Mobile gaming and social networking are undoubtedly the killer categories for mobile apps, making up the bulk of user interactions. Which makes it fairly obvious that the area where these two interact – social gaming – is set to be a real hotspot.

While in its web guise this space is dominated by Facebook partner Zynga – which is itself bolstering its mobile strategy – there are also a number of companies aggressively targeting the market with a smartphone-led strategy.

One of the biggest of these is Japanese mobile social gaming company DeNA, which is currently focusing its efforts on expanding its presence to China and other international markets.

The company distributes its games through its Mobage platform (pronounced moh-bah-geh), which runs on iOS and Android, as well as through alliances with operators, handset makers and social media companies. DeNA even signed a deal recently to distribute games for Disney.

In an exclusive interview with Mobile Apps Briefing, Takashi Doi, DeNA’s director of global corporate development (pictured), explained the company’s strategy – and the challenges that lie ahead.

Making it big in China
According to Doi, DeNA is pushing forwards with its cross-device and cross-border strategy “to establish Mobage as the world’s top social gaming platform, and to generate half of the revenue outside Japan by March 2015.” And a major part of this is expanding Mobage’s presence in China.

DeNA recently announced distribution deals with China’s three biggest mobile operators (China Mobile, China Unicom and China Telecom) as it looks to grow its reach in the world’s most populous country.

The sheer scale of the Chinese market was a major driver for DeNA’s push into China. Doi said this means that “even niche markets are huge,” while the increasing number of consumers using smartphones in China – driven by take-up of Android devices  –  is another big attraction.

Mobage China was launched in July 2011, and through partnerships with internet players such as Baidu and Kaixin001 as well as the operators, DeNA expects to sign an increasing number of users in the country.

The challenges of going global
China is not DeNA’s only new target market. The company also launched Mobage Global for the US and Europe in July 2011 and added Korea in February 2012.

Since then, it has been playing close attention to consumer responses to determine how to make services “more enjoyable and user friendly,” and how to more effectively promote them in different countries.

While Japan has been a proving ground for social games, it is not yet clear how the concept will take off elsewhere. “The mobile social gaming market is still largely unexplored outside Japan, and it’s a big challenge being a pioneer there,” Doi said.

A major challenge in expanding internationally has been to export a Japanese business model in an effective way – a path that has seen other companies in the tech sector struggle in the past. Doi said that with its international subsidiaries following the Japanese path, DeNA is “very excited to see how they turn out.”

With the addition of fierce competition and rapid changes in the social gaming market, DeNA is not going to have any easy ride. “Despite these challenges, we are steadily making moves internationally, hoping someday we will be a shining example of a Japanese web company with a global success,” Doi continued.

And there are some signs that DeNA is making progress. One of the titles available via Mobage was recently the top-grossing game on Google Play in the US. Rage of Bahamut, made by Japanese developer Cygames, was also ranked second in Sweden, sixth in Canada and seventh in the Netherlands.

Strength in numbers
The cornerstone of DeNA’s expansion in Western markets has been US-based mobile social games company ngmoco, which it acquired in 2010 to build its business beyond Asia. Doi said ngmoco has been operating the global version of Mobage and developing first-party social games that will have particular appeal to consumers in North America and Europe.

A further sign of DeNA’s expansion plan has been its investment in game development studios in Canada, the US, Sweden, Chile and Vietnam. However, the executive said opening offices in these regions is more about taking advantage of locally-available skills than expanding its operating presence.

“At least for the moment, their mission is to strengthen DeNA Group’s game development capabilities rather than to explore the local markets. These cities have excellent, high-skill engineers who are able to boost our first-party game development and operation functions,” Doi said.

Acquisitions remain a potential way for the company to continue its growth, and DeNA is closely monitoring markets worldwide. “When an opportunity arises, we will be ready to move,” he noted.

DeNA has struck a number of deals with operators and handset vendors, including Samsung and NTT Docomo, to distribute content – an approach it intends to continue with. Doi said the company believes that all parties can benefit from these kinds of deals, due to the fact that they drive uptake of games, devices and data plans.

In Japan, Mobage has an average revenue per monthly active user of more than US$12, and we look forward to applying this business model elsewhere with help of operators, manufacturers and mobile web companies,” he said.

Focusing on social gaming… for now
Although DeNA is looking at new markets and technologies, its focus is on social gaming – at least for the immediate future. While the company started as an online auction company, and continues to offer some payment and auction management services, social gaming now generates 85 percent of its revenue.

However, Doi added that the company will always be prepared to take opportunities for “new business domains”, suggesting social games won’t necessarily remain the main focus for DeNA forever.

“Ever since it was founded as a PC-based online auctions company, DeNA has grown by creating a stream of new businesses one after another. Right now we are focusing on the social games business… but we are always exploring opportunities for new business domains,” he said.

Tim Ferguson