How to land one of the biggest fish in gaming: The story of Nintendo’s new mobile partner, DeNA

Just about everyone knows Nintendo, but what is DeNA?

DeNA (pronounced D-N-A, not Dena) is a mobile game and platform business that, up until last week, was mostly known in its home country of Japan. The Tokyo-based company owns Mobage, one of the country’s largest mobile gaming platforms, and grew its business by focusing on gaming for Japan’s feature phones first,  later moving to smartphones. It is now a major player in mobile games, a market that Newzoo says will hit $30.3 billion in 2015. It has since published hundreds of games worldwide across its three key regions: Japan, greater China (including Hong Kong and Macau), and the West, which focuses on North America and Europe.

But its history was forever changed last week with the groundbreaking announcement of a partnership with Nintendo, which would have it teaming up with the Mario and Zelda maker to put its famed IPs on mobile devices for the first time ever. This deal has Nintendo taking a 10 percent stake in DeNA, and its mobile partner getting a small stake of Nintendo in return.

This partnership is a huge business deal for DeNA. While it has maintained its spot as a major player in the mobile space, it still lags behind others such as Supercell and King. It is currently No. 8 in terms of the top-grossing mobile publishers in Japan, according to App Annie, though it doesn’t make the top 10 worldwide. DeNA West CEO Shintaro Asako told GamesBeat in an exclusive interview that it Nintendo had been its sights as a potential partner since 2010, and through this partnership he believes that DeNA can finally reach Candy Crush-sized audiences.

GamesBeat visited the DeNA headquarters last week to get a look at its offices and find out more about its business, which turned out to be more than just games.

Above: One of the work floors of the DeNA Tokyo headquarters, where employees work on games.

Image Credit: Dale North/GamesBeat

DeNA’s past

DeNA was an online auction platform when it began back in 1999. The company started with only three members, headed by founder Tomoko Namba, a former McKinsey & Company partner and now one of Japan’s most notable female entrepreneurs. The three started their private company in a small, cramped Tokyo apartment, where they created an auction site that would eventually have to go up against Japan’s current giant, Yahoo Auctions.

DeNA saw an opportunity to shift its business to mobile in the early 2000s — a move that was hugely successful for the young company. This worked because Japan was a highly mobile country even at that time, and flat-rate access to 3G Internet allowed Japanese people constant connectivity via their phones. The company got in while Japan was still in the feature-phone age, some three years before the iPhone’s 2007 release kicked off the smartphone craze.

It wasn’t long before the company moved into mobile gaming. It released browser-based games for its Mobage platform, which quickly grew to reach over 30 million users in Japan. DeNA then bought U.S.-based mobile games developer Ngmoco and attempted to launch its platform overseas, but it found itself up against Apple’s App Store and the Google Play store, both official platforms that quickly became much larger.

Above: The lobby of DeNA’s Tokyo headquarters.

Image Credit: Dale North/GamesBeat

DeNA’s present

These days, DeNA sees success as a worldwide developer and publisher of mobile free-to-play games. Hits such as Blood Brothers, Defender of Texel, and Rage of Bahamut helped pave the way for the company to become a sort of branded games publishing house.

It now builds games on the App Store and Google Play for some very popular entertainment franchises, with titles like Star Wars: Galactic Defense, Transformers: Battle Tactics, and Marvel: War of Heroes topping digital charts. DeNA also partners with large game publishers like Tokyo-based Square Enix; a recent collaboration between the two will bring Japanese mobile hit Final Fantasy: Record Keeper to the west this year — a top-ten grossing title that has seen over 5 million downloads in Japan.

DeNA has about 2,200 employees worldwide, with most of those working on games. Outside of its four Japan-based locations, DeNA has offices in Shanghai, Beijing, Seoul, Singapore, Hanoi, Santiago, Vancouver, and San Francisco. For the fiscal year ending March 2014, the company’s annual net sales were at approximately $1.78 billion.

Above: The entry and signboards for Sakura Cafe, DeNA’s cafeteria. It was named after a founder’s dog.

Image Credit: Dale North

Made in Japan

DeNA’s headquarters are in the heart of Tokyo’s Shibuya, in a gleaming, fashionable, and relatively new 34-story mixed use high-rise, with a lobby on the 21st floor that opens up to outstanding views of greater Tokyo. ‘

The lobby is sparse and sleek, and it seemed eerily quiet. During my visit, a smart-looking meeting space remained unused, save for a quiet couple and a solo phone surfer. The receptionist might as well have been a statue. My shoes squeaked awkwardly as I browsed artwork from various games that decorated the space. They sat alongside a couple of cardboard standees celebrating DeNA’s own professional baseball team, the Yokohama DeNA BayStars. A secret door in a corner slides open to lead to a hallway that connects various meeting rooms and offices.

Unfortunately, all were dark and quiet on this day.

On another floor, though, the largest workspace seemed to house the entire staff among its rows and sections. A good deal of the more than 1,000 employees of the office share this open workspace, where department boundaries are mostly undefined. They manned computers, mostly coding or producing art. Others held impromptu meetings in the corners, over task management charts made of sticky notes. Some laughed, others snacked, and I saw one arranging toys on his desk. One was kind enough to offer me some of his Peeps marshmallow candies.

I met an engineer for Final Fantasy: Record Keeper there. He hails from Fort Smith, Ark., of all places. A brief chat revealed that he went to school at Princeton, where he studied Japanese because he enjoys games. A bilingual career group visit in Boston led him to DeNA, where he now he gets to work on one of his favorite game franchises. He said one of the things that interested him most was how diverse DeNA was.

DeNA is certainly diverse. Its global public relations person, Tomoyuki Akiyama, admitted that it’s kind of hard to keep track of all of the company’s platforms and businesses. When I asked about some signage in the office, he told me that DeNA built Japanese store Seiyu’s (a Walmart subsidiary) e-commerce platform. Somehow this led to a conversation about manga (Japanese comics), which had him pointing out that the company publishes its own exclusively available manga titles digitally on its own international platform, called Manga Box.

One of the engineers pointed me to the corner of the office, explaining that particular section housed DeNa’s Japanese idol streaming video service, called Showroom. The goal for that business is to make stars of Internet talent, he explained. DeNA is even into the geeky stuff.

Akiyama listed off several other business for DeNA during the visit, including a genetic testing service, travel, and even a social network for senior citizens. And that’s not even counting the company’s investment arm or its hand in professional sports.

Above: A colorful block featuring the DeNA logo.

Image Credit: Dale North/GamesBeat

DeNA’s future

DeNA might have continued on just fine as a publisher of games for big entertainment franchises and as a company that has its hands in so many IT sectors. But now that it is responsible for making mobile games using Nintendo’s top IPs as well as creating the social and technological backend that will power Nintendo’s console and software offerings from now on, it is essentially tied to Mario’s future.

Even with as capable as it seems, DeNA is only about 15 years old. But as it partners with Nintendo, a 126-year-old company and the maker of some of the most celebrated gaming franchises of all times, games will likely become even more of a focus for the company.

That quiet lobby and those dark office rooms are probably going to be quite busy very soon.