DeNA, Japanese Mobile Game Company, Reports Record $627M in Quarterly Revenue

If there was still any questions about the relative strength of the mobile marketplace for the videogame industry, Japan’s DeNA (TYO: 2432) laid those concerns to rest this week.

On Tuesday, the Japanese social and mobile gaming giant reported revenue of $627 million in the quarter ending Sept. 30, a 45 percent increase in revenue from the previous year and a record for the Tokyo-based company founded in 1999.

DeNA's operating income was $254 million, a 38 percent increase from the same quarter last year.

DeNA’s monetization model, which sells users a virtual currency known as “Moba-coin” to use within its mobile app, was particularly successful. The company said that Moba-coin purchases hit a new record of $700 million in sales within Japan, growth the company attributed to successful marketing campaigns throughout the quarter in addition to regular updates and introductions of new features and game content to maintain user engagement.

The company’s report also noted that sales of Moba-coins that were purchased on smartphones were greater than those on feature phones in the month of September, a development that would imply that DeNA has successfully transitioned a majority of its business to the ever-expanding marketplace for smartphone apps.

This transition has proved difficult for several U.S.-based social media and game companies such as Facebook (Nasdaq: FB), Zynga (Nasdaq: ZNGA), and even prominent console game publishers like Activision (Nasdaq: ATVI). But the difficulty of establishing a strong mobile user-base that these American companies are experiencing might equally signal a future roadblock for DeNA and its fellow Japanese mobile gaming giant GREE, both of which have begun to expand to Western audiences that are less accustomed to mobile media than their Asian counterparts.

Moba-coin sales outside of Japan rose to $30 million, less than half or a percent of that achieve in Japan. DeNA claimed that its North American and European studio, Mobage West, had six of its 80 games available so far to Western users reach the top 30 highest-grossing apps in Google’s (Nasdaq: GOOG) Android store, Google Play by November 5. But the statement only named two games, “Blood Brothers” and “Ninja Royale,” that exceeded $1 average revenue per daily active user (ARPDAU) in the quarter.

DeNA’s arch-rival GREE has faced a similar problem in attracting the attention of Western gamers more familiar with consuming their media through home-entertainment devices such as video game consoles and personal computers. In its effort to build “the world's leading gaming ecosystem,” GREE has therefore started to snatch up Western game developers to produce more culturally relevant content.

DeNA has adopted a similar approach to its westward expansion. In March, the company announced a partnership with Disney to develop mobile games, and followed up earlier this month with another 10 independent game studios.

“In our second quarter, we continued to see steady growth internationally, as well as in Japan,” Isao Moriyasu, DeNA’s CEO, said in a statement. “In order to build the world’s top social games platform, we must stay focused on expanding our audience and delighting our customers with exciting games that will keep them engaged.”