Reuters: By Isabel Reynolds and Reiji Murai
Japanese mobile social gaming firm Gree will aim for 500 million to a billion users worldwide, rivaling Facebook, the company’s founder and chief executive said on Wednesday. Gree this year paid $104 million to buy fast-growing U.S.-based mobile social gaming platform OpenFeint, which has 90 million users worldwide and is adding 2.8 more per second. “We are aiming for 500 million to a billion users, though we don’t have a timeframe, or particular countries,” Yoshikazu Tanaka said. Facebook is said to have 700 million, and we are also aiming for that level,” he added. Gree competes with DeNA in the mobile social gaming market, which grew rapidly with the spread of sophisticated feature phones in Japan, and the two are jostling to export their highly profitable business model, based on in-game microtransactions.
But some analysts say they may face a difficult transition to the smartphone era, with Apple restricting integration of social and gaming applications on the iPhone and the spread of free applications on phones based on Google’s Android operating system. Google this week announced its own social networking challenge to Facebook. Some in the industry expressed surprise at the high price Gree paid for OpenFeint, which made a net loss of $6.6 million on sales of $282,000 in fiscal 2010, according to a Gree statement. Tanaka said he was confident he could turn the business profitable, though he did not specify the timing, saying it would depend on how much Gree chose to invest. Gree itself made 19.6 billion yen ($242 million) in operating profit in the financial year to June last year on sales of 35.2 billion yen, and expects to hike operating profit to 27-30 billion yen in the financial year ending on Thursday.
Tanaka also said he expects more growth in the Japanese market, where Gree boasted more than 25 million users as of March 2011. “The population is about 120 to 130 million, so I think there is still room for growth,” he said. Concerns about the economy in the United States, where consumers are gloomy with unemployment stuck over 9 percent, (ID:nLDE7520PE) are unlikely to affect the company’s expansion, he said. “I don’t think there’s a connection. We have grown very rapidly in Japan in the past few years, even though the economy has not been good,” he said. “It’s a cheap way of enjoying games, because you don’t have to buy a console,” he added. DeNA said in October last year it would pay up to $403 million to buy out U.S. rival ngmoco as it bids to build up its own global network.
(Reporting by Isabel Reynolds; Editing by Chris Gallagher)