104m) and Funzio ($210m), while DeNA has bought US mobile publisher Ngmoco ($403m), plus a handful of indie developers. But even with high profile acquisitions, it’s not going to be easy for these Japanese specialists. There are already a string of publishers and SNS firms in the West who either have a social element or are set to launch one – the most high profile of which are Google Play, Zynga, Facebook and even Apple. But on top of that there’s Gameloft Live, PlayStation Mobile, EA Origin, PlayPhone, Papaya Mobile, Habbo, Tequila Planet, Kongregate and a whole lot more. And you thought the console market was a battleground.
How can the likes of GREE hope to compete with this level of competition? “It depends which one
you’re talking about,” says GREE’s Senior VP of marketing and developer relations Eros Resmini “I would say we are the largest when it comes to social mobile gaming. At 230m-plus users, there is no-one else in this space that has that many mobile gamers on their network. “The fact that we are providing both games and the platform makes us really interesting for our partners, because we can not only bring our own content and our own understanding of the space, but also share that with third parties and indie developers who want to come to the network and come to mobile.
“And finally, Eastern-style,
gaming has been around for years now. So as the devices have caught up here in the West, it is very unique for us to deal with and share those experiences of using high-powered gaming devices that are in your hand in Japan that are now showing up in the US and Western markets.”
It has become a turf war in the global mobile games space, and GREE and DeNA has some serious competition in the West. EA has the benefits of its in-house teams at Playfish, Popcap and Chillingo. PlayStation has partnered with its Sony Ericsson business, HTC and will even allow for PlayStation Mobile titles to be playable via Vita. Then there’s Apple, who is set to upgrade its Game