DeNA pays $92M for 20% share in Rage of Bahamut developer Cygames

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By Kathleen De Vere Comments

DeNA has entered into a strategic business alliance with Japanese mobile social developer Cygames, announcing today it has reached an agreement to purchase a 20 percent share of the company for 7.4 billion yen ($92 million).

As our readers are no doubt well aware, Cygames is the third party developer behind Rage of Bahamut, DeNA’s biggest international hit. The card-battle game has held the No. 1 spot on the Android top grossing app chart since April 22 — an eye-popping 28 straight weeks. On iOS, it hasn’t dropped below the No. 10 spot on the top grossing iPhone app chart since the beginning of June. According to DeNA’s most recent earnings report, the title is seeing average revenue per daily active user (ARPDAU) in excess of $1, a figure 5 to 10 times higher than the typical mobile game generates.

As industry watcher Dr. Serkan Toto points out, the deal also significant because Cygames is actually a wholly owned subsidiary of CyberAgent, another Japanese mobile social gaming platform operator, and therefore, direct DeNA competitor.

The deal is expected to close on Dec. 28, 2012 and pegs Cygames value at more than $460 million, putting the company in a similar range as Gloops, another Japanese mobile social gaming company that was just acquired by Nexon for $469 million in cash.

That valuation is interesting, given that Gloops likely generates more revenue than Cygames. According to Nexon, Gloops generated 23.7 billion yen ($303.8 million) in revenues between June 30 2011 and June 30 2012. Gloops also has a much larger catalogue of titles — 21 in all, including hits like Japan Pro Baseball, Warriors of Odin and Three Kingdoms Guild Battles. Cygames by comparison has released 7 titles, three of which are different versions of Rage of Bahamut.

Current financials aside though, it seems DeNA is willing to spend heavily on Cygames to keep it, and its games under the Mobage umbrella. The company been able to accomplish something both DeNA and its arch-rival GREE have struggled with — launching a breakout hit in the North American market.