DeNA Co. (2432), the Tokyo-based company whose service lets people play games on mobile phones, is seeking to expand its e-commerce and mobile entertainment businesses and is mulling acquisition opportunities.
The operator of the Mobage network has lost about 25 percent this year as mobile subscribers shift to smartphones from an earlier generation of handsets that relied on the gamemaker’s platform to download titles. DeNA is the fifth-worst performing stock on Japan’s benchmark Topix index this year, which has gained 39 percent over the period, boosted by Prime Minister Shinzo Abe’s fiscal and monetary stimulus.
As DeNA moves further into e-commerce, it will have to compete with online retailers such as Rakuten Inc. (4755) and Yahoo Japan Corp. (4689), which are fighting for customers amid a declining population at home. DeNA had about $470 million in cash and near cash items in the quarter ended June.
“Gaming is a big pillar of our company but we won’t be dependent on it,” Chief Executive Officer Isao Moriyasu said in an Oct. 24 interview at Bloomberg’s Tokyo offices. “We are paying close attention to the entertainment content space.”
The maker of “Blood Brothers” and “Ninja Royale” got 89 percent of its revenue from social media in the fiscal year ended in March. E-commerce-related sales accounted for about 7 percent.
DeNA rose 2.6 percent to close at 2,127 yen in Tokyo, the highest since Aug. 19. The benchmark Topix index lost 0.4 percent.
The company has a “strong” pipeline of native apps in the second-half of this year, Jefferies LLC analyst Atul Goyal said in an Oct. 28 note. He upgraded the company’s shares to “buy” from “hold.”
Apple Inc.’s iPhone and Samsung Electronics Co. handsets using the Android operating system allow users to download games and other apps directly.
Earlier this month, DeNA began offering a credit card that allows users to accumulate points through purchases that can be used on its platform. The company will produce 60 titles for Japan and 20 for Europe and the U.S. this fiscal year, Moriyasu said.
“We want to produce new services. We may do it internally or through acquisitions,” Moriyasu said. “We would like to spend money in the mobile Internet business domain so we can grow bigger.” Moriyasu declined to elaborate.
In August, some of Japan’s biggest game makers, including Sega Sammy Holdings Inc. (6460) and Capcom Co., said they would team up to promote each other’s titles for smartphones.
Sega, creator of Sonic the Hedgehog, developed a system to allow makers to display advertising of mobile app games by other members, Koji Ueda, a Sega spokesman, said at the time. The alliance may allow the companies to bypass platforms operated by DeNA and rival Gree Inc. (3632) and avoid commissions.
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