Why mobile social games need a platform now morethan ever - Eros Resmini - Openfeint

GREE Overview Japan’s Leading Mobile Social Gaming Platform Tokyo Founded December 2004 Founder & CEO Yoshikazu Tanaka International San Francisco Founded January 2011 CEO Naoki AoyagiConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

OpenFeint Overview Leading Mobile Social Gaming Ecosystem • Mobile social gaming standard with millions of users globally • Cross platform ecosystem: iOS + Android • Open source & customizable UI • Founded in April 2009 in Burlingame, California • Acquired by GREE in April 2011Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

GREE Financial Overview Net Sales & Operating Profit USD 2007 2008 2009 2010 2011 • $5 Billion market cap Net Sales 3.8M 34.6M 164.1M 414.5M 750M O. Profit △1.2M 12.3M 98.4M 230.3M 370M • Fastest Growing Tech Company in Japan USD (Millions) • 2,636% revenue growth over 3 years • Q2 FY2012 record high revenue ($536M) topped Zynga ($311M) * Fiscal year-end, June 30 Source: Deloitte Technology Fast 50 Japan 2010Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Growth in Free-to-Play Games Game Design Shifting to Freemium with IAP Premium games User Revenue monetize users once Free-to-play with IAP $ Paid Longer play = more $$$$ F2P games monetize users many times Premium Game Virtual goods market was $7.3B in 2010; will Time game played double by 2014 Download App Source: Zynga SEC filing, via In-Stat market intelligence firm.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

IAP Increasingly Generates Revenue % of 2011 US Apple App Store Revenue from Free Apps Source: Distimo Report, 2011 (* Top 200 grossing iPhone apps in the US per month)Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Goal of Freemium Games Increase Player Lifetime Value (LTV) Player Lifetime Revenue Engagement Value = Per User X (LTV) Cost Per Acquisition (CPA)Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Social Games are Special Social is a unique variant of “freemium” that uses social network effects to increase LTV and lower CPI/A SNS or social platform Game Economics Player Lifetime Engagement Value = Revenue X (LTV) Per User from friends Cost Per Requests Acquisition (CPA)Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Social Gaming Ecosystem Social Games are More Efficient on Platforms Facebook: Users Start with SNS, then Discover and Play Games Mobile: Users Start with Games, then Tap into SNSConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Benefits of Social Games Ecosystem Optimizes Acquisition, Retention, Monetization • App portal optimizes distribution Acquisition • Cross promotion builds user base • Social & communication tools engage users SNS Social Platform Retention • Games and platform engage users • Viral effect cross games Monetization • Standard virtual currency across all games on platform increases ARPUConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Why Fragmentation is Inefficient Inhibits Acquisition, Retention, Monetization Acquisition Multiple High cost & Through campaigns poor results Multiple Ad Networks Retention “Loose coupling” of users Low retention Channels are Email, SMS, notifications Weak Limited Monetization Dependent on retention Difficult to Due to Univ. currency, VG tools increase ARPU Economic ScaleConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

PC: Casual Game Portals Early Portals Lacked Strong Social Effects Most portals lacked social features, inhibiting player- to-player interaction. SNS Some portals emerged offering weak social features, badges, and micro-transactions.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

PC: Facebook Social Games Emerged on Facebook in 2007 Facebook won social and dominates the online social gaming market. SNS Developers leverage Facebook’s high DAU and social effects to retain and monetize users.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

2012: A Pivotal Moment Smartphone Sales Outpace PC Sales Global Smartphone vs PC Sales出所： MorganStanley 「 Mobile Internet Trend 」より当社作成 Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Mobile: Fragmented Network Games on Mobile are Currently in a Fragmented Player Ecosystem Users currently discover social network within each game. SNS Fragmentation makes acquisition, retention and monetization challenging for developers.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Mobile Game Type Evolution Mobile Game Type Becomes Increasingly Social Free-to-Play Free-to-Play Free-to-Play Social Games Social Games Arcade Games Games with In- (fragmented (within social App Purchases & ecosystem) network) Virtual EconomicsConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Mobile: Social Gaming Platforms Platforms are Emerging to Solve Fragmentation Acquisition Similar to the shift we saw on PC, mobile games are Mobile moving to social platforms. Social SNS Platform Retention These platforms provide efficient channels and Monetization features for developers.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

NimbleBit: Tiny Tower Mobile Social Game Without a Platform Social games can be successful without platforms and viral friending loops Apple named Tiny Tower the 2011 iPhone Game of the Year Boasts 1 million DAU Zynga recently announced similar title on mobile called Dream Heights Sources: http://www.pocketgamer.biz/r/PG.Biz/Tiny+Tower/news.asp?c=36660 http://www.gamesbrief.com/2011/07/ios-tiny-tower-on-track-to-make-3-million-in-its-first-year/Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Business Strength GREE Integrates User IDs, SNS, Games, Platform Business Field Device Global SNS Platform Game Mobile Unified ID Game Center ✔ ✔ ✔ ✔ ✔ Google+ ✔ ✔ - ✔ ✔ ✔ ✔ ✔ ✔ - ✔ ✔ - ✔ ✔ - ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

