Yahoo Partners With Archrivals GREE and DeNA, Japan’s Two Largest Mobile Gaming Companies

Like its more dominant rivals at Facebook (Nasdaq: FB) and Google (Nasdag: GOOG), Yahoo! (Nasdag: YHOO) has also been struggling to transition its business to an increasingly mobile marketplace. On Friday, the No. 3 search engine in the world revealed plans to expand its mobile business by strengthening partnerships with two of Japan’s most established and successful mobile gaming companies, GREE (TYO:3632) and DeNA (TYO: 2432).

Interestingly, the announcements from the two archrivals came within hours of each other. Neither statement went into much detail about the nature of their partnerships, or how their work may relate or intersect in Yahoo’s overall mobile content strategy.

Yahoo! has been partnered with DeNA since 2010, when the two companies first created a Steam-like PC-gaming platform known as “Yahoo Mobage.” The expansion in their relationship mostly brings the work done on Yahoo Mobage to mobile and “smart” devices in addition to PCs.

“Through strengthening their alliance, DeNA and Yahoo! JAPAN will expand the range of their collaboration from PCs to smartphones and tablets, thereby responding to the rapid spread of smart devices in Japan,” DeNA said in a statement. “In addition, the companies plan to interconnect user IDs and loyalty point systems of their respective services on smartphones to explore further opportunities.”

While DeNA and Yahoo! already had an established business contract, the partnership with GREE is an entirely new relationship.

“The two companies aim to create new value by generating synergies in Internet entertainment through a combination of the media reach and payment capabilities of Yahoo! JAPAN with GREE content such as social games and original IP,” GREE’s statement read.

The current priority, the statement added, would be “directing traffic from the top and other pages of the smartphone version of Yahoo! JAPAN to social games on GREE.” In return, GREE will begin using the Yahoo! Wallet mobile payment system to process players’ virtual transactions.

DeNA, which this week reported record-breaking revenue, already uses its own independent virtual currency of “Moba-coins.” The two simultaneous partnership raises the possibility of Yahoo! consolidating all e-commerce within its own “Yahoo! Points” system, something that GREE said it was currently “discussing” in its statement.

Both GREE and DeNA have begun to expand aggressively into the U.S. and European markets for mobile apps. But both of these cultures have proven more resistant towards paying the same kind of premium for mobile entertainment that Japanese users are clearly willing and eager to. Mark Zuckerberg himself admitted that "gaming on Facebook isn't doing as well I'd like" last month according to TechCrunch. But as prominent U.S. software companies like Yahoo! and video game publishing giant Activision try to expand their products into mobile territory as well, GREE and DeNA may find themselves with brands strong enough to finally float their mobile ecosystem to Western audiences.