Japan’s DeNA posts record annual revenue of $2bn, targets profitability in the West as growth slows

Japanese mobile gaming firm DeNA has posted record annual revenue, and its ninth straight year of increased profit. However, the results are somewhat overshadowed by signs that its prolific growth is slowing as it expands its services and presence worldwide. In response, the company is aiming to turn its Western business profitable within a year.

DeNA, which runs the Mobage mobile gaming service for iOS and Android, recorded 202.5 billion yen ($2.05 billion) in revenue for its fiscal 2012, a 38 percent increase on 2011. Annual operating profit rose by 28 percent to reach 76.8 billion yen ($777 million).

Slowing growth

Despite those impressive figures, the company’s Q4 2012 report indicates that DeNA’s phenomenal growth is slowing. Quarterly revenue came in at 52.3 billion yen ($530 million) which, though an increase of 22 percent year-on-year, is the same as the previous quarter.

Operating profit for the fourth quarter was 18.2 billion yen ($185 million) which is up just 3 percent year-on-year and down on the previous quarter (19.9 billion yen). In fact operating profit in Q3 2013 was actually down 3 percent, quarter-by-quarter, indicating that — while revenue is increasing — the company’s overheads are growing too.

Domestic MobaCoin consumption flattening, ‘steady’ overseas

One area where DeNA has invested heavily is MobaCoin, its virtual currency. Consumptions appears to be stabilizing and reached 58.3 billion yen ($588 million) in Q4, which is 2.5 percent lower than the previous quarter. Year-long consumption in Japan grew 41 percent to 228.5 billion yen ($2.31 billion).

Japan remains the primary market for MobaCoin but DeNA says overseas usage was “strong and steady” and was just south of $70 million during the quarter.

One major hurdle that the company leapt was the introduction of regulation on gambling type (‘kompu gacha’) titles, which had been a lucrative business for DeNA, rival GREE and others in Japan.

Elsewhere, DeNA has grown its portfolio with the introduction of music app Groovy (in Japan) and its mobile messaging service Comm, which competes with offerings from Line, WhatsApp, Kakao Talk and more. While it struck a number of partnerships, including deals with Nexon, Korean operator KT, Yahoo Japan, Mixi and others.

Making its Western business profitable

Going forward, Mobage West, its service for users in the West is a key focus. DeNA plans to “aggressively launch” titles in Japan using knowledge from the US and Europe, while it is aiming to make Mobage West a profitable business in its own right by the summer.

That international emphasis comes as little surprise, given DeNA rebranded earlier year in a bid to raise its visibility and brand outside of Asia.

The company says it will also continue its policy of partnering on games, while it will look to extend its offering into other ‘mobile Internet services’. Q1 2013 revenue is estimated at 53.9 billion yen ($545 million), with profit of 17.4 billion yen ($181 million).

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