D2C Inc. Establishes Joint Venture in China, Enters Smartphone Game Market

On June 28, D2C Inc. established a joint venture company, "Shanghai Oriental Pearl Dierxi Culture Media Co., Ltd.," within China's (Shanghai) Free Trade Zone. This venture was formed with Shanghai Oriental Pearl Culture Development Co., Ltd. (OPCD), a subsidiary of Shanghai Media Group (SMG), a major Chinese media and cultural industry group, to enter the mainland Chinese game market.

In recent years, China's online and smartphone game markets have expanded rapidly. The smartphone game market size, in particular, reached 11.24 billion yuan (approximately 185.5 billion yen) in 2013 and is projected to exceed 20 billion yuan (approximately 330 billion yen) in 2014. Furthermore, the number of smartphone game users increased significantly in 2013, growing by 54.7% year-on-year to 215 million (Source: GPC, CNNIC).

The new company will develop its own games and localize, publish, and operate smartphone games developed by D2C Inc. and Japanese companies. It will pursue monetization through iOS and Android platforms, aiming for success in the notoriously challenging Chinese gaming market. D2C Inc. invested 40% (20 million yuan), while OPCD invested 60% (30 million yuan).

Leveraging the synergy between D2C Inc.'s expertise in smartphone games cultivated in the Japanese and Chinese markets and the powerful promotional capabilities utilizing numerous media outlets owned by OPCD's parent company, Shanghai Oriental Pearl (Group) Co., Ltd. (OPG), and SMG, the company will pursue business expansion in the rapidly growing Chinese market.

Tetsuya Yamaguchi, Head of D2C Inc. Consumer Business Division, will serve as the new company's CEO.

<ABOUT D2C Inc.>
Established on June 1, 2000, as a joint venture between NTT DOCOMO, Dentsu Inc., and NTT Ad, D2C is a digital advertising and marketing company. It operates three core businesses: - Advertising & Marketing Business: Provides one-stop services centered on the wireless domain, including advertising handling across Docomo Media and various general media, as well as integrated digital marketing proposals and implementation. - Consumer Business: Develops and provides consumer-oriented apps and content. - Overseas Business: Conducts advertising and marketing operations primarily in Asian countries. In the consumer domain, it offers popular titles such as the smartphone game "Sekigahara Engi," which has surpassed 1.8 million downloads, and the NBA-licensed smartphone game "NBA Dream Team" in Japan, China, the US, and other regions. Total app downloads have reached 10 million.

<About Shanghai Media Group (SMG)>
Established in March 2014 through the merger of Shanghai Media Group, Shanghai Media Services / Radio,TV Division, and Shanghai Oriental Media Group Co., Ltd. As of the end of 2013, SMG had total assets of 44.5 billion yuan (approximately 734.3 billion yen) and operating revenue of 21 billion yuan (approximately 346.5 billion yen). It is one of China's largest mass media and comprehensive cultural industry groups.

＜Shanghai Oriental Pearl (Group) Co., Ltd. (OPG)＞
A cultural industry enterprise listed in 1992 and a subsidiary of SMG. Registered capital: 3.186 billion yuan (approx. 52.6 billion yen). Total assets as of end-2012: 12.083 billion yuan (approx. 199.4 billion yen). Focuses on cultural industries, new media creation, and overseas investment. Operates the popular tourist attraction Oriental Pearl TV Tower, as well as the Shanghai International Convention Center and Shanghai Mercedes-Benz Arena. Also owns a digital TV channel covering Shanghai's subway and bus systems.

＜About Shanghai Oriental Pearl Culture Development Co., Ltd. (OPCD)＞
Established on October 1, 2013, as a subsidiary of OPG, it is a business entity operating in the cultural and content sectors within the China (Shanghai) Pilot Free Trade Zone. It is one of the first 25 companies to enter the zone. Beyond its first-mover advantage as the first cultural and entertainment company to enter the zone, it is expected to leverage the media resources and brand recognition of the Oriental Pearl Group as significant strengths.

＜About the China (Shanghai) Pilot Free Trade Zone＞
An economic special zone approved by the State Council Executive Meeting in July 2013. It promotes financial liberalization, logistics and trade liberalization, and streamlined investment procedures. The Chinese government positions the establishment of this pilot zone as a major turning point in economic policy, following the creation of the Shenzhen Special Economic Zone and China's accession to the World Trade Organization (WTO). It has the potential to expand beyond Shanghai to other regions like Tianjin, Chongqing, and Dalian.

ShanghaiOrientalPearl DierxiCultureMediaCo., Ltd.Overview
Registered: Within the China (Shanghai) Pilot Free Trade Zone
Date of Establishment: June 28, 2014
Officer: Director and General Manager / Tetsuya Yamaguchi (D2C Inc. Consumer Business Division)
Capital: 50 million yuan (approx. 825 million yen)
Shareholders: Shanghai Oriental Pearl Culture Development Co., Ltd. (OPCD) 60%
D2C Inc. 40%
Business Activities: Game Distribution Business

Tetsuya Yamaguchi Profile:
Joined D2C Inc. in 2010. Established the Consumer Business Division in 2011 and engaged in developing new consumer-oriented businesses. Launched smartphone social game operations in 2012, achieving a top 10 ranking in domestic iOS sales within the first year (according to AppAnnie). In 2013, leveraged expertise cultivated in the game business to participate in establishing "D2CR," a marketing company for smartphone app providers.

D2C Inc. News Release
http://www.d2c.co.jp/news/2014/20140711-1804.html