Last week, GREE released its financials for the Q1 2013 fiscal year. GREE generated revenue of $466.7 million for the quarter, representing an annual run rate of over $1.8 billion. GREE also had a profit for the quarter of $111.5 million, which extrapolates to about $450 million in yearly profits. I am not a professional (or even amateur) stock analyst, so rather than predict—or try to predict—GREE’s future performance, I will highlight its impact on other social and mobile game companies.
The numbers showed GREE’s dependence upon the Japanese market. Unlike DeNA, which I wrote about a few weeks ago, GREE does not yet have a major success in North America (outside of the Funzio games it acquired). It does, however, have significant costs in its efforts to grow internationally. GREE’s cost of sales increased 123 percent year-over-year, which GREE attributed to its aggressive international expansion.
GREE’s financial results overall were not nearly as strong as DeNA’s but a much more positive sign for the industry than Zynga’s results. They reinforce you can generate high revenue (a $1.8 billion run rate in sales is not bad) and profitability by primarily selling virtual goods. They also show how one or two hits in a portfolio of over 50 games can move you from good to great (Rage of Bahamut probably accounts for most of the difference between DeNA and GREE) and are the difference between success and failure in global expansion. Next quarter, the results may be the inverse and probably would not make one company better than the other. Overall, though, it is great to see multiple social gaming companies with strong revenue and profitability.
I have written several times about the great opportunities for mobile games in emerging markets, particularly some of the lesser known markets such as Vietnam and Nigeria. A recent article in the McKinsey Quarterly, “Act like a hero: How to sell in emerging markets,” did a great job of describing how companies can actually turn these opportunities into profits. Although these opportunities are incredibly exciting, it takes significant effort and the backing of your whole company to penetrate international markets, let alone emerging markets. If your company is at the point where it can focus on building its sales outside the home market, the following steps are a great roadmap to success.
How to succeed in emerging markets
The key to success in emerging markets is realizing the consumer is different and then understanding these differences. What works in the US, Japan or the EU probably will not work in an emerging market, and trying to force that product or strategy can cause a false negative (a perception that there is no opportunity when there really is one). There are three imperatives to accelerate growth in emerging markets: Continue reading “How to capitalize on emerging markets”
To me, one of the most exciting opportunities in social media and gaming is in the truly emerging markets, the countries one or two economic tiers below what is currently considered the emerging economic group (the latter consisting of countries like Brazil, Russia, India and China). I wrote a few months ago about how interesting Africa is potentially to social game companies and I wanted to expand on those thoughts now that a recent TechCrunch article has highlighted the opportunity. Continue reading “Opportunities in emerging, emerging markets”
I find it interesting that the two largest social game companies, GREE and DeNA, generate virtually no press, while you can’t avoid articles about the third largest social game company, Zynga. I believe that because they are Japanese and not US companies they do not generate the same level of attention, but that is unfortunate. People do not draw conclusions about the viability of the airline industry by looking at Spirit’s performance or determine whether the auto industry is rebounding by analyzing Audi, so why look at the third largest game company when assessing the social game industry? If you are an investor, entrepreneur, engineer, etc., and trying to judge the opportunities in social gaming, it makes sense to benchmark against the biggest and best, and that is DeNA and GREE.
Continue reading “GREE and DeNA, the real companies to watch in social gaming”
I have hesitated in publishing a “reading list” because often when I see them on other blogs, they are little more than the author’s effort to get some referral income. As many of you know, I do not monetize this blog at all (there is no advertising and I have refused all sponsorship offers) and the links in this post are not tied to any monetization. With that in mind, I wanted to share some books that have made me much more successful and I think will help anyone in the gaming ecosystem (and probably any other business). Given that we all have very limited time, even to read, I have listed the books by how much of an impact they have had for me. Continue reading “Great books for social game companies”
I just got back from the Bogota Audiovisual Market (BAM) in Colombia and had a chance to meet with many of the game development teams there. Below are my key takeaways from the trip and what may be relevant to you.
Continue reading “My takeaways from the Bogota Audiovisual Market”
I have spoken at several conferences and written occasionally about opportunities for social games on (Web) networks other than Facebook. When I first moved into social gaming, some of the most exciting international economies (Germany, Brazil, Russia, Japan and China) were dominated by social networks not named Facebook. As the landscape has evolved, however, this opportunity is now less important for social game companies.
Continue reading “Whither social networks other than Facebook”
Facebook’s decision to explore the 13-and-under market may present more opportunities for social game companies than the potential legalization of online gambling, but it is not generating nearly as much buzz. I think it is inevitable that Facebook finds a way to allow children under 13 to legitimately use the Facebook service. As the Economist pointed out, a recent study found that 5.6 million US children under 13 were already using Facebook (and undoubtedly millions more throughout the world). If Facebook does not address this issue, not only are they missing out on a business opportunity, they are leaving themselves open to litigation.
Continue reading “Making social games for those under 13”