DeNa Invites Western Developers to Japan, Touting $27.5M Fund and a New Yahoo Social Network

With the social game market in the United States flattening out this year, following its huge growth in 2009, developers are looking for new sources of growth. The largest potential, for many, appears to be in Asia. The problem is that the Asian markets, especially technically-advanced Japan and South Korea, have an intimidating reputation. But DeNa, a Japanese company with a soaring social game business, is going out of its way to welcome Western developers. DeNa's big announcement today is a new venture fund, charmingly called Incubate Fund No. 1 Limited Partnership, to which it has provided $27.5 million (other investors contributed another $5.5 million). The fund is for developers who might wish to try the Japanese market, including DeNa's own mobile gaming platform, called Mobage Town. There's a bit more to DeNa's plans than just the fund, though. The company is also working with Yahoo Japan on a new web gaming platform that could provide an easy entry point for developers new to the Japanese market. And in a dose of its own medicine, DeNa is also localizing its own games for the American market, having already released several, like Bandit Nation. We spoke with DeNa CEO Tomoko Namba last week about the company's progress. Based on its last quarter, DeNa's profits near the largest American social gaming company, Zynga: Namba says she company recorded a $205 million revenue with profits over $100 million, benefiting from the huge average revenue per user in Japan. But DeNa's platform, which is still fairly new, doesn't rely on the traditional game players that made Sony's gaming systems a huge hit. As in the United States, Namba says that a new generation of Japanese gamers are driving social game growth -- and that the tastes of these gamers aren't much different from their overseas counterparts. "People like me who have never played social games are still spending a lot of dollars," says Namba, a slim, well-dressed woman who indeed does not look like much of a gamer. "There's just a higher propensity to spend in Japan." Namba is encouraging newer developers to start on the upcoming Yahoo platform. The big difference between this Yahoo platform and familiar sites like Facebook is that instead of connecting with real-life friends as they would in the West, gamers in Japan will tend to make online friends and develop networks of similar gamers. For most games, this change shouldn't matter. Farming games are already taking off in Japan, and they're one of the biggest genres in China, which is seen as the next big market, if not one that is quite ready for a full-scale assault yet. Other genres, like role-playing mafia games, haven't yet taken hold in Japan, but there's no evidence that they can't also succeed. The new Yahoo platform will open in September, while DeNa's own mobile network will welcome existing mobile developers now -- although Namba recommends having a small Tokyo office to help with localization. (The DeNa we're talking about here, by the way, is a subsidiary of the larger Japanese mobile operator of the same name.) All of this is timely for smaller developers. Some of the largest already have firm plans for overseas growth. Playdom and CrowdStar have both positioned themselves to grow in Asia, while Zynga and RockYou have taken direct investments from Softbank, the Japanese conglomerate that is majority owner of Yahoo Japan -- suggesting that the their games will be some of the first on the new Yahoo platform.

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DeNa Invites Western Developers to Japan, Touting $27.5M Fund and a New Yahoo Social Network

Chris Morrison

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