This is an edited version of a presentation on Japan's social games market I gave a few weeks ago.

1. DeNA, GREE: Demystifying
Japan’s Social Gaming Market
By Serkan Toto, PhD
Twitter: @serkantoto
Image credit: GREE International

2. About Me
• Tokyo-based web, mobile and gaming
industry consultant
• Advisor for startups in Japan, Asia and the US
• Japan contributor for TechCrunch.com
• Personal website: www.serkantoto.com

3. Contact Information
Twitter: http://twitter.com/serkantoto
LinkedIn: http://linkedin.com/in/serkantoto
Email: totoserkan AT gmail.com

4. Visit My Website For Free Information On Japan’s
Social Game Industry (http://www.serkantoto.com)

5. Agenda
I: Structure Of The Domestic Market
II: Japan’s Social Games Vs. The World
III: Future Trends In Japan’s Social Gaming
Industry

6. I: Structure Of The Domestic Market

7. Japan‘s Unique Social Networking
Landscape
• Basic structure: real social graph vs.
virtual social graph
• 3 homegrown social networks with roughly
25 million users each:
– Mixi (real/80% mobile social networking)
– GREE (virtual/mobile social gaming)
– Mobage (virtual/mobile social gaming)

8. Fragmented Industry Structure
• Hundreds of social application providers
• 2 dominant companies double as platform
and game providers:
GREE and DeNA (“Facebook+Zynga in 1“)
• Mixi as latecomer
• Rekoo only really successful foreign player

9. Dominant Duopoly

10. Size Of Japan‘s Social Gaming Market
• Annual sales of DeNA and GREE
combined reach over $2 billion
• Different sources offer different numbers:
– Video game magazine publisher Enterbrain:
$0.3 billion in 2009, $1.45 billion in 2010
– Market research firm Seed Planning:
$1.46 billion in 2010

11. II: Japan’s Social Games Vs. The World

12. Key Peculiarity: Gaming Nation Japan
• Taito‘s Space Invaders kicked off the gaming
industry as a whole in 1978
• Nintendo‘s Famicom revitalized industry after
the big crash 1983
• Japan has 10% share ($6.5 billion) in global
video game market
• Games enjoy greater cultural attention in
Japan than elsewhere
• higher payment walls for progressing in social
games are accepted

13. Key Peculiarity: Mobile
• Social games (and the web at large) are consumed
mainly on mobile phones
• Yahoo Mobage only PC-based social gaming
platform worth noting
• virtual item payment via carrier billing as catalyst
• GREE/Mobage pre-installed on handsets
Image credit: KDDI au

14. Key Peculiarity: Facebook Japan
• Active Facebook members (potential social gamers)
in Japan in September 2011: 5 million
• ⁓5% of web population (in the US: ⁓68%)
Source: Socialbakers

15. Key Peculiarity: Special Genres
• Some social gaming genres are as popular in
Japan as elsewhere, i.e.
– farming
– pet-breeding
– city-building
– restaurant management etc.
• But some are especially popular over here

16. Key Peculiarity: Special Genres
• Example 1: Manga-based social games
• Gundam Royale racked up 1 million players in 6 days

17. Key Peculiarity: Special Genres
• Example 2: Social RPGs
• Square Enix‘ Gleipnora is exclusively
available on Mobage

18. Key Peculiarity: Special Genres
• Example 3: Social dating and love simulations
• Renai games are especially popular among female
users
• Andamul‘s Delicious Kiss is popular on GREE
(below)

19. Key Peculiarity: Special Genres
• Example 4: Social idol-raising games
• Goal: Train and guide girls on their way to become
an idol (star)
• Love Kyun! Idol Battle was launched on GREE in
May 2011

20. Key Peculiarity: Special Genres
• Example 5: Social collectible card games
• Konami‘s Dragon Collection has been #1 on
GREE for over a year straight

21. III: Future Trends In Japan’s
Social Gaming Industry

22. Growth Is Expected To Continue
• Growth in the domestic social gaming market
has slowed down, but still ongoing
• Projection by Mitsubishi UFJ Morgan Stanley
Securities: US$5.2 billion in 2013

23. Growth Is Expected To Continue
• Yano Research: $406 million in 2009,
$900 million in 2010, $1.4 billion in 2011:

24. Japan‘s Mobile Future Is All Smartphones
• GREE CEO Yoshikazu Tanaka: “By 2015,
feature phones in Japan will vanish.“
• iPhone and Android set to dominate in the
future
Source: The Nikkei / MM Research Institute

25. Video Game Makers Going Social
• Many Japanese video game makers starting
to produce social games
• Konami alone expecting to generate $390
million in fiscal 2011 with social games
• A lot of high-quality IP still untapped

26. GREE: Internationalization
• More cautious approach
• US office in January 2011
• Offices in Seoul, Dubai, London, Singapore...
• Focus on partnerships:
– South East Asia: mig33
– China: Tencent
• Only one sizeable acquisition abroad so far
(Openfeint for $104 million)

27. DeNA: Internationalization
• DeNA‘s 3-market approach with Mobage for
Smartphone:
– Japan
– China
– Rest of the world
• Aggressive M&A:
– Ngmoco $403 million
– Gameview Studios, Rough Cookie, etc.
• DeNA failed twice on a global level:
– MiniNation (WAP)
– Mobamingle (iOS)

28. Future International Positioning For
GREE And DeNA
• Tens of thousands of free/cheap games in
the App Store and Android Market
• Promising social layer services for
smartphones already available:
– Apple‘s Gamecenter
– Scoreloop
– Gamewave
• Facebook‘s Project Spartan just launched
• Indifference from users abroad?

29. Thank you for listening!

30. Contact Information
Twitter: http://twitter.com/serkantoto
LinkedIn: http://linkedin.com/in/serkantoto
Email: totoserkan AT gmail.com