DeNA’s results show the opportunity in social mobile

Earlier this week, the Japanese-based social mobile game company DeNA announced its results and the numbers show that great opportunities still exist in the social gaming space. I have written several times about the importance of DeNA (and its Japanese competitor, GREE) in the social gaming ecosystem, in particular that they are better industry bellwethers than Zynga. DeNA is best known in the US as the parent company of ngmoco:), which it acquired in 2010 for $400 million.

DeNA’s results for the quarter that ended in September show the health of the social gaming and free-to-play business. For the quarter, DeNA generated $627 million in revenue and $254 million in profits. At that run rate, DeNA would see about $2.5 billion in revenue and $1 billion in profits for a twelve month (one year) period. The quarterly numbers also show a 45 percent increase in revenue and 38 percent increase in profits over the same period from the previous year.

The other interesting result in DeNA’s report was the revenue per daily active user (ARPDAU) it is generating from some of its titles in the US and Europe. In particular, Mobage West (DeNA’s platform that targets the US and Europe) saw over $1 APRDAU across multiple titles, including Blood Brothers and Ninja Royale. This ARPDAU is 10X to 20X larger than many of the major US social game companies see from their titles. The Mobage West ARPDAU figure shows clearly both that gamers are still monetizing and there is significant room for western companies to increase their ARPDAU.

There are two takeaways from these numbers. First, social mobile gaming is still a great business if it is done correctly. Although some companies are clearly struggling, DeNA’s numbers prove there are great opportunities for great companies. Second, the ARPDAU numbers show that people are still willing to spend significant sums on virtual goods, and most social game companies have not yet come close to optimizing their revenue potential.

Author: Lloyd Melnick

I am GM of Chumba at VGW, where I lead the Chumba Casino team. Previously, I was Director of StarsPlay, the social gaming vertical for the Stars Group. I was also Sr Dir at Zynga's social casino (including Hit It Rich! slots, Zynga Poker and our mobile games), where I led VIP CRM efforts and arranged licensing deals. I have been a central part of the senior management team (CCO, GM and CGO) at three exits (Merscom/Playdom, Playdom/Disney and Spooky Cool/Zynga) worth over $700 million. View all posts by Lloyd Melnick