Japan's social game giant Gree the apocalypse: missed the chance to move

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Gree founder Tanaka and is Japan's youngest billionaire on Forbes ' Fortune list this March

Introduction: Foreign media wrote today that the Japanese social game giant Gree in recent years in the mobile gaming field performance, due to miss the global mobile Internet frenzy, its share price has fallen from the November 2011 record high level of 2840 yen to 1224 yen. Gree founder China Tanaka (Yoshikazu Tanaka), the youngest billionaire in the Forbes Fortune list this March, has shrunk from $4 billion trillion to $1.38 billion.

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In the five-year period, Gree, the Japanese social-game giant, became a celebrity investor, and its founder, China Tanaka Yoshikazu Tanaka, became Japan's youngest billionaire with a stake worth 4 billion dollars. But 18 months later, his shares shrank sharply, with only 1.38 billion dollars left.

The 36-Year-old Tanaka and the second-youngest billionaire in Japan are 12 years younger than Japan's billionaire rankings, but his footsteps failed to keep pace with the global smartphone boom. 5 years after Apple's iphone was listed in Japan, Gree's main user base is still a smartphone user, with a revenue ratio of 60%.

Gree said its annual profit would fall for the first time because consumers had flocked to the games offered by Apple and Google apps and gradually abandoned the gree and Dena, the two biggest social gaming platforms in Japan. Gree's share price rose to its all-time highs in November 2011, then halved, becoming the worst performer in the company's 108-Peer stock index.

"They face threats from Apple and Google, and we now face as many as 9 mobile gaming companies," said David Gibson, an analyst David Gibson Macquarie Group in Tokyo. "David Gibson advises investors to sell gree and Dena shares and forecasts that the two stocks will fall by 25% in the coming year.

Gree has been unable to ride on Japan's new government policy to spur growth. The Nikkei 225 index has the best start of the year in more than 40 years, while Gree's decline was almost flat against the 55% per cent gain.

Launch a new game

The exchange rate also failed to help Tanaka and: Gree's share price hit a new high in the week before the yen also rose to post-war highs, then slipped 21%, leading to a further contraction in the value of Tanaka and 48% per cent in dollar terms. At present, the value of Tanaka and its stake has shrunk by 180 billion yen, but he has yet to reduce his share of the stake.

Gree said on February 12 that in the fiscal year ending June 30, the company's net profit could be as low as 31 billion yen (about 311 million U.S. dollars), the first profit decline since the Gree's IPO in 2008. Gree today at 1224 yen, and its November 2011 peak was 2840 yen.

Gree spokesman Shinichi Iriyama said the company is trying to boost game downloads by introducing more new games, such as the "Fishing Star", "Adventure series (Driland)", which is being developed. The company refused to let Tanaka and interviewed.

Gree, a mobile-phone-oriented social networking service, was founded in 2004. 3 years later, the company began offering gaming services through its network platform and launched its first smartphone-oriented gaming application in 2010. This year, the most sought-after game, Angry Birds, was unveiled for the first time. In addition, Gree also offers web games.

Smartphone penetration Rate

Japanese smartphone users surged to 37% from 3% three years ago as of March 31 and are expected to rise to 58% and 65%, respectively, by March 2015 and March 2016, according to data from the Tokyo Market Research Institute, MM study Cato. The global smartphone sales will grow by 28% this year, with a total of 836 million, according to his isuppli, a review and analysis firm.

"The surge in smartphone penetration will make gree and Dena suffer, and the smartphone gaming market is already saturated," Amir Anvarzadeh, Amir Anwazah Asia Equities sales manager at the BGC Group in Singapore, said. ”

Dena's share price also fell 0.6% this year. In February this year, the company said its net profit could grow by 44% per cent in the fiscal year ending March, to 44.8 billion trillion yen. Dena expands its business by providing free internet telephony, online music sales, and partnering with mobile game developers.

