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China	  Social	  Gaming	  Market	             Entry	  Study	   Analysis	  and	  comparison	  of	  Japan’s	       GREE	  an...
China	  Market	  Strategy:	  GREE	  vs.	  DeNA	              China	  Office	                      Strategy	  Overview	      ...
SWOT	  Analysis:	  GREE	  vs.	  DeNA	                                   GREE	                                             ...
RecommendaHons	  /	  Possible	                             Scenarios	                                GREE	                ...
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China Social Gaming Market Entry: Japan's GREE and DeNA Comparison


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China Social Gaming Market Entry: Japan's GREE and DeNA Comparison

  1. 1. China  Social  Gaming  Market   Entry  Study   Analysis  and  comparison  of  Japan’s   GREE  and  DeNA  strategies   July  2011   By  Alexei  Poliakov  (  
  2. 2. 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     Exchange  and  operates   mobile  operators.   vendor’s  smartphones   off.  In  2011,  changes   (   Builds  a  social   mobile  app  store   worldwide,  including  DeNA   strategy  by  finding  local   -­‐  Localized  games   community  on  top  of  NetDragon  will   China.   partner  to  build  local  user   from  Japan  and  (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  
  3. 3. 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  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  
  4. 4. 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   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.