Rakuten, the Japanese e-commerce giant, is preparing to enter the mobile games space soon, according to a report from the Wall Street Journal.
The Journal said that, inspired by the success of Pokémon Go and Nintendo’s much-anticipated move to mobile, Rakuten has created its own smartphone games division. The firm is said to be working with Blackstorm Labs, a U.S.-based startup that raised $33.5 million from investors including Rakuten this year, to develop a platform that would include titles from Rakuten and third parties that can be played inside a mobile web browser, chat app and other places.
Blackstorm is notable for its own platform which helps game creators go beyond the Apple App Store and Google Play on Android by creating games for alternative platforms like chat apps, and VR.
Rakuten is reportedly focused on the Japanese market first, which makes sense because not only is it home-soil but also the world’s most lucrative market for smartphone games.
Rakuten did not reply to a request for comment.
Messaging app Line is perhaps one of the best examples of what smartphone games can do when connected to chat apps. Line went public in a dual U.S.-Japan IPO that raised over $1.1 billion, and its sales from 2015 reached $1 billion — the majority of which came from its ‘connected’ games platform, with Japan its most lucrative market.
Facebook is also focusing on chat app-based gaming with a new platform that is currently under development. Earlier this week, TechCrunch reported that the social network is testing “instant games” inside Messenger using titles from third parties such as King.com.
That format could be one of the concepts that Rakuten is working on. That would make a lot of sense since it would build on the work of Viber, the chat app that Rakuten acquired for $900 million over two years ago.
Early last year, Viber introduced social games that its users can play via its chat app. In the same style as Line, users purchase in-app items and battle each others scores, all of which creates a tidy amount of revenue — although neither Viber nor Rakuten has ever revealed how much money its games gross.
Rakuten’s business has undergone major restructuring this year, amid increased competition from Amazon and others on its core e-commerce business in Japan.
The company wrote down $340 million in assets and exited Southeast Asia in February, then, in June, it cut back on its business in Europe. CEO and co-founder Hiroshi Mikitani announced a new ‘2020 Vision’ for Rakuten earlier this year, which places emphasis on Viber, video-streaming service Viki (acquired for $200 million) and other assets which will be pushed to help monetize and grow its e-commerce presence on mobile.
Despite global cut backs on e-commerce, Mikitani remains bullish on the prospects of Rakuten’s U.S. business, which includes Ebates, the cash-back website it bought for $1 billion in 2014.