GREE, founded by Yoshikazu Tanaka in Feb, 2004, is now the largest SNS platform in Japan. The company is listed on the first section of Tokyo Stock Exchange in June, 2010 when it has >20 millions users. By end of 2010, GREE’s registered users have reached 23.83 millions and it has around 282 employees worldwide.

Unlike many Japanese local web companies which focus on Japan only, International market, is one of most important business strategy for GREE in 2011. In January 2011, GREE established its subsidiary, GREE International Inc. in the US, and also acquired Atlantis Co. Ltd. More recently, GREE also announced the business collaboration with Tencent, the super Internet giant.

It’s a great honor for TechNode to have the chance of talking to GREE Pr. in Japan which gave us a comprehensive exploration of GREE’s achievement, vision and strategy in 2011.

Users & Revenue: The Impressive Figures

Since November 2006 when GREE first launched its mobile SNS, its user base is increased dramatically every month (see Figure below). By end of December 2010, GREE has 23.83 million registered users. We asked about the demographics, GREE PR friends give us some figures which look very healthy,

  • By gender, 51% of users is Male, 49% is Female;
  • By age, the largest group is at the age of 20-29 which takes 33% of overall users; 27% of users is at the age of 30-39; 20% is above 40 years old; 14% is under the age of 18; and the rest 6% is particular at 18, 19 years old.

Talking about the revenue in 2010, GREE’s net sales has reached 35,231 million yen (~$435.65 millions)  and operating profit is 19,578 million yen (~$241 millions). The interesting point is that approx. 80% of the revenue is from paid services sales, i.e. virtual goods (approx. 80%) and the rest is from advertisement sales (20%).

What differentiates GREE from other social networks in Japanese Market

In Japan, GREE, Mixi, and DeNA are probably the top 3 social networks in Japan. Compared Japanese market with U.S. and
China market, the market size is relatively smaller, but all three networks are doing quite well and profitable (read our previous overview of Japanese social networks), so we came up with question, how GREE differentiated itself from others in Japan. We’ve been told that,

“GREE runs own SNS/provides in-house social games/open own platform. We are currently focusing on social game but will provide any service as an internet business company. We think connection among users can be both virtual and real. Approximately 560 applications are provided by approx. 240 partners on GREE Platform. In the smartphone market, we are the only company providing Web Applications, Native iOS Applications, Native Android Applications. Additionally, we are running our own SNS, with having in-house social games, and opening our own platform. We have a significant strength having these three points.”

TV, GREE’s marketing strategy

GREE has huge advertising expenditures for TV commercial. It says, “We place each TV commercial with checking precisely how much it contribute to new registration. The good point is that, we can count the number of access to the game straight after running our TV commercial.”

Partnership with Tencent in China

Through business collaboration, GREE and Tencent will mutually provide social applications and support the localization of each product.We believe the collaboration will facilitate business of both companies. The reason is that, Tencent serves the largest online community in china and GREE will have great advantage of facilitating the social applications which apply the “GREE Platform for smartphone” to be compatible for “QQ wireless Game Center” in order to provide their contents to many Chinese users. Additionally, GREE is one of the largest SNS in Japan with high ARPU and has abundant experience and know-hows in platform business. The collaboration will facilitate Tencent to expand their business in Japan and also to obtain GREE’s popular titles including GREE’s original ones to “QQ Wireless Game Center.”

GREE in 2011, Expanding to U.S

We are asking how GREE will deal with the competition from Facebook when it starts the business in U.S. “While Facebook is focusing on SNS and platform business for PC, GREE is focusing on business for mobile devices. “As a future plan, we look for any possibilities, including business partnership with various platform providers on standardizing specification of platform.” Says GREE.

Expecting More Social Games from China

GREE says that In Japan, a lot of game applications including most popular game “Sunrise Firm” are provided by Chinese developers. Through the business collaboration with Tencent, GREE wants to mutually provide social applications in the near future. “We are expecting much more of Chinese developers.” GREE added.

The Strategy of 2011: Smart Phone & Oversea Market

At last, we asked GREE about its company strategy in 2011. GREE summarizes:

  • Continue to strengthen and expand original social games
  • Promote growth in the GREE Platform business
  • Develop smartphone services
  • Expand oversea business
  • Strengthen and expand advertising

Besides the oversea business, GREE’s move on the smartphone market really interests us. As iPhone and Android goes more and more popular in Japan, GREE among many other mobile service companies has started shifting (gradually) its business from Japanese featured phones to smart phones. In December last year, GREE has released its first beta Android application, and the iPhone applications such as GREE, Mahjong for GREE etc are also available on market. GREE explains that the company will implement free casual game apps for Android and release one free casual game on iPhone per week. The big plan is that starting from 3rd quarter this year, GREE will transfer existing games to smart phones, which sounds quite promising.