Jun 30, 2011 - Released the Mobage smartphone application for Android. Launched social games developed with the ngCore g
Q1 FY2011 Operating Results Q1: Three months ended June 30, 2011
TSE
DeNA Co., Ltd.
2432
0
Q1 FY2011 Highlights
Net sales and operating income both reached an all time high for seven consecutive quarters. Net sales: JPY34,649 million (+ 43% YoY) Operating income: JPY15,809 million (+ 32% YoY)
We continued to see a steady increase in the number of third-party titles on Mobage and consumption of Moba-coins
Released the Mobage smartphone application for Android. Launched social games developed with the ngCore game engine
Started offering Mobage on Samsung Electronics’ Android-based smartphones in Japan
Established a subsidiary in South Korea and began marketing and exploring new game developers
1
Overview of Operations for Q1 FY2011
(Millions of yen) Q1 FY2011
Q1 FY2010
Change
Q4 FY2010
Change
Net sales
34,649
24,193
+43%
31,955
+8%
Operating income
15,809
11,989
+32%
15,736
+0%
Ordinary income
15,757
11,952
+32%
16,111
-2%
9,456
6,526
+45%
9,275
+2%
Net income
2
Net Sales by Segment
(Millions of yen)
34,649 31,955
Others E-Commerce Social Media
29,494 27,085 24,193 19,073
11,655 8,810
8,565
2009年度 FY2009
2010年度 FY2010
2011年度 FY2011
Note: Segment sales numbers are net sales (sales after consolidation and eliminations).
3
Breakdown of Expenses (Millions of yen) Q1 FY2011
Q1 FY2010
Change
Q4 FY2010
Change
5,959
3,169
88%
4,897
22%
Labor costs
608
127
376%
296
105%
(See note below)
Depreciation and amortization
543
395
37%
440
23%
(See note below)
Advertising media costs
387
693
-44%
491
-21%
Business consignment expenses
787
576
37%
650
21%
(See note below) Increase in game royalty revenue share (Approximately JPY2.3 billion in first quarter. +JPY250 million compared with fourth quarter) (Also, see note below)
Cost of sales
Linked to Pocket Affiliate sales
3,220
753
328%
2,629
22%
412
622
-34%
388
6%
12,880
9,033
43%
11,321
14%
Employee salaries
2,075
1,542
34%
1,766
17%
Sales promotion and advertising
5,043
4,195
20%
5,138
-2%
Commission fees and business consignment
3,547
2,406
47%
3,209
11%
Increased commission fees for agency settlement of item billings with Moba-coins
Others
2,215
888
149%
1,206
84%
Amortization of goodwill accompanying consolidation of overseas subsidiaries
Commission fees Others
Selling, general and administrative expenses
(See note below) 1,282 employees as of June 30, 2011 (1,080 as of March 31, 2011)
Note: Increase in expenses accompanying consolidation of overseas subsidiaries (ngmoco, Gameview)
4
Operating Income
(Millions of yen) Operating Income 営業利益 % of Net Sales 営業利益率
18,000 16,000
(%)
51.5
49.6
14,745
15,736
15,809 50
44.8 13,624
14,000 12,000
50.3
35.6
50.0
49.4 45.6
11,989
36.0
40
9,819
10,000
30
8,000
4,000
20
5,224
6,000 3,137
3,083
10
2,000 0
1Q
2Q
3Q
FY2009 2009年度
4Q
1Q
2Q
3Q
FY2010 2010年度
4Q
1Q
0
FY2011 2011年度
5
Cash Flows
(Millions of yen) Q1 FY2011
Q1 FY2010
Change
Q4 FY2010
Change
Cash flows from operating activities
-4,295
5,023
-9,318
17,677
-21,973
Cash flows from investing activities
-2,498
-1,526
-971
-92
-2,405
Cash flows from financing activities
-4,913
-1,302
-3,610
489
-5,402
Cash and cash equivalents at end of quarter
50,861
36,562
14,298
62,620
-11,758
6
Social Media Business Sales (Millions of yen) 31,161 367
28,306 368
25,511 261
23,325
1,779
1,696
2,615
1,527 1,819
1,774
Others
Everystar, others
2,015
223
20,578 224
1,787
Advertising 2,669
2,580
Banner ads, tie-up ads, ads matched to content/search, affiliate advertising (other companies’ media)
Avatar-related 27,448 24,149 20,856 18,737
15,987
Game-related
1Q
2Q
3Q FY2010
4Q
1Q FY2011
*Segment sales figures are prior to consolidation and eliminations.
Item billing, in-game ads (CPA/CPC), ads for third-party game developers, mixi Mobile (ad/payment program), affiliate advertising (users acquire Moba-coins),Overseas
Note: Overseas sales have been transferred from the “Other” item to the “Game-related” item beginning with the first quarter (quarter under review). Figures have been adjusted retroactively from the first quarter of 2010.
