THE WALL
STREET JOURNAL
Publishers Master the Psychology of Payments in a Country
Conditioned to Buy on Phones
By MAYUMI NEGISHI
Updated Dec. 11, 2013 3:38 a.m. ET
TOKYO—Like many other mobile games, "PokoPang"
features cartoonish animals and requires players to defeat monsters.
Players can continue a game, even after the "Game
Over" screen comes up. GungHo
Hironori Tomobe, data scientist at Mobage game platform
operator DeNA Co., talks about how big data is used to retain users and to
improve long-term profits in an exclusive interview with the Wall Street
Journal.
But the puzzle game—little known outside Japan—stands out
for its developer's ability to conquer revenue.
"PokoPang" has helped make Line Corp. one of the
highest-grossing mobile-game publishers in the world for much of this year,
according to app-analysis provider App Annie.
Line isn't alone. Japan's GungHo Online Entertainment Inc. earned
$4.1 million per day in October, according to company projections, thanks to
its biggest revenue source, "Puzzle & Dragons." Neither game
shows up in App Annie's top 10 most-downloaded list.
Better than any other country, Japan's mobile game makers
have cracked the revenue code despite having few world-wide megahits. The
secret: an industry that is constantly experimenting with new ways to master
the psychology of mobile payments.
Japanese game publishers make sure each download counts and
players stay engaged—hiring math and statistics experts to parse billions of
data points in real time, as Line, DeNA Co. andGree Inc. do, or having
dozens of staffers monitoring the chatter on blogs and Twitter, like GungHo does.
In Japan, each downloaded game earns three times the global
average on Apple devices and
six times the world-wide norm on Android devices, according to App Annie.
"The download is just the start,'' says Jun Otsuka,
Line's global business manager. "The real grunt work is in running the
game."
The stream of cash from games has even pushed Japan to
overtake the U.S. in app revenue on phones and tablets overall, according to an
App Annie report being published Wednesday. In October last year, Japanese
consumers spent roughly 30% less than U.S. consumers did on gaming apps; this
October, that is reversed to roughly 30% more, App Annie said.
Game experts point out the Japanese populace has long been
conditioned to pay for goodies on their phones.
Japanese carrier NTT DoCoMo Inc. introduced its mobile
Internet service i-mode at the beginning of 1999, eight years before the first iPhone and
nine years before the first Android-powered phone.
For five magic stones, this dragon-shaped machine will
dispense a monster that can be used in battles.GungHo
Pay to Play
GungHo's "Puzzle & Dragons" uses clever
tactics to entice players to pay for extra goodies:
Funny Money
Like a casino, "Puzzle & Dragons" issues its
own virtual currency—magic stones—to lull players into forgetting they may be
spending real money.
Reward Removal
Players can pay one stone to continue a game even after it
ends. If players choose not to, the game reminds them of what they'll lose.
Limited-Time Sale!
For five magic stones, a dragon-shaped machine dispenses a
monster to use in battle. Limited-time offers stoke enthusiasm.
Won't You Miss Me?
As players collect monsters, they run out of places to keep
them—unless they buy more space.
Source: GungHo, AppBank, WSJ reporting
In the early 2000s, many i-mode users were already spending
hundreds of dollars per month on everything from services that let you check
weather and train schedules to games and fancy emoticons.
Japanese publishers, though, say the real key to their
revenue generation is a system of data-crunching and game-tweaking that keeps
people engaged and active, on the theory that "people will eventually pay,
if they keep playing,'' as GungHo producer Daisuke Yamamoto says.
Although many global publishers crunch data as well, the
Japanese firms have the deepest pockets, and are the most thorough in applying tactics
to get people to pay, says Ramin Shokrizde, an expert on monetizing games at
the U.S. arm of Wargaming.net, the Belarus-based developer of World of Tanks.
For instance, DeNA—maker of card-battle game "Rage of
Bahamut"—often tries out different versions of game tutorials on test
audiences to make sure they entice people to start playing, says Hironori
Tomobe, a Ph.D. in computer science who heads a group of 30-odd data-analysts.
To keep enthusiasm from waning, DeNA—like most Japanese
publishers—holds periodic events where players for a limited time can get
special prizes, enhanced odds of winning coveted items, or more interactive
game play.
During each event, Mr. Tomobe's team keeps track of a range
of parameters—like how many people are playing or whether they're graduating to
new levels—and tweaks the game in real time if the figures are off what's
expected by 10% or more.
DeNA's programmers also adjust parts of games that seem too
hard, as they did with a role-playing game called "Kaito Royale" when
they found a high number of players defecting after they had to fight a
particularly difficult enemy.
The sweet spot, says Mr. Tomobe, is to keep games just hard
enough so that players will pay money for items that help them get ahead—yet
not so hard that they feel taken advantage of, or get frustrated and give up.
"Sometimes the data looks good—people are engaged and
buying items—but then you realize that it's too tough on people and their
wallets," says Mr. Tomobe. "In the long run, it's always better to
have people enjoying the game and coming back for more, than making money
short-term."
Mobile-gaming experts say the master of getting players to
pony up inside the game is GungHo, whose "Puzzle & Dragons" was
one of the first mobile games to adopt an arcade-type system of paying virtual
money to continue playing after the "game over'' notice.
In the game's dungeons, for instance, players have to defeat
a number of waves of monster attacks.
After each wave, they're shown the treasures—and rare,
collectible monsters—that are waiting if they can make it all the way through.
For those players who don't make it the first time, those
glimpses provide an extra incentive to buy game extensions and try again.
"'Puzzle & Dragons' is truly diabolical in
convincing you that you need to pay money," said Tokyo-based games
consultant Serkan Toto. "You don't make that kind of money without being
relentless on how you operate your game."
Now, Japanese game makers are trying to replicate their
lucrative mobile-gaming model abroad—mainly by promoting their games in foreign
markets. The English version of "Puzzle and Dragons" has been
downloaded more than a million times in the U.S., while a Korean version of
"World of Mystic Wiz" by Colopl Inc. has
been downloaded a million times.
Still, those levels are just a fraction of the downloads at
home, and the gaming sites of DeNA and Gree have had slow starts in the U.S.
Some mobile-game experts say differing tastes may be to blame. Many Japanese
companies are eyeing partnerships with local game developers to combine
overseas tastes with Japanese moneymaking know-how.
Write to Mayumi Negishi at mayumi.negishi@wsj.com
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