Why Mobile Social Platforms Are Critical for Game Developers

Why Mobile Social Games Need a
Platform Now More than Ever

Eros Resmini
SVP of Marketing & Developer Relations

Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.

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 Aoyagi


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 2011


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 2010


GREE’s Global Reach

Amsterdam

London Seoul
Beijing
San Francisco
Tokyo
Dubai

Singapore

São Paulo


Growing User and Game Network

Live Games
Players (Millions)

190+ MM 7500+
Unique User Accounts Live Games

2010 2011 2012 2010 2011 2012


A Platform Symbiosis
mobile social design


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.


Free-to-Play Games Monetize
US App Store: 20 of Top 25 Grossing Games
are Free to Download

Source: iTunes store February 18, 2012


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)


Goal of Freemium Games
Increase Player Lifetime Value (LTV)

Player
Lifetime Revenue Engagement
Value = Per User
X
(LTV) Cost Per
Acquisition
(CPA)


Goal of Freemium Games
LTV Greater than Cost Per Acquisition (CPA)

Lifetime Cost Per
Value Acquisition
(LTV) (CPA)


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)


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 SNS


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 ARPU


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
Scale


Case Study:
Game Evolution on PC & Mobile


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.


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.


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

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.


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
Economics


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.


Emerging Mobile Social Platforms
Current global market


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/


Global Mobile Market Challenges

… but several platforms are emerging


Potential Platform Landscape
SNS Focus

Social Platforms Meta-Platforms

Game Focus
OS Platforms Studio Platforms


Business Strength
GREE Integrates User IDs, SNS, Games, Platform
Business Field Device
Global
SNS Platform Game Mobile Unified ID

Game
Center ✔ ✔ ✔ ✔ ✔

Google+ ✔ ✔ - ✔ ✔
✔ ✔ ✔ ✔ -

✔ ✔ - ✔ ✔

- ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔


GREE Platform:
Addressing Global Mobile Audience
GREE global platform


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-how


GREE Platform Strategy
Offer developers the most robust toolset to take
advantage of the global mobile gaming market

Global

Social

Open


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 Analytics


Thanks! Questions?

eros.resmini@gree.net

facebook.com/gree twitter.com/gree_corp

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 - Sales


Appendix

35

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 2010


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 play


Facebook & Zynga Users
Zynga DAU Grew on Facebook Platform
Daily Active Users (Millions)

Sources: Zynga SEC Filing and Facebook SEC Filing.


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.


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 market


Recent Zynga in the Press

Arvind 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 Customer


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


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%29


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

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%29


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 $

44

The Future is Mobile
Mainframe Personal Desktop Internet Mobile Internet
Computing Computing Computing Computing
~1970s 1980s 1990s 2000s


Why Mobile Social Platforms Are Critical for Game Developers

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