‘Monster Strike’ Gives Former Social Media Giant Mixi a Second Act
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Version 0 of 1. TOKYO — It was a familiar trajectory for a social network like Facebook that did not happen to be Facebook: One moment there were tens of millions of users and a multibillion-dollar stock market valuation. The next, a plunge toward whatever-happened-to-it oblivion. But the Japanese technology company Mixi, once the dominant social network in its consummately Internet-connected home market, is rewriting the ending to its story, thanks to a striking act of self-reinvention. Abandoned by most of its users and investors a year ago, Mixi has come storming back in a new field: mobile video gaming. The company is profiting from a hit smartphone game that it started marketing in late 2013 in what looked like a desperate attempt to stave off collapse. The game, Monster Strike, has been downloaded more than 20 million times, mostly in Japan, and it is earning Mixi about $2 million a day in revenue. It was the company’s first foray into game development — a success that feels as unlikely as, say, Myspace creating the next Angry Birds. “What we’re seeing is Mixi’s second coming, and it’s much bigger than the first,” said Serkan Toto, founder of Kantan Games, a consulting firm based in Tokyo. “They were on their knees when Monster Strike came out.” Kengo Inoue, 16, a high school student in Matsue in western Japan, said he had never heard of Mixi the social network. “All I know about it is it’s the company that makes Mon-Suto,” he said, using the popular slang name for Monster Strike. He has been playing it for about a year, he said, inhabiting heroic animated characters and battling dragonlike enemies, alone or with teams of friends. At his most “crazy” he regularly played for two hours at a time — stretching the definition of so-called casual phone gaming. On one level, Mixi’s turnaround illustrates how inexperienced challengers have dominated the relatively new business of mobile games, while established game developers from the home-console era have struggled to make a mark. The founders of King Digital Entertainment, the British start-up behind the hit Candy Crush Saga, got their start with an online dating service before moving into games. In Japan, the most successful mobile game developer, GungHo Online Entertainment, was little known until it released its popular game Puzzle & Dragons. Yet perhaps no game developer has come to the field after a previous rise — and fall — as meteoric as Mixi’s. Unveiled in February 2004, the same month as Facebook, by a 28-year-old Internet entrepreneur named Kenji Kasahara, its social network quickly attracted a following in Japan. The company went public two years later, and by late 2007 investors valued it at more than $3 billion. For a while, it looked as if Mixi might become one of the few social networks to resist Facebook’s global onslaught. It was gaining users even after Facebook started a Japanese-language version, in 2008. At one point, 27 million people, or one in five Japanese, had a Mixi account. But eventually Mixi succumbed, as users turned to Facebook and other social networks like Twitter and Line, a popular messaging app. Last year, it stopped publishing membership data after the number of people who logged on at least once a month fell to half of what it had been at the company’s peak. Experimental ventures like matchmaking and photo-sharing services failed to catch on. Last year, Mr. Kasahara stepped aside as chief executive, succeeded by a 30-year-old former McKinsey consultant who had once trained as a jockey in Australia. Mixi’s stock dropped to 5 percent of its peak value. All of this was before Monster Strike. In the last year, the company has recouped all its stock market losses and then some as investors have poured back in. Content revenue — essentially all from Monster Strike — reached 19.4 billion yen ($161 million) last quarter, or about 90 percent of Mixi’s total income. In June, the head of the game-development division took over as president. “It was a big bet,” the new leader, Hiroki Morita, said in an interview, of the decision to expand into gaming. Although there were precedents — two big Japanese mobile gaming platforms, Gree and DeNA, had started in unrelated Internet businesses — Mixi “had fallen behind,” he said. To differentiate itself, Mixi decided it wanted a game that people could play face to face, Mr. Morita said, “something you could play with friends if you were out drinking, for example.” The company solicited prototypes from outside developers. The one it chose was from Yoshiki Okamoto, who had created the popular console-era franchise Street Fighter. The Monster Strike app made its debut on Apple’s app store in October 2013, and Mixi spent about $5 million on television commercials and other promotions — an unusually aggressive marketing campaign for a smartphone game. “It was a relief when we saw the numbers” for downloads, Mr. Morita said. Like many other mobile games, Monster Strike is free to acquire and play, but users can spend money on special characters and to extend their lives when they are wounded in battles or killed. In the last two months, Mixi has released versions of the Monster Strike app for South Korea, China and the United States, where it has ranked as high as 13th in weekly downloads in iPhone games, according to the app tracker App Annie. Mr. Toto, the games consultant, calculates that Monster Strike is “per capita, the most profitable game on the planet.” It helps, he said, that the game began in Japan, where people spend liberally on all kinds of products through their phones. And while a traditional video game developer would be under pressure to develop the next hit quickly, before users completed every level or got sick of trying, the free-to-play model is all about expanding and updating existing properties, giving Mixi time to grow into its new role. “It’s like a social network in that it never ends,” he said. Mixi has not bothered to tie Monster Strike to its own fading social network. Users can play alone, with nearby friends over a Bluetooth connection or remotely with their Line contacts. Masatoshi Kurosaki, 18, a high school student in Okayama, in western Japan, said he used Line to play with four friends about 80 percent of the time. He does not spend money on the game, he said, but some of his friends pay ¥20,000 or ¥30,000 (roughly $160 to $250) a year to buy characters — sums that can quickly grow for some players. Japanese regulators insisted on age-based limits two years ago. Mr. Kurosaki said, “Some people spend all the money that they earn from part-time jobs.” |