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Topics Number of Registered Mobage Users in Japan
Continued steady growth in consumption of Moba-coins －Total number of titles available on the Mobage platform surpassed 1,000
(Millions of members)
29.71
30 3,000 25 2,500 20 2,000
－Among third-party games, a title is now recording a consumption of more than one billion Moba-coins per month －On Yahoo! Mobage, a title is recording consumption of more than 100 million Moba-coins per month, and this platform is steadily expanding
1,500 15 1,000 10 500 5 00 Dec.
Strong business partnership with telecommunications carriers －Users are now directed to Mobage through the “iMenu” and the “docomo Market” on the official NTT DOCOMO site
Mar.
FY2009
Jun.
Sept. FY2010
Dec.
Mar.
Jun.
FY2011
Note: The number of registered users is the total after excluding the overlap among users of the feature phone version, PCs (Yahoo! Mobage), and the users of smartphones (browser version).
Age Composition of Users (%) 30+
26
Full-scale development of Mobage for smartphones
32
42
－Started offering social games developed with the ngCore game engine －Started offering Mobage on Samsung Electronics’ Android-based smartphones
20-29
43
42 38
31 10-19 9/30/09
26 6/30/10
20 6/30/11
8
Platform Power Increasing: Strong Moba-Coin Growth
Trends in consumption of Moba-coins (Million yen)
33,437
35,000
28,178
30,000 25,000
23,357 20,288
20,000
16,721 15,000
10,361 10,000 5,000 0 4Q FY2009
1Q
2Q
3Q
4Q
FY2010
1Q FY2011
Note: Includes consumption of Moba-coins, monthly membership service fees for social game and ticket sales
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Growth of Mobage for Smartphone After launching Mobage for smartphones in December 2010 in Japan, the service usage has grown steadily due to the expanded game lineup and the arrangement of carrier billing.
Trends in ARPU of Mobage for smarphones 1,000
Status of Mobage for smartphones in Japan ・April: Carriers billing began 938
(100 = December 2010)
・May: Released the Mobage smartphone application and started adapting popular browser-based titles to application-based titles.
800
・Number of titles: Browser-based Mobage—54 titles Application-based Mobage—13 titles (As of June 30, 2011)
600
400
200
100 0
Dec.
Jan. 12月 1月 FY2010
Feb. 2月
Mar. Apr. 3月 4月 FY2011
May 5月
Jun. 6月
Notes: 1. ARPU: Average revenue per user (computed as coin consumption/MAU) 2. MAU: Number of users who have used the site at least once a month
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E-Commerce Business
Sales (Millions of yen)
Mobakore 3,870
3,541
3,580 3,370
All shares of Mobakore Co., Ltd. were sold to Senshukai Co., Ltd., at the end of November 2010. (October and November 2010 sales included)
3,447 Others
Paygent
Continued steady expansion in size of settlements
Mobaoku
Paid registered users: 1.26 million (as of June 30, 2011)
Bidders
Gross merchandise volume: JPY10,128 million (up 11.6% YoY) Stores: 4,168 (as of June 30, 2011)
FY2010
FY2011
*Segment sales figures are prior to consolidation and eliminations.
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Our view of the social game market opportunity on SmartPhones
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Expansion of the Social Game Market in Japan
Recent growth in the market
Rough image of smartphone coverage of the game market Core gamers
Fiscal 2011: Approximately JPY200 billion
PCs
High-end games Infinity Blade X (tentative) (“Super Creators” Project AQ IINTERACTIVE INC.)
*Incl. JPY135 billion from Mobage (annualized)
Console games
Application games
Ninja Royale Bokujo Hokkorina
Fiscal 2012–Fiscal 2013:
Approximately JPY300 billion Source: DeNA estimates
Browser games
Mobile phones
GUNDAM Royale Kaito Royale
Domain covered by smartphone
Casual gamers
In addition to the browser-based games and the application-based games, the social game market is continuing to expand to capture core gamers through high-end games. 13
Growth Potential of the Overseas Social Game Market Ten years ago, Japan had a 40% share of the world market for household game software. Overseas markets are also expected to grow in the social game market.
Social Game Market
Household Game Software Market 家庭用ゲームソフト市場規模 Approximately JPY 800 billion
Approximately JPY 2 trillion
Approximately JPY 400 billion
15%
15% 42%
Japan
Japan
50%
85%
85% Overseas
Several trillion JPY
Overseas
58%
50%
FY2001 2001年
FY2010 2010年
FY2011 2011年
FY201x 201x年
Source: Ministry of Economy, Trade and Industry, FAMITSU GAME HAKUSHO 2011,
Sources: Think Equity and DeNA estimates
DeNA estimates
14
Growth Potential of the Smartphone Market The overwhelmingly widespread use of mobile phones and their convenience will be favorable for the expansion of social games.
