China Social Gaming Market Entry: Japan's GREE and DeNA Comparison
China Social Gaming Market Entry Study Analysis and comparison of Japan’s GREE and DeNA strategies July 2011 By Alexei Poliakov (analyHca1st.com)
China Market Strategy: GREE vs. DeNA China Oﬃce Strategy Overview Product Distribu9on Partners Social networks Developers Mobile Operators Handset Makers Opened oﬃce in Enters China through -‐ Localized version of Strategic alliance with Partnership with online Will leverage The9’s Reportedly in talks with Beijing in 2011 in partnerships. Leverages OpenFeint, a mobile China’s biggest social game developer and exisHng relaHonships some vendors but no order to be partners’ exisHng social gaming network Tencent operator The9, who with leading announcements so far. strategically distribuHon channels. Focus plaUorm (a.k.a. (~600m users) to launched OpenFeint-‐ operators. The9 is GREE close to its on spreading its OpenFeint “Gree PlaUorm for enable the ﬂow of powered “The9 Game reported to be partner Tencent plaUorm among developers Smartphone”) games between China Zone” service and who developing a mobile rather than building a user -‐ Localized games and Japan and expose has R&D staﬀ of 300 for gaming plaUorm base directly. Taps into local from Japan Gree PlaUorm for in-‐house development. along with three developer talent to source Smartphone in China. operators. hit game Htles for its Japan With The9 launched the operaHons. PosiHons itself $100m Fund9 to fund as a mediator between games that “move from China and Japan markets to iOS to Android.” maximize distribuHon and moneHzaHon for both Will co-‐invest with Chinese and Japanese Tencent in local developers. developers to encourage the adopHon of OpenFeint in China In Shanghai from Direct entry in 2006 and -‐ Ngcore social Operates mobile SNS In He-‐up with local Relies on NTT Announced a He-‐up 2006 M&A entry (acquisiHon of gaming engine TianXia with 12m partner NetDragon, who DoCoMo’s with Samsung to pre-‐ leading at that Hme SNS -‐ Social network built registered users. is listed on HK Stock introducHons to install Mobage app on TianXia) in 2009 didn’t pay on top of 91.com Exchange and operates mobile operators. vendor’s smartphones oﬀ. In 2011, changes (mobage.com.cn) Builds a social mobile app store worldwide, including DeNA strategy by ﬁnding local -‐ Localized games community on top of 91.com. NetDragon will China. partner to build local user from Japan and 91.com (91Game use DeNA’s Ngcore community and spread games developed in PlaUorm), a mobile app engine to develop Ngcore social gaming engine China store operated by games. among developers. Makes NetDragon investments in local game In late 2010, put developer companies. approximately $12m in two funds co-‐operated by Japan’s Cyber Agent Ventures and JAIC to invest in small third-‐ party developers from China
SWOT Analysis: GREE vs. DeNA GREE DeNA Strengths Weaknesses Strengths Weaknesses • Strategic alliance with • Partnership with • Long presence in China • Lack of iniHal partners the Tencent Tencent is not exclusive (learned from its own caliber of Tencent • LucraHve high-‐ARPU and can be copied by mistakes with TianXia) • Low brand awareness of user base in Japan rivals • TianXia’s exisHng 12m mobage.com.cn among (alracHve to Chinese • No direct control over user base Chinese users game developers) the distribuHon channels • Considerable degree of • Focus on smartphones • War chest to fund • Small knowledge about control over the leaves out of picture the expansion plans and experHse in China distribuHon large feature phone and • Localized version of • Non-‐existent sales force • High-‐ARPU user base in PC segments OpenFeint is ready (The9 • Focus on smartphones Japan (alracHve to has a ﬁve year license leaves out of picture the Chinese game deal) large feature phone and developers) PC segments • War chest to fund expansion plans OpportuniHes Threats • Tie-‐up with Samsung • AdopHon of OpenFeint • Reliance on by Tencent (lock-‐in) intermediaries to deliver OpportuniHes Threats • Rapidly growing the product – risk of • Going directly to end-‐ • Rival mobile social game smartphone market exposure to potenHal users by building own plaUorms • Booming digital goods shins in power to the social networking service • SubstanHal investments market channel • Booming smartphone to build business from • Rival mobile social game and digital goods scratch can be lost due plaUorms markets to bad execuHon • Slow execuHon of its strategic alliance with Tencent
RecommendaHons / Possible Scenarios GREE DeNA • Gepng developers on board with OpenFeint is key • DeNA should merge or direct remaining traﬃc from to success for Gree in China. In addiHon to TianXia social network to its new venture leveraging Tencent and The9 partnerships to full mobage.com.cn potenHal, Gree should spread the adopHon of • DeNA needs more distribuHon/ promoHon He-‐ups in OpenFeint across the rest of value chain. For China to catch up with Gree-‐Tencent alliance example, co-‐market Gree for Smartphone PlaUorm • Japan with its high-‐ARPU users is very alracHve on mobile operator and Android smartphone market for Chinese developers; DeNA as well as maker’s developer portals (oﬀering localized SDK Gree should oﬀer streamlined billing, adverHsing, and tutorials for download, organizing developer analyHcs and localizaHon soluHons to enable events and workshops). painless distribuHon and moneHzaHon of Chinese • Hiring local sales and markeHng staﬀ is another games in Japan without the need for developers to opHon to consider. establish a presence in the country (China’s Rekoo is • Gree should streamline API, billing and localizaHon a good example of success in Japan but they had to issues in order to start beneﬁpng from He-‐up with branch out to Japan to take care of all the issues). Tencent (the process should be seamless for • DeNA should oﬀer Chinese game developers developers and automated as much as possible). distribuHon on PC-‐oriented Yahoo! Mobage service For example, integraHng MyGengo API for rapid in Japan in addiHon to mobile-‐only Mobage as a localizaHon of games. diﬀerenHator from Gree (many Chinese developers • Gree should outsource some in-‐house game target Facebook and, thus familiar with social PC development to China (Capcom’s case should serve game development) as an example) • DeNA should boost its investments in local small third-‐party developers to win more supporters for Ngcore engine.