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Social Killer: How DeNA Leads Japan's Market
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Social Killer: How DeNA Leads Japan's Market

October 28, 2011 Article Start Previous Page 3 of 3

According to your figures you get $12 average revenue per user. Compared to Zynga, that's very high. Why is that?

KK: It's a very different scene, and I think that Zynga has not really researched monetization. I think that people who don't know much about the Japanese market just dismiss those users as crazy, but that's not the case. You really need to research thoroughly at what time monetization becomes the most fun for your users.

With Zynga, monetization often comes in the form of energy refills, or area expansions, or item unlocks, or decorative stuff. If you ask whether there's any reason to buy all of that, there really isn't. So I think the biggest difference between us and Zynga is in the number of payments made by users.

I would bet that the ARPPU [average revenue per paying user] between the two companies isn't that different. I read in article that the ARPPU across all Facebook apps is something like $20 a month, which is up there with the best of Japan's game scene.

However, the ratio of paying users is only three percent-ish, I think. That's one of the big differences, and I think that's most people don't see enough reason to start purchasing things; that or the purchases just aren't that exciting. They don't expand on the fun. Their sales approach is "if you want to buy these, go ahead." The commodity is right in the retail store, in other words.

The same games on Mobage and Mixi, the Japanese web-based social network, have very different ARPUs, however.

KK: Well, the KPIs and other metrics are all recorded on the Mobage platform, but one reason is that Mixi is a virtual social network like Facebook. Kaito is a game where users battle against each other. There's a ton of activity, and as a result, you get all these notifications along the lines of "A is fighting B," "C is fighting D," and so forth. It completely fills up your wall if you let it.

On Mixi, you see people's real names, like "Akiyama or Kobayashi is fighting," and you start to wonder who the heck these people are. There are games, of course, where it's fun to play with real identities, but I think there are also a lot of fun games where you can't see that.

If you were playing Call of Duty or Battlefield or whatever and all the players' real face portraits were used on the soldiers, wouldn't that make you hesitate a bit? Also, a lot of users access social games three or five times a day, and that shows up on Mixi too -- "Kobayashi logged into Kaito Royale at 11:55," then the same notice at 3:05, then the same notice at 6:15. You look at that and wonder "Are you doing any work?" I think the same thing happens on Facebook, too, and I don't think everyone wants to have that be visible.

I heard about DeNA's "interest graph" earlier -- could you describe that?

KK: It's very close to that virtual social network idea. Basically, it's a community you make with people you share interests with, which I think is the most interesting thing -- especially in terms of games.

The same genres.

KK: Yes. It gets livelier when you're in a group you share interests with. In Japan, there are anonymous forums like 2ch, and when people with like interests come together, they get excited about pretty hardcore topics. Personally I don't find it all that interesting to talk about Final Fantasy XI with other people, but when you have people who like it come together, they start talking about all the great times they had on this or that server.

Is there a forum for user communication for DeNA games outside of the games themselves?

KK: There is, within Mobage itself. You can create social groups for games, and they get pretty lively when the games grow popular. For example, there's a popular iPhone social game in Japan called Kaibutsu Chronicle. All of the activity of this game is in the comments section of the iTunes review page. There aren't any reviews there; they use it as a forum. There isn't any other sort of forum for it, so they made one for themselves there instead.

Ninja Royale has launched in the U.S. How has user feedback been?

KK: Well, it's still in beta with a limited number of users, so there hasn't really been enough feedback to get a full picture yet. We're at the point where we'll see how the game iterates in the future. As a result, to be honest, we can't really say whether it's been good or bad yet.

Lately in the U.S. there's the impression that Japanese games outside of Nintendo aren't popular. What sort of interest do you think the Japan-developed DeNA games hold for U.S. users?

KK: One of the things behind what makes a game a hit is the backdrop -- war, dark fantasy. Another is the style of graphics -- pop, realistic, and so on. The externals, in other words. Then there's the game system -- FPS, RPG, and so on.

I think that in terms of game system, a lot about Japanese games can be applied to the whole world universally. Without a change in graphics, though, you have a lot of Japanese games not appealing to the West and vice versa. I think Ngmoco's sense will play a big role here, and I think a lot of the gameplay systems we've developed here can come into use.

Nintendo and Japanese companies can make globally-appealing games. Is that what you're shooting for, to make game systems that work universally?

KK: One thing I feel, and in particular that I felt at E3, is that the winning genres in the West tend to involve FPSes or action or sports games, and they involve war and zombies and whatnot, and the big winners in those fields -- the Call of Dutys and Battlefields and Gears of Wars -- are all massive, multi-million-dollar projects. You need that to win in those genres. If we made something in those genres with a smaller budget, we would have no chance of winning.

That's the situation over there, but it's very different with social games on smartphones. You can still challenge the market with new ideas, and new types of gameplay are always coming out. I think Japanese outfits have a lot of room to innovate and thrive in that market. There are, of course, parts of Japanese culture that hit it big in the West, too, so working with those provides opportunity as well.

Article Start Previous Page 3 of 3

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