Market Watch

Mobile Social Games on Rise in Japan



Leading Japanese mobile social network and mobile commerce company DeNA reported total Q2 2010 revenues of $262m. It generated $172.9m from games related sales, comfortably making it the leading global mobile games company by revenues. It is far ahead of EA Mobile, the leading Western mobile games publisher, which reported Q2 revenues of $52m. DeNA's mobile based revenues far outweigh Japan's total PC-based social games market.

Unlike EA Mobile, DeNA does not simply publish games. Instead, it has built its own mobile social network Moba-ge Town, which now has over 20m active users and features more than 350 games from 154 companies.

All Mob-age town games are free to play, with the vast majority of DeNA's games revenues coming from microtransactions for virtual currency or items to use in game and a small amount of advertising.

Since the launch of its social mobile games platform, DeNA has seen its games related revenues jump over 7,000 per cent from the $3.7m it generated in Q2 2009.

Analysis
Historically, it has been difficult to look to the Japanese mobile games market to predict what will work in Western markets. Japanese operators were the first to launch successful mobile games subscription services with a mass market appeal that Western operators could never match. There are signs, however, that the two markets are moving in similar directions.

In October 2010, DeNA acquired a 20 per cent stake in AuroraFeint, the US-company behind leading iPhone social games platform OpenFeint.

Western games companies are also looking to the Japanese mobile market for expansion.  In August 2010, leading social network games company Zynga acquired Japanese social games company Unoh. Unoh, which already has games available on Moba-ge Town, will form the foundation of Zynga's Japanese mobile efforts. In July 2010, Japanese mobile network operator Softbank Mobile invested $150m in Zynga as the two companies launched a social mobile games joint-venture in Japan.

Smartphone social games platforms are growing the market for mobile social games in North America and Europe. OpenFeint claims 29m active users across more than 2,400 games. ScoreLoop (which offers a similar service to OpenFeint) claims to be adding more than 300,000 Android users per month. Apple is also getting involved in mobile social gaming, with the forthcoming launch of its Game Center social platform.

Screen Digest will be adding market sizing and forecasts for mobile social games to the mobile intelligence service in due course. The Screen Digest Games team has recently started coverage of the PC-based social games market with two reports, one providing analysis of the world 2009 market and forecasts to 2014 and another analyzing H1 2010 performance for Facebook and the leading games and operators on that platform. A new market report is due next year which will combine analysis and sizing of both the PC and mobile based social games markets.

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