Japanese mobile Internet company DeNA Co., intent on establishing a broad mobile games business in the U.S., has bought iPhone game developer Ngmoco Inc. for $300 million in cash, plus an additional $100 million if the company meets undisclosed financial targets before the end of 2011.
Ngmoco, founded two years ago by former Electronic Arts Inc. executive Neil Young, develops mobile games, mostly for Apple Inc.'s iPhone, iPad and iPod Touch. Its titles include We Rule, GodFinger and Flick Fishing.
The San Francisco company derives most of its revenue from selling "virtual goods" for its free-to-play games, such as castles for We Rule or pirate ships for GodFinger. To a lesser extent, it gets revenue from selling ads in the games and through game sales. The privately held company does not disclose financial details.
Ngmoco also maintains a platform, called Plus+, for other developers to distribute their games and for players to connect with friends who are also playing the game. About 14 million people have registered for Plus+, Young said.
"They have great games, but what we value in Ngmoco is their platform," said Dai Watanabe, president of DeNA Global, a San Mateo, Calif., subsidiary of DeNA. "We want to use that platform the same way we operate our business in Japan."
Though little known in the U.S., DeNA (pronounced dee'-nah) is firmly established in Japan, where it has 20 million customers. It had revenue of $570 million in 2009 and projects sales of $1 billion this year, not including Ngmoco.
DeNA is betting that it can duplicate its success in the U.S., where the market for social games on Facebook and mobile games for the iPhone and Android devices is growing fast.
Ngmoco is DeNA's third U.S. acquisition. It also purchased Gameview in Mountain View, Calif., and Icebreaker in Bellevue, Wash. In addition, DeNA has purchased a 20% share of mobile gaming company Aurora Feint in Burlingame, Calif., and an undisclosed share of Astro Ape, a mobile game developer in Edison, N.J.
Other companies have had the same ambition. Electronic Arts bought Playfish for $400 million in 2009. Walt Disney Co. snapped up Playdom in July in a deal worth $763 million, shortly after it bought iPhone game-maker Tapulous for an undisclosed amount that same month.