Intralot gets social; Japan’s social networks new gacha flap; DeNA’s record quarter

TAGs: Betable, DeNA, gacha, Intralot, Japan, social gaming, Zynga

dena-intralot-social-gaming-gacha-japanGreek lottery and gaming tech provider/operator Intralot is the latest gambling outfit to hop on the social gaming bandwagon via a partnership between its Intralot Interactive subsidiary and Greek game publishers Lazyland. The Lazyland Social Gaming Suite has already made its Facebook debut in Italy under the Giochi di Intralot brand.

It’s rare that a month goes by without some significant executive shakeup at social gamers Zynga, and November is proving no exception. CFO David Wehner is leaving (apparently on good terms) to join Facebook. Wehner’s CFO seat will be filled by chief accounting officer Mark Vranesh. Former exec VP of business and corporate development Barry Cottle is now chief revenue officer, and exec VP of games Steven Chiang is now president of games. Chief mobile officer David Ko is now chief operations officer.

Ya-Bing Chu, a former GM of mobile at Zynga, has joined Betable, the bolt-on back-end that allows social game companies to go the real-money route without worrying about having some over-officious gaming regulator shine a flashlight up their back passage. Chu told AllThingsD he hopes the extra revenue stream will allow game developers to reinvest in making new hit games and thus grow their businesses.

Remember the Japanese social gaming ‘kompu gacha’ scandal earlier this year? The games were controversial because they offered users the option to pay to acquire individual virtual goods items – such as cards – necessary to complete a set and thus allow them to progress further in the game. The problem was, the purchases were made sight unseen, meaning a player could end up with nothing of virtual value, which led critics to compare it to gambling. The criticism grew louder when software engineers revealed social game companies were manipulating the supposedly random outcome of these virtual purchases in order to keep users playing – and spending. The furor eventually grew loud enough that social game networks Gree and DeNA announced they would voluntarily phase out the games, but Japanese regulators officially banned kompu gacha just weeks later.

But a new game mode, known as “package gacha” or “box gacha”, is once again raising the ire of critics. In these games, the user is presented with a set of virtual items for sale, with the number of rare/valuable items included in the set clearly labeled. What’s more, the items in the box aren’t refreshed after each purchase, so a user is guaranteed to eventually acquire the rare items if he/she continues to make purchases. Despite the user knowing in advance the odds of acquiring the rare items, critics say the setup encourages vulnerable users to keep spending by ‘stimulating the gambling spirit.’ Macquarie Equities Research analysts David Gibson estimates ‘package gacha’ currently accounts for as much as 40% of Japan’s social gaming revenues and that (just like Zynga) 10% of users account for half of all social game spending.

Speaking of DeNA, the mobile social gaming network recently turned in its Q2 report card for the three months ending Sept. 30, which showed revenues up 45% to ¥50.3b ($633m). Operating income rose 38% to $254m, despite the fact that the company’s business is still almost entirely confined to Japan. Sales of DeNA’s virtual currency Moba-coins hit $700m in Japan during the quarter, but just $30m were sold outside Japan. Nonetheless, DeNA’s US- and European-focused studio Mobage West has published 80 games, with six reaching the top-30 highest grossing apps in Google’s Android store as of Nov. 5. Four Mobage titles – Chains of Durandal, Rage of Bahamut, Blood Brothers and Ninja Royale – exceeded $1 average revenue per daily active user in the quarter.


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