Mugeta: a blatant Mobage knock-off

Mobile | 2008/08/26 01:01 | Web 2.0 Asia

This came on my radar only recently, but there is a Korean mobile game and social network service called "Mugeta", that has copied Japan's popular Mobage service (short for "Mobagetown", or "Mobile Game Town") down to the name itself: "Mugeta" in Korean is short for "Muryo (free) Game Town".

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The service is provided by Entaz, a mobile content service provider, through KTF (Korea's #2 carrier). Mugeta began service in April this year, and reached 0.2 million subscribers mark in just four months. To put this in perspective, Mobagetown of Japan has been around since February 2006 and today has 9 million subscribers. So at least in terms of growth, Mugeta is pretty impressive.

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Mugeta is free - users get mobile games (there are 58 game titles available now), avatars, mobile homepage (called "phone-py", perhaps after the minihompy), all for free. Mobagetown also used its free content to build up the initial user-base, and when they amassed a big user base, monetization followed.

KTF says over 70% of Mugeta service users are teens (under 20), and female users take up 43%, which is pretty high compared to other mobile content services.

Well, in this age of globalization, a best practices in one country can get copied very quickly in other countries. People may quickly point their fingers to China, as that's an easy one to spot, but StudiVZ shows that Germans know how to copy, too. That said, I seriously wonder if Mugeta has partnered up with DeNA (the provider of Mobagetown) or is paying them royalty. Otherwise, I would be very uncomfortable.
TAG Games, KTF, Mobagetown, Mobile, Mugeta

One of the best mergers happened in the history of Korean web industry was between Naver, a Korean portal, and Hangame, a popular online gaming site. Naver acquired Hangame to form NHN Corporation in 2000. Until this time, Naver had been considered a fledgling, promising web portal at best. Naver was fairly popular, but was a #4 or #5 player - with the solid leader being Yahoo Korea which looked nearly impossible to be dethroned.

But it turned out Naver was very smart, as the company kept investing the cash earned from its Hangame service into Naver search to make the search service better and better, until it became somewhat of a monopolizing web search among the Koreans. Someone at Naver, most likely its founder and Chief Strategy Officer Haejin Lee, had a piercing eye through to the future and saw that search was going to be the biggest killer app of all time on the web. Buying Hangame was a well calculated tactic as improving search required funding and Naver was yet a publicly traded company, though the company just finished $10mm funding. Hangame wasn't cheap at the time either (valued at some $60mm, with Naver worth about $250mm at the time), but Naver decided to make a big bet on Hangame - and the combined company took off from there.

I recently read a story on EST soft, a Korean software company that recently went through IPO (getting itself on the rare list of tech IPOs lately). EST Soft is best known for its Altools suite of free software. EST charges corporate customers, but still the revenue wasn't enough for them to go public. So they started an online game service, including Cabal Online. Gaming service made up about 2/3 of EST's total revenue last year, and without the revenue contribution of game service, EST Soft wouldn't have been able to go public successfully this year.

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So, from the cases of Naver and EST Soft, one is faced with a question: Is gaming service the proven cashcow for web and software companies? At least in the Korean market, the above statement has seemingly held true. Game services has been to web/software companies what Jonathan Papelbon has been to Boston Redsox - namely, a trustworthy reliever who could help them win.

It's no secret that web services are very difficult to monetize, and I assume this is not the case for only the Korean market. When faced with a right business model, folks have resorted to things like Google Adsense, freemium, and mobile service. Well, how about adding to the list a gaming service, as a sideways cashcow business that can assist the main business by injecting cash? What do you think? Is this a good strategy, or a less desired strategy that only diverges the company's business model? Will this work in other markets like China or the US?

TAG Cabal Online, EST Soft, Games, Hangame, Naver, NHN