Japan-based Gree is the $5 billion mobile and social gaming company you’ve never heard of.
The company’s games are widely popular in Japan and now the company is expanding globally, particularly in the U.S. and China. Gree in April acquired OpenFeint, one of the largest mobile gaming platforms in the U.S. for $104 million and now is planning to launch its first U.S. game this summer.
I recently met with Gree founder and Chief Executive Yoshikazu Tanaka, a 34-year old billionaire, while he was visiting the OpenFeint offices in Burlingame, Calif.
In the U.S., social games on PCs have been hugely popular, but Gree is betting that mobile will be the next big social gaming wave—and it’s using its expertise from Japan, where mobile gaming is dominant, as a springboard.
“We have been producing social games for about five years,” Tanaka says, noting that that was before Zynga was on Facebook. “We do have a successful model. We think we can apply that globally.”
The Gree games will be aimed at showcasing the OpenFeint platform—which enables developers to add social features like leaderboards and the ability to see which games their friends are playing.
Gree plans to bring its own style of games to the U.S. and OpenFeint’s 84 million users. But it’s not “porting” Japanese games to the U.S. The company is building the games from scratch specifically for the U.S. market, Tanaka says.
Gree plans to launch its first game in the U.S. this summer. The game will be a “next generation gaming experience,” Tanaka says.
THE NEXT ZYNGA?
In the U.S. Zynga has access to Facebook’s 600 million users, but mobile gaming is more fragmented. The distribution channels are varied with Android, Apple’s iOS and carriers, and new games have to compete on app stores for eyeballs. Tanaka says this plays to Gree’s advantage since it now has OpenFeint’s 84 million U.S. users to market and cross-promote new games.
Tanaka says Gree has the chance to do for mobile gaming what Zynga has done on Facebook’s platform.
“We are one of the companies that have an opportunity to be in the position where Zynga is,” Tanaka says. “Just like in social with the Facebook platform where Zynga dominated, the same thing will happen in mobile as well. When there’s a new market there will be a new winner.”
The OpenFeint acquisition is part of a larger global move by Gree. The strategy is a mix of leveraging Gree’s experience in Japan in both social and mobile gaming–while working with local partners to ensure relevant and appropriate games for each market.
In January, Gree partnered with Tencent, China’s largest Internet company in a deal that brings Gree’s games to Tencent’s 650 million users and also brings Tencent’s games to Japan. The deal enables developers to more easily develop games for both countries through standardized technology. Then in April Gree announced a similar deal with Mig33, a gaming company popular in Southeast Asia to make their games inter-operable.
In addition to building its own games, developers on Gree’s platform are key to its strategy. Gree is working to make Gree and OpenFeint’s platforms interoperable so that games can be easily transferred to Japan from the U.S. and vice versa.
“Within a few months or so, there will be developers who we can provide the Gree platform in Japan and at same time (make it available) to developers in the U.S.,” Tanaka said. “It’s will not be a year or two.”
Gree focuses on games with mass market appeal–not just younger hard-core gamers. People 30 and older make up 48% of its users, 20-somethings make up 33% and those under 20 make up 19%. Gree wants a similar mainstream demographic in the U.S.
Gree respects U.S. companies but believes Gree can do better, says Gree’s vice president of marketing and sales, Sho Masuda.
“Though we’re impressed by Zynga, Digital Chocolate, and Popcap Games, who create great games, we believe we can make more customized social games,” says Masuda. “In a lot of social games, what happens is not really social. You’re not communicating with friends. With Gree you can have simultaneous games going on with friends. It’s at that level that consumers want to play a game.”
“Sengoku Kingdom,” A New Game Gree Released In February
The U.S. mobile gaming market is complicated to navigate, but Tanaka is convinced he can replicate his success in Japan. As chronicled in a Forbes Asia profile last year, 34-year old Tanaka was not trained in computer science but was self-taught.
After learning to develop web sites, banner ads and blog systems, he started a social network as a hobby, eventually turning it into Gree. He’s now worth $2.2 billion and is Asia’s youngest self-made billionaire.
Despite the company’s rapid growth, Tanaka says there is still much room to expand, even in Japan, where Gree has 25 million users in a country of 130 million people. Mobile gaming is in its early stages even in Japan, Tanaka says.
The upshot is Gree has seen strong growth. Net income increased 54% in its quarter ending in March to JPY4.7 billion ($58.1 million today). Revenue jumped 77% to JPY16.4 billion ($202.6 million today). The company has a market cap of $5.16 billion and the stock is up 75.8% year to date on the Tokyo Stock Exchange.
Tanaka is betting Gree can do similar things around the world.