GREE + OpenFeint A New Global Platform for Developers and Gamers Social Games 7,000+ Games Current Current New Global GREE Japan OpenFeint GREE Platform Platform Platform High-ARPU 150MM+ users users, plus social 12,000+ developers know-howConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Comprehensive Offering 190 MM Users Unified global platform Cross promotions through developer announcements Key regional distribution partners Promotional programs Distribution Acquisition Localization services Wall posting Friend invites Gifting Incentivized invites Social sharing Social sharing Engagement Push Notifications Virality Gifting Dashboard access to game Universal billing analytics International currency Game, player, and management monetization data Monetization AnalyticsConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

We’re Hiring! Apply Now San Francisco office apply at GREEjobs.com London, Beijing, Singapore, Seoul offices apply at corp.gree.net/uk/en/ - Admin & HR - Legal - Art & UX - Marketing & PR - Business Analysis - Operations - Biz Dev & Operations - Product - Engineering - SalesConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

GREE Japan Platform Grew as a Game Platform on a Carrier Platform 1st mobile social game launches GREE goes public Users (Millions) Japanese Mobile Carriers GREE 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

World’s First Mobile Social Game GREE’s Tsuri Star Shows Early Design Launched in 2007. Successful for over 4 years. Goals are to fish, buy special tools, participate in events, and show off skills. Why so popular? •Popular hobby •Simple rules •The more you play, the more you discover – simple but involved game playConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Facebook & Zynga Users Zynga DAU Grew on Facebook Platform Daily Active Users (Millions) Sources: Zynga SEC Filing and Facebook SEC Filing.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Zynga Revenue Growth CityVille * Daily Active Users (Millions) Revenue (Millions) Farmville Café World Zynga Annual Revenue Facebook DAU Zynga DAU Note: FY 2011 Zynga revenue is speculated based on the assumption that Q4 revenue will be the same as Q3 revenue.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

High-DAU vs. High-ARPU Strategies Differ with Platform Conditions CityVille Kingdoms of Camelot •10MM+ DAU •210K DAU •Highest MAU FB game •High % paying users •Lions share of FB users •Maximize LTV •Leverage DAU to cross •Competitive strategy in promote other games consolidated marketConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Recent Zynga in the PressArvind Bhatia, Analyst Zynga spent $120M on Marketing Torsten Reil, CEO of at Sterne Agee (Jan-Sep 2011) NaturalMotion Acquired 400K new users Acquired 1M new users 3M unique payers in Dec 2010; 3M unique payers in Dec 2010; 3.4M in Sep 2011 3.4M in Sep 2011. But factor in 20% attrition rate and attracted 1M new users Spent $300 per new user Spent $120 per new user Each new user spends $150 Each new user spends $150 Zynga Loses $150 Per Zynga Makes $30 Per New Paying Customer New Paying CustomerConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Case Study: Zynga Jan-Sep 2011: Zynga spent $120M on Marketing and users grew from 3M to 3.4M A Arvind Bhatia, Analyst at Sterne Agee B Torsten Reil, CEO of NaturalMotion Acquired 400K new users Acquired 1M new users Each new user Each new user spends $150 spends $150 Lost $150 Per New Earned $30 Per New Paying Customer Paying Customer Sources: http://www.pocketgamer.biz/r/PG.Biz/NaturalMotion+Games+news/news.asp?c=37153 http://www.gamasutra.com/view/news/39747/Analyst_Zynga_is_losing_150_per_new_paying_customer.php? utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fingergaming+%28FingerGaming%29Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Case Study: Zynga Jan-Sep 2011: Zynga spent $120M on Marketing and users grew from 3M to 3.4M A Arvind Bhatia, Analyst at Sterne Agee B Torsten Reil, CEO of NaturalMotion Acquired 400K new users Acquired 1M new users Factors 20% attrition, so 1M total new users Each new user Each new user spends $150 spends $150 Lost $150 Per New Earned $30 Per New Paying Customer Paying Customer Sources: http://www.pocketgamer.biz/r/PG.Biz/NaturalMotion+Games+news/news.asp?c=37153 http://www.gamasutra.com/view/news/39747/Analyst_Zynga_is_losing_150_per_new_paying_customer.php? utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fingergaming+%28FingerGaming%29Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Need to Factor Attrition Rate Case B Factors Attrition, Leading to a Larger Acquisition Number and LTV Users Acquired B 20% Attrition Larger Total New Acquisition Paying Number Users & LTV A (3.4M) Marketing $ 44Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

The Future is Mobile Mainframe Personal Desktop Internet Mobile Internet Computing Computing Computing Computing ~1970s 1980s 1990s 2000sConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

Why mobile social games need a platform now morethan ever - Eros Resmini - Openfeint

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Why mobile social games need a platform now morethan ever - Eros Resmini - Openfeint Presentation Transcript