GDC China: DeNA Talks 'Not Very Competitive' Social Smartphone Game Biz

In a talk kicking off GDC China's Social Games Summit, Japanese executive Kenji Kobayashi of major Japanese smartphone social game network Mobage discussed what makes social gaming businesses successful worldwide, giving hints and tips to social game firms along the way. Kobayashi, who is a key executive and director for DeNA, started his talk at the Shanghai-based event, which runs through Monday, by highlighting Mobage's successes. He actually advocated that the free to play smartphone game market is still "not very competitive, because it is only the beginning." His company has surprised the traditional Japanese console game market -- alongside other services such as Gree and Mixi -- by building major revenues through free to play cellphone game titles. But the executive nonetheless warned on the "misconception" that all social games are making lots of money. Well-placed to see the rush to social games from the Japanese console game creation market, Kobayashi, who recently gave an in-depth interview with Gamasutra, made some specific suggestions from his experience on what has led to failure. In particular, he noted that some companies end up "using surplus resources" in their teams, instead of hiring high-quality (and costly) engineers. Because these companies are rooted in other non-social game pasts, "they don't use their top people" to make social games, and it hurts them in the long-term. In addition, many gaming companies copy other game products' success without understanding - making "something that looks like a social game" without designing details. This also leads to failure. Those who are most successful in the market "need to be very detail-oriented", and create very in-depth monetization plans, says Kobayashi. In particular, the transition from 'fire and forget' manufacturer to 'continuous feature and asset additions' service provider is also very important. Kobayashi then went on to detail the spectacular growth of virtual currency spending on Mobage in Japan. Interestingly, around half of the revenue on Mobage in Japan is through first-party games as of September 2011. But 18 months earlier, only a small minority of the Mobage revenue was third party specific, showing how the company is opening up its platform to accelerate growth, taking a cut of the revenue from third parties in a similar way to services like Facebook. These statistics show why the firm is trying to aggressively expand beyond Japan, buying Ngmoco in the West to swiftly grow Mobage's reach onto Western Android platforms, and venturing into China to explain their platform to local creators at GDC China 2011. Kobayashi's belief? "You should enter the [smartphone social gaming] market as quickly as possible."