Here is the link to a column I wrote on Japan’s social games sector for the journal for the American Chamber Of Commerce in Japan, covering DeNA (Mobagetown), GREE, Zynga Japan and other things.
The market valuation of Zynga, the San Francisco-based company behind Farmville and a host of other hit social games, ballooned to $5.5 billion by October 2010, and competition in the space is heating up quickly. Earlier this year, Disney acquired Zynga’s biggest competitor, Mountain View-based Playdom, for a whopping $763 million. In 2009, American video game giant Electronic Arts paid up to $400 million for Playfish, another social games developer. These three companies have used the money to internationalize quickly in the past few months, with Zynga being the biggest and most aggressive player.
Fueled by over half a billion dollars in funding, the company appears to be especially bullish on Japan, one of the biggest game markets in the world. Zynga used part of the $150 million it raised in a spectacular deal with telecommunications powerhouse SoftBank this summer to acquire Tokyo-based game developer Unoh. The joint venture, dubbed Zynga Japan, will localize the company’s existing games and develop new games—especially for use on mobile phones. But in Japan, the Americans should be ready for a serious uphill battle, at least in the mobile space.
Local users have been playing social games since 2006, when Tokyo-based Web company DeNA launched a mobile gaming community called Mobage-town (Zynga was founded one year later). The site now has roughly 21 million members, as many as its main competitor GREE. While GREE expects sales of up to $700 million this fiscal year, sales for DeNA are reportedly on track to reach $1 billion. Both companies currently boast market caps of over $3 billion at the Tokyo Stock Exchange.
The Japanese gaming giants have been solely focusing on their home market so far, but DeNA seems to be determined to make a full-fledged entry into the U.S. and other markets sooner rather than later. Tomoko Namba, DeNA’s Harvard-educated CEO and one of the very few women in a leading position in this industry, went on an unparalleled overseas buying spree in recent months. A total of four gaming startups in the U.S. are now under her company’s umbrella, including San Francisco-based iPhone game maker ngmoco, which DeNA bought for a staggering $400 million in October. GREE has announced the launch of a subsidiary in the U.S. and China by the end of the fiscal year. America’s social gaming juggernaut Zynga would be well advised to watch what its cash-rich Japanese counterparts are going to do next very closely.
– read the rest here.