Japanese Mobile Social Gaming Startup Gumi Raises $26 Million

Mobile social gaming is big in Japan. Very big. Mobile gaming publisher Gumi, which has been growing very rapidly lately, raised $26 million last week in a series F round from Jafco, Shinsei Bank, and DBJ Capital. It previously raised a total of $7 million.

I visited Gumi’s offices and spoke with founder Hironao Kunimitsu, who says he expects to use the new capital to roll up other Japanese mobile gaming developers and expand to the Korea, Singapore, and the U.S. (see video).

Gumi has 140 employees. Its growth started taking off this year. The company expects to sell more than $50 million worth of virtual in-game coins this year (see slide below), which can be used by players to outfit their characters and level up. Those gross sales fo coins are split with parters such as the phone carriers and the mobile social gaming network GREE, which is also an investor in Gumi from an earlier round and owns a 20 percent stake.

The company currently has eight games, including Yakuza Wars, Pirate Wars, and FIFA World Class Soccer (co-developed with EA/Playfish). It has 10 million registered users in Japan, and 1 million active users per month. The average revenue per user in Japan is between $2.50 and $4.00, with some players paying $50 to $100 a month in virtual goods.

Kunimitsu explained to me the difference between social games in the U.S. and Japan. In the U.S.on Zynga-type games, people play with their real friends. But Kunimitsu thinks “that makes game not exciting.” In Japan, people play with a looser set of gaming friends—basically anyone who wants to play a game. Gumi matches gamers base don their skill levels.

Overall, the market for social games in Japan is expected to surpass the domestic consumer console market in the next couple years as it surges past the $4 billion mark. Gumi wants very much to catch that wave.