Social Gaming Wars: The Eastern Front

The battle over planet Earth's domain is ensuing at full force as the game developer titans take the social gaming wars to the eastern front in Japan. In the latest news, Yahoo Japan Corporation and DeNA Corporation's joint venture called Yahoo! Mobage officially launched on October 7th with 100 titles from among 70 renowned game developer partners. What does this mean for US game developers and Japanese social gaming platforms? More after the jump. Large developers like EA/Playfish and Crowdstar have already jumped on board Yahoo! Mobage by launching famous titles like Restaurant City, Happy Aquarium and Happy Island. These successes aren't coming easy, however, for Yahoo! Mobage as they have set asides a budget of $12M to promote their PC-based social gaming platform. Tactics included TV commercials and branded buses in Tokyo along with campaigns that let users win free Moba Coins. Yahoo Japan and DeNA's alliance was planned earlier this year after the companies recognized the potential for PC based social games in Japan's market. DeNA's flagship mobile gaming portal called Moba-ge-town has approximately 20M subscribers. The mobile platform provides tools to make it easy for third party developers to launch their games on mobile so it made sense to also create a PC platform where players could play the same games on PC or mobile. Yahoo Japan is the biggest portal site in Japan and announced that it would let players use their Yahoo Japan to login to Yahoo! Mobage and make purchases. DeNA also has been actively working on its iPhone gaming platform called MiniNation that it launched back in May. The gaming social network is a smart move that is helping DeNA's expand into the global arena although we don't know exactly how much of a general impact it is having on Apple App Store. DeNA then made an investment for 20 percent stake in Aurora Feint, an iPhone gaming company known best for its popular social mobile gaming platform OpenFeint, for a joint learning experience. DeNA also has recently made investments in 3 gaming companies: IceBreaker, Gameview and AstroApe. These investments are all in alignment with DeNA's larger 'X-device, X-border' strategy. DeNA is expected to top $1B in revenue by the end of the fiscal year having already hit $279M in Q1. Near the same time DeNA and Yahoo! Japan announced their alliance, an accord was being formed by two other giant players in the industry: Zynga and SoftBank. Shortly after, Zynga announced raising $150M from the investment arm of Softbank called Softbank Capital, bringing its total money raised to $366M. Zynga's position in Asia thus became stronger, especially since it had also recently acquired a Chinese gaming company called XPD Media in Beijing. It's important to note that the XPD Media acquisition was NOT to go after the Chinese market - which is hampered down by its policies and causing many other Chinese developers to look for markets outside of China. So where does Zynga exactly sit? Zynga has been building its arsenal by making acquisitions in the gaming space. It acquired Dextrose, developer of an HTML5 based cross platform engine called 'Aves Engine' and acquired Bonfire Studios, makers of Ngmoco's We Farm. Zynga also bought Japanese developer Unoh which has a popular city builder called Machitsuku with 3 million users on Mixi. Mobile is definitely something Zynga is aiming for but it won't be reducing efforts on PC anytime - so why no games for Yahoo! Mobage? Note that Japan's SoftBank is the LARGEST stakeholder in Yahoo! Japan thus it would make sense that Zynga, who has a joint venture with SoftBank, also make games for the Yahoo! Mobage platform which would ultimately benefit SoftBank and DeNA. Also note that Yahoo! and Zynga have previously partnered to integrate Zynga's games across Yahoo!'s network of 600M users. One of Zynga's key competitors, Crowdstar has quietly climbed to the number 2 spot on Facebook. At roughly 100 employees, its impressive that Crowdstar has vaulted to the position right behind Zynga, especially never having raised venture capital. Crowdstar is also aggressively pursuing Japan and recently announced the launch of Happy Island and Happy Aquarium on Yahoo! Mobage. They are also working with a publisher called Drecom that's helping them with their localization efforts. Right now could be a golden opportunity for social game developers who can successfully come to Yahoo! Mobage and we'll be watching that platform closely to see successes. Other big guys players who have achieved stardom on Facebook, such as Playdom, have also been exploring the international realm. Playdom partnered with Mentez, Latin America's biggest social gaming publisher, to bring its games to latin american audience on Facebook and Orkut. Playdom also recently partnered with i-Jet Media to publish games across Eastern Europe and Russia. i-Jet media is an international distribution network, and we have over 60 million users in 70 games published on 30 social networks all over the world: China, Europe, and Russia. Disney/Playdom's next steps could in fact be centered around the Asian market through some acquisitions. Despite Facebook's 500M + population, China, Russia and South Korea are not easy turfs to penetrate for the social networking site. Japan is also encumbered with players that are in stiff competition with each other: Gree, Mixi, and Mobage Town. Mixi and Gree started in February of 2004 as localized copies of western social networks like Orkut that were spreading fast. Mixi saw fast growth and now has roughly 21M users. For half a decade Mixi stayed near the top and had established itself on the PC platform. In 2007, however, mobile page views started surpassing those from PC. Gree came back and inking a deal with KDDI au, one of the biggest cell-phone carriers, created a mobile gaming site for cellphones. Gree eventually adopted a model of allowing third-party social games to expand on its current list of games - a strategy well embraced by Mobage Town. Mobage Town, like Gree, got its inspiration from Hangame, a South Korean online game portal. Mobage Town got to 20M users fast and saw success after enabling users to earn virtual money if they clicked on advertisers' websites. Now the battle is set in motion and both Gree and Mobage Town will be spending tons of money to acquire more users and monetize them with virtual currency. The Japanese market is more advanced than say the Android market in US because purchases are easily connected to the users' telephone bills. Mixi on the other hand relies primarily on advertising revenues. Although beyond the scope of this post, Mixi and Mobage Town don't overlap completely and could cooperate on certain levels. Mixi has a partnership announced with South Korea's Cyworld and China's Renren to create a standardized platform that allows third-party developers to run on all three SNS. Despite stiff competition, it is a great time to be a developer since publishers like wizQ are working with top developers to bring games to the Japanese market.. Like Facebook and Apple, Yahoo! Mobage also takes 30 percent and you must use their official platform currency. There are other strict rules and guidelines that one must abide by when doing business in Asia. There is room for innovative games that offer a compelling user experience to enter the space and many publishers willing to help out.

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Social Gaming Wars: The Eastern Front

Azam Khan

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Azam Khan