
How one Japanese gaming startup is generating $3.8 million in revenue per day - nreece
https://www.shoestring.com.au/2013/07/how-one-japanese-gaming-startup-is-generating-3-8-million-in-revenue-per-day/
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RyanZAG
I don't believe this kind of in-app pay-to-win style games will last much
longer. It's the kind of thing someone new to games will pay for, but after
paying for a bit, those same people seem to 'wise up' eventually.

I think you'll see these kind of games slowly decreasing in profitability over
the next 5 years. It's similar to many other forms of short term profit in
which the value provided does not equal the amount paid - eventually the
market will dry up as it becomes common knowledge.

~~~
robotmay
I'm not too sure. I see a lot of people these days, and unfortunately even
kids, becoming hooked on quick fixes; pay-to-win games, AAA games with 10-hour
single-player campaigns, and pretty much all mobile games. I gave a copy of
Pokemon Black to a friend's kids (same age as when my brother and I, and all
of our friends, were obsessed with them), and they couldn't get more than 15
minutes in without getting bored. Obviously that's a very small sample group,
but it seems like a lot of the big companies are moving over to mini-game
filled nonsense rather than requiring anybody to utilise their brain or
imagination for more than five minutes.

I hope you're right though; I really miss the days where I'd buy a complete
game on release, rather than only getting half the experience.

~~~
robryan
What is wrong with 10 hour single player AAA games? These generally offer the
most refined interactive story type experiences. I much prefer one of these to
most movies.

~~~
yareally
Mostly the price of the typical 10 hour single player AAA game tends to be $60
+ additional DLCs or special preorder things making up go up to the $80+
range.

That might not seem so troublesome on the surface, but there's generally
little motivation to replay such games most of the time. Also, the knowledge
that there have been many games with much more single player time as well as
re-playability for a comparable or lesser price now or in the past. The more
those 10 hour games become popular, the more it's considered acceptable and
even normal for games in general.

The problem compounds when a new generation plays such games and never
realizes how games were in the past. I've already noticed it with PC gamers
and that many use controllers now even for typically keyboard/mouse games like
FPSs. Companies end up failing to user test for keyboard/mouse players and
things like custom key bindings or keyboard/mouse UX get ignored. Probably the
worst example I've seen recently was Sleeping Dogs on PC. No custom key
bindings (except for keys you didn't care about changing). Things like exiting
a vehicle were set to the right mouse button without a way to change. I ended
up accidentally pressing it at least 40-50 times throughout the game and had
to repeat at least a few missions.

Typically, these type of games are bought for the multiplayer aspect (which is
why I assume the single player game is so short and limited). I'm not much for
multiplayer gaming unless it's with friends and not random people. Co-op
gaming can be especially fun if done right (Saints Row 3, Terraria,
Borderlands, etc).

In the end though, it's all about preferences. You might like such games
yourself (and many others), but not everyone does. I think such games fill a
niche for those that like them, but I loathe seeing them become the majority
of PC/Console games as they're not the type of game that usually interests me.

~~~
Semaphor
> Mostly the price of the typical 10 hour single player AAA game tends to be
> $60 + additional DLCs or special preorder things making up go up to the $80+
> range.

You pay for the graphics and the voice acting. If you can handle having more
limited graphics and simpler/no voice acting, you will get games that are
better in other aspects (balance, story, development, replayability) for way
less.

~~~
yareally
True and I agree, but those games aren't considered AAA (since the definition
of AAA is based on money spent as the sole criteria). Plenty of games have
been AAA, of above average quality, and longer than 10 hours in the past 4-5
years (though I don't rush through games and like to enjoy the little
details). When they are, I gladly pay for them[1] (probably more than I will
ever be able to play lol). As I get older, I find time is harder to come by so
I maybe I'm just more picky about what games I'll buy and then invest time in
than I was when I was a kid.

Deus Ex: Human Revolution

Borderlands 1 and 2

Saints Row 3

Far Cry 2 and 3

Bioshock 1

XCOM: Enemy Unknown

Rage

Fallout 3

Fallout New Vegas

Tomb Raider

Crysis 1 and 3

Sleeping Dogs (despite the keyboard issues)

Portal 1 and 2

Elder Scrolls: Skyrim

Dishonored

Mirror's Edge

Metro 2033

Hitman: Absolution

Mass Effect Series

Fable 3

[1]
[http://steamcommunity.com/profiles/76561198025283419/games/](http://steamcommunity.com/profiles/76561198025283419/games/)

