This presentation covers the size of Japan's social gaming market and 14 reasons why the two big social game companies in Japan, DeNA and GREE, monetize better than Zynga.

1. GREE And Mobage operator DeNA:
14 Reasons Why Japan’s Social Gaming
Giants Monetize Better Than Zynga
By Serkan Toto, PhD
www.serkantoto.com
Image credit: DeNA

2. About Me
• Web, mobile and gaming industry consultant
• Advisor for startups in Japan and the US
• Japan contributor for TechCrunch.com
• Based in Japan since 2004
• http://www.serkantoto.com

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

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

5. Agenda
I: Structure And Size Of Japan’s Social Gaming Market
II: Top 13 Reasons For Successful MoneDzaDon

6. I: Structure And Size Of Japan’s Social
Gaming Market

7. Japan‘s Social Gaming Market: Dominant Duopoly

8. Market Size Stats: Depend On Sources
‐> Yano: Japan‘s social gaming market worth US$1.4
Billion In 2011

9. Size Of Japan‘s Social Gaming Market
‐> ProjecDon from Morgan Stanley, January 2012

10. Size Of Japan‘s Social Gaming Market
‐> ProjecDon from Nomura Research, January 2012

11. II: Top 14 Reasons For Successful
MoneDzaDon

12. Reason 1: Japan Is A Gaming NaDon
• Taito‘s Space Invaders kicked off the gaming
industry as a whole in 1978
• Japan has 10% share ($6.5 billion) in global video
game market
• Games enjoy greater cultural aaenDon in Japan
than elsewhere

13. Reason 2: Japan Is A Mobile NaDon
• Social games (and the web at large) are
consumed mainly on mobile phones
• Content is easier to sell on mobile devices
• 99% 3G penetraDon in Japan, crucial for playing
mobile games
Image credit: The Nikkei

14. Reason 3: Popularity Of Card Baale Games
• Card baale games have proven to be excellent
money makers
• Up to 70% of the top 20 games on Mobage and
GREE are social card baale games currently

15. Reason 4: Rise Of The Video Game Makers
• All major video game makers produce social
games now
• Konami alone is expecDng to generate $390
million in fiscal 2011 with social games
• Video game makers increasingly use popular IP
for social games

16. Reason 5: Acceptance Of Higher Paywalls
• Japanese users don‘t really mind higher payment
walls for progressing in social games
• Micropayments to progress known from arcade
machine market (*Insert Coin* concept)

17. Reason 6: Japan Is A Wealthy Country
• Japan has the world‘s No. 3 economy (US$5.5
trillion in 2010)
• GDP per capita stands at over US$34,000 per year
(IMF, 2011)
• World‘s 2nd highest online spend at $6,688 per
year (Visa, 2009)
• Morgan Stanley: 10% of Japan‘s social gamers
were paying in 2010 (projecDon for 2013: 17%)

18. Reason 7: FricDonless Mobile Payment
• I am hearing from social game makers 80‐90% of
gamers pay via carrier billing (monthly phone bill)
• Wide range of paying opDons: carrier billing,
credit cards, e‐money, pre‐paid cards, Paypal
• SubscripDons for virtual items are possible

19. Reason 8: Aggressive TV MarkeDng
• DeNA And GREE are invesDng large amounts of
money in TV adverDsing
• In November 2010, both companies showed the
most spots on Japanese TV
Image credit: Social Game Academy

20. Reason 9: Zynga’s User Base Is Wide‐Spread
• Zynga has significantly more registered and acDve
users, but they are spread across a large number
of regions with smaller economies and weaker
technical infrastructures
• Example: Indonesia is Facebook‘s fourth largest
market, but its GDP per capita is only about 1/8
of Japan
• DeNA and GREE evolved into mulD‐billion dollar
companies without foreign compeDDon

21. Reason 10: Pre‐InstallaDon On Handsets
• Mobage is part of the home menu in NTT
Docomo‘s feature phones
• Japan‘s No. 2 mobile carrier KDDI is an investor
and GREE partner (pre‐installaDon deal)

22. Reason 11: Zynga Is Weaker WRT MoneDzaDon
• Zynga‘s raDo of paying users is lower than that of
Mobage and GREE
• DeNA director Kenji Kobayashi:
'I Think That Zynga Has Not Really Researched
MoneDzaDon‘ (Gamasutra, October 3, 2011)

23. Reason 12: Gacha As Major Money Maker
• Gacha mechanism is biggest money maker in
many Japanese social games
• Even Bejeweled has a gacha feature in its
Japanese version

24. Reason 13: In‐Game Events And Campaigns
• Japan‘s social game makers are brilliant in using
Dmed events and campaigns to boost revenue
• Example for a campaign: offer an exclusive item
that only users who pre‐register for a game get
• Example for an event in Mobage‘s Ninja Royale
(English version) pictured below

25. Reason 14: Virtual Social Graph
• Players use GREE and Mobage anonymously
• Virtual social graph makes mass‐inviDng friends,
showing one‘s gaming addicDon less awkward

26. Thank you for listening!
Questions?

27. Contact Information
Twitter: http://twitter.com/serkantoto
LinkedIn: http://linkedin.com/in/serkantoto
Email: serkan AT serkantoto.com