Global growth of smartphones Mobile phones
More than 5 billion
(phone calls and short message services (SMS))
PCs, tablet computers
Advantages of mobile phones
More than 1 billion
Can use anytime 24/7/365
Possible to attract the light casual gamers
Payments via telecommunications carriers
Purchasing content is simple
Over the next five years, the outlook is that the majority of phones will be smartphones and create a huge market that is highly suitable for social games. 15
Social Media Categories Users are moving toward using various SNS categories for different purposes.
Characteristics of SNS Categories Category
Representative players
Active users
ARPU
“Real friend” types
Facebook mixi renren
+++
+
Information transmission/ Collecting
Twitter weibo
+++
+
Business
LinkedIn Youthwant
+
++
++
+++
Entertainment/ virtual types
The need for social media is universal and does not depend on nationality or region. Virtual community-based platforms will take over the global market. 16
Characteristics of Entertainment/Virtual Social Media Profitability is much higher on virtual social graphs when comparing social games to real social graphs. Mobage and Zynga: ARPU Comparison
Kaito Royale in Mobage and mixi: ARPU Comparison
US$1=JPY80
USD12.06
Approximately 18 times
Approximately 10 times
USD0.66 •Mobage: Actual results as of June 2011 (on all devices); Zynga: average for January to March 2011 •Mobage ARPU: Moba-coin consumption (Actual in June, including monthly membership service fees and tickets)/MAU (note 2 below) •Zynga data source: SEC S-1 Filing (ARPU=Booking basis sales/MAU (Note 3 below)) Notes: 1. ARPU: Average revenue per user 2. MAU: Number of users who have used the site at least once a month 3. MUU: Equivalent of MAU
17
DeNA’s Strength Know-how for mass-producing highly profitable games at high speed Game Design Patterns DeNA owns many game design patterns that stimulate user activity (Accumulated through trial and error during events inside games) Generalized methods and know-how for retention (keeping customers) and monetization (generating revenues) New game schemes by combining game patterns.
Sophisticated operation of social games DeNA has sophisticated balance tuning capabilities that continue to stimulate users to spend money (Controls in a timely way depending on the status of users) Controlled parameters by time unit Makes immediate changes in the game balance Base system that enables fast analysis Engaged, highly-capable team in data mining to make the above possible
DeNA can develop a large number of highly profitable games faster than other companies 18
DeNA’s Speed The essentials of the cross-border, cross-device strategy that DeNA has pursued since the acquisition of ngmoco has been completed and DeNA has started offering worldwide services.
Platform • Released Mobage China and Mobage Global, completing the release of a worldwide common platform • Set up marketing to attract more customers through alliances with leading device manufactures. －offering Mobage on Samsung Electronics’ Android-based smartphones
• In addition to platform operating centers in Japan, the United States, and China, DeNA is establishing sales centers in other locations: － South Korea (already set up), Europe (scheduled center in London), and Southeast Asia (scheduled center in Singapore)
Social Games • Expanded the social game lineup with enhanced capabilities for first-party and third-party games － DeNA currently has approximately 400 staff in Japan and overseas that are focused on developing smartphone applications. Development staff will soon be 1,000.
• In collaboration with game developers around the world, DeNA is expanding and will continue to expand its titles to include a variety of titles －For core gamers: “Infinity Blade X (tentative title) ” and titles to be released from the “Super Creators” project (AQ INTERACTIVE INC.) －For casual to middle-use gamers: Offerings include “Pocket Frogs,” “Zombie Farm,” “Zoo land.”
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Summary Becoming the world’s top Social Gaming Platform With DeNA’s know-how and fast speed
Massive market Smartphones Social games
×
DeNA know-how Speed
The World’s Top Social Gaming Platform
20
Consolidated Performance Forecast for 1H FY2011 (Millions of yen) 1H FY2011 (Forecast)
1H FY2010 (Actual)
Change
Net sales
71,000
51,278
+38%
Operating income
32,500
25,614
+27%
Ordinary income
32,500
25,363
+28%
Net income
18,600
14,165
+31%
Method for Forecasting Performance In the social game market, which is the Company's principal business, the speed of market growth is difficult to forecast because the market has recently been established, and the continued expansion in the range and diversity of devices. In addition, profitability is greatly influenced by many uncertainties, such as the availability of titles that suit user tastes and become popular. In addition, for similar reasons, it is difficult to forecast the profitability of the Mobage business, which expands overseas during the current fiscal year. Accordingly, due to the difficulty in calculating highly reliable performance forecasts for the full fiscal year and the interim period, we will announce performance outlooks for the next quarter, and at the time of announcements for each quarter.
21
The forecasts in these presentation materials represent management’s assumptions and beliefs based on the information currently available. Readers are cautioned that these forecasts are subject to a number of risks and uncertainties and may differ materially from actual results.
DeNA Co., Ltd. 22
