Ngmoco’s Neil Young on Rage of Bahamut ARPDAU, redefining No. 1 on top grossing charts

Ngmoco founder and CEO Neil Young says that the Mobage platform will redefine what No. 1 on the top grossing charts means with a range of new games married to proven data from Japan.

A a Mobage Media Day event in San Francisco, DeNA’s U.S. developer and Mobage platform operator walked an audience of reporters from business and video games media outlets through a presentation outlining the as-yet-untapped potential of the mobile-social games market outside of Japan. Young stated that Japan sees $4.5 billion in social-mobile game revenues coming from gamers in a population of just 120 million. Extrapolating those numbers against those of the developed Western world, Young estimates that the global social-mobile game market could be as high as $30 billion — with just $5 billion of that coming from Japan.

To tap that market, ngmoco and its parent company, DeNA, are aiming to bring a range of new games to the Mobage platform in its four regions (the U.S., Japan, South Korea and China). These games come in four flavors: first-party games out of DeNA’s owned and operated studios, hit Japanese games localized for new audiences, third-party originals ported to new audiences in other regions and proven game systems married to Western IP. Ngmoco will be announcing entries in that fourth category later this week and next, but already we know the most prominent example of a Japanese hit ported to Western audiences to be Rage of Bahamut, developed by third-party studio Cygames.

After the presentation, we spoke with Young to get more detail on just how well Rage of Bahamut is performing after 16 straight weeks in the No. 1 spot on iOS and Android charts — and for some more context on how Japan’s knowledge can feed social-mobile growth in the West.

Inside Mobile Apps: We know you won’t give us a specific number for the average revenue per daily active user, but does $7 sound too high…?

Neil Young: It would be awesome if ARPDAU was $7. We don’t actually talk about those numbers. What we’ve said before is that ARPDAU — for us, that’s average revenue per daily active unique — on Rage of Bahamut and a few of the games on our service are much higher than industry norms. There are three tiers in the mobile games industry right now. There’s scaled casual — that’s sort of in the 1-, 2-, 3-cent ARPDAU range. Then there’s mature social/mobile game companies — somewhere between 15- to 20-cent ARPDAU. And then there’s a very, very small group of companies of which DeNA are certainly one of that are able to drive ARPDAU that’s significantly higher than that, by like 3 to 6x.

We don’t talk specifics about Rage of Bahamut, but the range is very good. We really think about lifetime value. That’s the basis for all our calculations. The LTV on these games are well above the cost of acquisition, so that sort of monetization expertise is essential to succeeding in the market today. It’s just going to be increasingly difficult for developers, especially in mobile casual, to do any meaningful marketing. Their marketing is going to be partnership promotions with one of the platform holders, or with a viral channel they establish themselves, or word of mouth. I think it’s going to be more complicated for even mature social mobile game companies in the 15-cent range because the cost of acquiring customers is going up. You do have to focus on monetization so that you can get the scale of audience so that the marketing equation works.

IMA: What about conversion rates by game genre? Rage of Bahamut appeals a “hardcore” audience that we’ve heard other developers claim is more likely to convert to paying users than casual gamers.