Asian Mobile Game Companies Bet On U.S.

GAMENowhere are mobile video games more popular ? or lucrative ? than in Asia. And now Asian companies are making big bets that they can spread some of their expertise in mobile gaming to the United States.

In the last year, some of China and Japan?s largest Internet companies and game makers have pumped tens of millions of dollars into American mobile game companies. Tencent, China?s giant Internet conglomerate, invested $126 million in Glu Mobile and $60 million in Pocket Gems, two American game studios. Alibaba, China?s biggest online commerce company, put $120 million in the San Francisco-based Kabam. And Sega, a Japanese company, took stakes in Demiurge Studios in Cambridge, Mass., and Ignited Artists in San Francisco.

At DreamHack, a twice-yearly hackathon held in Jonkoping, Sweden, more than 20,000 participants convene to work on a wide range of digital projects and play games over a single gigantic network.Power in NumbersJULY 16, 2015

That is expected to continue on Thursday, when SGN, one of the largest mobile game studios in the United States, announces a $130 million investment from Netmarble Games, a mobile game publisher in South Korea. The investment, one of the largest in mobile gaming since 2013, is the latest in a string of moves by fast-growing Asian gaming and Internet companies to invest in American mobile game studios.

While this east-to-west migration of capital and mobile games has been picking up steam since 2010, it has intensified significantly in the last two years. In part, the rush is fueled by flush Asian companies and investors. But it is also happening because Asian companies see the gaming market as less crowded in the United States, giving them an opportunity to try some of their games in America.

?They see an opportunity to bring their content over to the West,? David Kaye, founder of Gaming Insiders, a professional network for gaming industry executives, ?so it makes sense for them to invest in U.S. companies.?

As smartphones have quickly emerged as top platforms for video games, Asian countries have led the way in spending on those games. Japanese gamers spent $6.1 billion in 2014 and Chinese players spent $4.2 billion, according to SuperData, a New York City-based market research firm specializing in interactive entertainment. Mobile game revenue for all of North America last year was $4.2 billion.

Tim Merel, managing director of Digi-Capital, an investment bank that specializes in games, said Asian developers were 12 to 18 months ahead of Western game makers at finding ways to make money from games. The majority of successful mobile games are free-to-play at a basic level, with enhancements available for a cost.

But Asian publishers have also had a hard time getting a foot on the ground in the United States. Less than 10 percent of their revenue comes from outside Asia, said Joost van Dreunen, chief executive of SuperData. To change that, Asian companies have begun investing in smaller mobile gaming studios in the United States and the West generally, as they look to build games that will resonate with Western players.

Matthew Wong, research analyst for CB Insights, a research firm that tracks private companies, investments and acquisitions, said Asian corporations were trying to establish a presence in the United States and gaming was one area where experience in Asia could be transferred to America.

?In addition to that, a lot of mobile gaming companies here want to move into the Asian market,? he said, ?so finding strategic partnerships is important for both countries.?

That was the thinking of Chris DeWolfe, the hard-driven but soft-spoken chief executive at SGN. The company, which started in 2010, will have revenue this year of about $280 million, he said. For each of the last two years, Mr. DeWolfe said, revenue has grown about 300 percent a year.

Among the six most popular games SGN makes for smartphones is Cookie Jam, a puzzle game where players strive to get three of the same game pieces. Juice Jam, another matching puzzle game, features fruit, rather than cookies and cupcakes. And in the game Panda Pop, players work their way through increasingly difficult levels to rescue baby pandas.

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