~~~
Semaphor
We have to agree to disagree here, I have a different view on many of those
games ;)

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alcari
I don't like this article because it lacks a source for the revenue figure,
has a tenuous grasp of the English language, and doesn't really add anything
to the discussion of the business model (it reads like the author's never
heard of "free to play" games before).

As for the business model itself: I prefer Valve's take on it, where paying
doesn't give any competitive advantage (all the Team Fortress 2 items that
aren't purely cosmetic are random drops for non-paying players, and Dota 2 is
all cosmetic items).

~~~
BillyMaize
Exactly. I wouldn't play Dota 2 anymore if all the big fans could simply dump
a couple hundred bucks into it and be better than everyone else. It's the
reason I stopped playing games like Magic the Gathering as well.

------
coffeeaddicted
Our highest law court in Germany made a judgement recently which can make
selling that kind of games a lot harder here in the future. They forbid
advertisement for online game items if the advertisement is targeted at
children. The concrete example which triggered this could be translated as
"Take the chance bargain and give your armor and weapons that certain
something." German link: [http://www.heise.de/newsticker/meldung/BGH-
verbietet-Interne...](http://www.heise.de/newsticker/meldung/BGH-verbietet-
Internet-Werbung-fuer-Kinder-1919592.html)

~~~
w1ntermute
There was a similar thing in Japan with the kompu gacha ban a year or two ago,
but the companies have just found ways around it and are thriving the same as
ever.

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babarock

        Reports suggest the app is currently making around USD$3.8 million a day or around USD$54 million per month.
    

I don't get it. That's about 15 days per month. Unless I'm missing something?

~~~
lcedp
You are not. They messed up something.

------
ksk
Has anyone actually duplicated any form of success exclusively by
studying/analyzing the business models of successful startups? In grad school
we went through dozens harvard business review case studies on large and small
companies. All the reasoning about why they failed or succeeded just seemed
too locally connected to actually be true. Honestly I just felt like there was
nothing to learn from reviewing them.

Yes, people already know that luck plays a factor in success, but someone
needs to sit down and quantify it. I secretly suspect that it is much larger
that most people think it is. Here I'm talking purely about business
decisions/strategies. I'm leveling the playing field by assuming that
companies are able to hire qualified people to plan/execute the creation of a
high-quality product/service.

Edit:

BTW. This is a great read for people interested in how chance affects our
daily lives.

[http://amzn.com/0307275175](http://amzn.com/0307275175)

------
marcamillion
I would love to see more evidence. "A report suggests..." doesn't quite cut it
for me.

Not saying the author is lying, but his maths could be off or maybe he could
have misread something somewhere (e.g. maybe it is $3.8M/year vs /day).

~~~
abhimir
The numbers are correct. These numbers have been reported by GungHo (the
company that has made Puzzles&Dragons). They have to report their revenue
numbers as they are traded in the Osaka Stock Exchange. [1] Also these are
April numbers, recent revenue estimates will be even higher as the game is now
climbing up the top grossing charts (iTunes) in US too.

