Japanese internet company DeNA said it intends to strengthen its position in native mobile games, as it also pushes into new markets in order to diversify its operations.
The company said that with regard to native mobile games, it has created several titles which make “more than JPY100 million ($977,500) per month”, but that it still does not have a “large hit”. To drive its success in the market, it conducts user tests and reviews of new products early on, and “if the game turns out to be lacklustre, we discontinue developing the game”.
Once identified as potentially successful, “we set aside more time than we previously did to make sure they have the required quality and new elements before launch.”
The company’s caution seems well-placed. Operating profit from its Japanese gaming business is on the slide, with lower spending on its ‘Coin’ virtual currency (down 14 per cent sequentially to JPY37.6 billion).
It said that although it continued launching new titles, this did not offset a slump in use for its existing products. It did note that “a few new games, primarily third-party games, have started making several hundred million yen per month”.
And likewise, Coin consumption in its international games operations is also decreasing, with this unit consistently operating at a loss.
Again, while it “pursued efforts with a view to providing titles in a broader range of genres for Europe and the US”, this did not offset the downward trajectory of older titles.
In a presentation, the company said that “games will continue to be DeNA’s core business”, with the “potential for explosive growth”.
In Japan, it will dedicate around 80 per cent of new game development resources to native apps, and “consistently launch new titles while ensuring a strong focus on quality”.
In China, it will “launch promising new titles by leveraging access to premium IP licensors, game development capabilities, and an established publishing network”.
And for its ‘West’ operation, it will “continue to launch many new exciting games, including popular IP titles to achieve coin consumption growth in Q2 and onwards”.
But it also said that it will “build new businesses with structural advantages for mid- to long-term growth”.
This includes efforts in the healthcare field, with plans to launch a direct-to-consumer genetic testing service imminently.
However, it was clear that despite its diversification efforts, “to change our declining trends in the next six months or so, it will be necessary to create a hit native app game”.
On a group level, for the quarter to 30 June 2014, it reported a profit attributable to shareholders of JPY3.77 billion, down 60.6 per cent, on revenue of JYP35.82 billion, down 31.3 per cent.