Mobile Gaming Market

Japan's Yano research Cato January forecast that in the fiscal year ended March, the Japanese mobile game market size will rise 37%, to 387 billion yen, the fiscal year will be up 10% per cent year-on-year.

Although the market is growing, gree and Dena have lost the monopoly of the Japanese mobile gaming market, and their revenues are likely to stagnate, according to Macquarie Group analyst Gibson.

Gree shares will fall to 800 yen, according to Naoshi NEMA, the investment bank's Cantor Fitzgerald LP analyst. According to the current yen, the value of Tanaka and its holdings will shrink to about 90 billion trillion yen.

"We are most worried about social gaming companies such as Dena and gree," Nema said in a March 7 report, "The Japanese market has not enough room to allow them to expand their user base in any way." ”

Social game pioneer

2007, Tanaka and became a pioneer in mobile social gaming. From the Gree website, Tanaka and his first visit to the Internet in 1996, 3 years later, he graduated from Japanese university and obtained a Bachelor of Law degree. Greee was established before he worked for the Sony Internet division, while at the retailer Lotte (Rakuten INC). Work。

Tanaka and the youngest Japanese billionaire in the Forbes Fortune list this March, and the second youngest is Lotte President Hiroshi Mikitani (Hiroshi Mikitani), aged 48, worth 5.6 billion dollars.

This February, Gree announced that it would recruit engineers to further support its mobile game development. In the second half of the fiscal year ended June 30, the company launched a new game called "Sumo" and launched the RPG adventure game "Nautical Log" (one Piece Adventure log, in cooperation with Southern Dream Generation Holdings Limited (NAMCO Bandai Holdings Inc.) )”

Gambling colors

However, Gree and its rivals, under the supervision of regulators, must remove a gambling-colored feature from its game. The Japanese Consumer Affairs Agency (Consumer Affairs Agency) introduced a ban on "game state note (comp Gatcha)" in May 2012. It's an aggressive sales mechanism with a gambling tinge. Companies such as Gree and Dena must remove this feature. Because of this policy, the Gree development process has been delayed.

At the same time, Gree is also trying to expand its gaming landscape by acquiring small developers. The company has bought 17 companies since 2009, according to Bloomberg data.

This February, gree with Japan's largest portal, Yahoo Japan, to reach a mobile gaming partnership. Last month, the company teamed up with the "Pac-Man" game development Company, PAC, an animation company and Tokyo Television to develop an animated project and sell related products.

"Low Valuations"

"Gree is making big investments to meet its future growth needs," Mi Keiichi Yoneshima, an analyst at Barclays Bank in Tokyo, and expects Gree's share price to rise to 1600 yen, the fourth-highest forecast in data compiled by Bloomberg. "Gree's current stock valuation is very low," Mi said. He points out that while Japan's social gaming market is hard to maintain its previous growth rate, as the mobile gaming market continues to expand, Gree and Dena, the two companies in Tokyo, still have a chance.

Still, at least one gree early investor has been reducing shares. KDDI, Japan's second-largest mobile operator, said on February 19 that it would sell half of its 6.8% gree shares by May 12.

KDDI claims that the reduction is for investment interests, and its partnership with Gree will not change. KDDI had already invested in Gree before the Gree went public in 2006.

On the other hand, SoftBank, Japan's third-largest wireless operator, said on March 25 that it would inject 25 billion yen into game developers to increase its stake in GungHo Online Entertainment, a Japanese game developer, and acquire the developer.

GungHo said on February 14 that since last year's game "Puzzle & Dragons" was popular, its profit last year reached 9.3 billion yen, nearly 8. The game is available for download at Apple and Google app stores, as well as Amazon's Kindle store. The company announced on April 11 that as of April 9, the game had been downloaded 12 million times.

Macquarie Group Gibson points out that KDDI and SoftBank's actions herald the future of mobile gaming. "The industry has shifted from the existing platform to the new platform, and I believe KDDI and SoftBank should have seen this," he said.