[1][http://www.gameskinny.com/bdbci/gungho-made-376-million-a-
da...](http://www.gameskinny.com/bdbci/gungho-made-376-million-a-day-in-april-
with-puzzle-dragons)

~~~
patio11
+1 for "The numbers are correct."

See, among numerous other places:
[http://www.gungho.co.jp/ir/uploads/irk20130509_2.pdf](http://www.gungho.co.jp/ir/uploads/irk20130509_2.pdf)

If you don't understand what an audited financial statement written in
Japanese says, that's cool, you can default to "Trust Patrick that Puzzle
Dragons is a _cultural phenomenon_ right now and that it is one of the first
Japanese companies which has truly absorbed the spirit of Zynga with respect
to monetization."

~~~
marcamillion
I can't read Japanese, so I will trust you Patrick.

Soo...given that the numbers are real...that's crazy.

------
dennybritz
Don't see what's new about this, i.e. why this has so many upvotes. Tons of
mobile games have been following on the same model for a while. Is this being
upvoted just because the number looks stunning?

~~~
endemic
Yeah, seems like just another scammy F2P mobile game. Kudos to them for making
money hand over fist, but I don't think I could sleep at night if I built my
business by exploiting users.

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mbesto
I'm going through this market with a friend right now. This is very real. For
example look at DeNA.[0] This statement right here is simply amazing:

 _As a result, revenue of the Social Media Business was ¥179,627 million, up
37.9% year-on-year, and segment profit was ¥78,106 million, up 29.4% year-on-
year._

Their YOY revenue from Social Media (mobile games) is $1.8bil.

[0][http://v4.eir-
parts.net/v4Contents/View.aspx?template=ir_mat...](http://v4.eir-
parts.net/v4Contents/View.aspx?template=ir_material&sid=21726&code=2432)

~~~
kayoone
Yep, but its also a very crowded market, for ever startup that makes huge
money with free to play games, there are hundreds (or even thousands) that
fail.

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lazyjones
The amazing thing about this is how easily these f2p apps/games can monetize
"content" while all kinds of web publications struggle with this. Is "serious"
content simply to unattractive or is the fact that the payment process is
handled by a centralized, trusted mechanism what makes the difference? If the
latter, we should probably add payment options to browsers.

~~~
rfnslyr
Maybe we should further gamify websites? Look at OKCupid, you can purchase a
wide array of features. You can buy the ability to be invisible, to disable
adds, to send unlimited messages, to receive unlimited messages.

We could build an extra layer on top of websites offering additional features
to the site that don't take away from the main experience. All I'm seeing
similar to this is a few websites offering ad removal for $x, nothing else.

These games pop out new games on various platforms by the week, then advertise
the new game in all the other X amount of games they have. It recycles itself.

------
nicholassmith
The most interesting part (for me) was the mention of the pay for credit to
continue. Now _that_ is an interesting use of IAP rather than 'shiny golden
boots, £3', as it works on an established model that was reasonably successful
for a number of years. Does anyone know of any other games using the same
mechanism?

~~~
Negitivefrags
"Time gating" is probably the most common free to play business model on IOS.
See the top 10 grossing list in the App Store for other games using that
model.

~~~
nicholassmith
Timegating is different isn't it? You pay X for Y amount of time, whereas this
is you pay X for Y amount of lives. Or have I got my definition of timegating
wrong?

~~~
Negitivefrags
Time gating doesn't mean paying for time, it means paying to make a clock go
away.

Time gating in these games is often in the form of "Pay X to get another life
now or wait for 30 minutes". Candy Crush being a good example.

It's like having an arcade machine that gets a free credit on it every half an
hour.

~~~
nicholassmith
Ah hah, of course. That's much different though, that's the game imposing a
limit upon you outside your control, in this case it's if you die you have to
make a choice of paying or dropping back.

------
cnipb
On a side note, I find showstringmedia.com.au as an interesting company with
three different businesses under it - media, applications (though there is
only one) and lead generation.

Are you aware of similar businesses that have successfully built independent
media business, bootstrapping it with other services?

------
bluekite2000
Any game designer here wants to collaborate in reskinning my puzzle games
Smart Kick (IOS and Android)? We feel like our puzzles are much better. Links
are on ndat.org.

