The allegation: DeNA, which recently paid US$400 million to acquire American smartphone game maker ngmoco, pressured Japanese mobile game developers to release titles exclusively on Mobage-town (its mobile social gaming community) – and to not provide games on rival GREE‘s mobile platform.

The JFTC’s decision to conduct a spot inspection of DeNA’s headquarters came as not too big of a surprise after TechCrunch Japan first reported about rumors circulating in the country’s social gaming sector in August.

According to some sources I have talked to over the last few days (and months), DeNA executives approached a number of local game makers saying they will see a negative impact on their business on DeNA’s Mobage-town platform when they release games on GREE (I live in Japan). One developer told me that soon after ignoring this “advice”, he saw his games dropped off the search results on Mobage-town – which currently lists about 600 different titles. (Needless to say, this is by no means evidence that DeNA did anything wrong or broke the law, especially as the investigation still continues.)

Neck-and-neck race in a huge market

Japan’s mobile social gaming market is the world’s largest, and DeNA and GREE are the leading players, which means the JFTC raiding DeNA’s offices is a pretty big deal.

Just a few numbers: DeNA is on track to generating over US$1 billion in revenue this year (mainly through sales of virtual items) and currently counts 22 million users. GREE expects revenue to hit up to US$700 million in the current fiscal and has about the same number of users (market cap: US$2.9 billion). What’s amazing is that about 99% of the business both companies do is Japan only and mobile only.

DeNA and GREE have been in a neck-and-neck race in the last few years. For example, both companies are spending more money on TV ads than big consumer brands like Toyota or Sony, trying to attract programmers with unusual incentives, and even don’t refrain from suing each other for copyright infringement (a relatively rare incident in Japan).

Expect to hear more from these companies in the future, especially when they accelerate their internationalization efforts (DeNA has been active in the US for years, and GREE is rumored to follow suit in the next few weeks).

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Authors: Serkan Toto

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