Japan's Biggest Social Player Turns Its Eyes On the U.S.
July 15, 2011 Page 2 of 4
Has the direction changed for OpenFeint since GREE acquired the company? Has expertise from your success in the Japanese market shaped the future of it?
NA: The answer is yes and no. Because, we decided to keep the OpenFeint brand, because the developers and the number of users -- they know the OpenFeint brand, but not GREE yet, so as a platform we're going to keep the OpenFeint brand. Because, as a platform, we don't want to lose the momentum -- and I think now the relationship with developers and users is very good, also.
So yeah, that's the one thing. But also, the management team, they stay even after the acquisition. Of course we give them the incentive. So yeah, that part, it's going to remain.
But as for the functionalities, we agreed to upgrade OpenFeint. For example we launched, in June, a new service called GameFeed [with] which we're going to kind of provide some distribution channel across the OpenFeint games. Also we plan to enhance communication among users, so we're going to do a lot of updates on the social community functionality side. That's the overall plan.
And you talked about you're keeping the OpenFeint branding. Are you going to be using the GREE branding on anything beyond a corporate level in the U.S.? Like anything consumer-facing?
NA: Both the consumer-facing and corporate brand, we're going to use the GREE brand as well. In the U.S. we have two parts. One is the OpenFeint platform, and the other thing is gaming studio part. GREE International is working on making games. So now we are, I think, in this summer, we're going to launch social games, mobile social games on the OpenFeint platform.
So it strikes me to know that we have both platforms and also killer content. I think you know GREE is going to contribute to OpenFeint by introducing some killer content, then expand the user base more. Then third party developers, they're going to get some benefits from that. We tried to kind of achieve such a combination -- integrated model -- but at the same time, we're going to operate OpenFeint as a kind of independent entity, so that's kind of, I think, a difference from other players.
I think that's different from the companies like Facebook and Apple, because they're doing all platform things. Then the other gaming companies, they don't have a platform. They're making games, but they don't have the mutual user base. So we can leverage. We have both content and platform.
So that's the important part of the strategy, in your view? To have both a platform and original developed content to deliver onto that platform?
NA: That's right. I think that's too different from the other platforms. And that's actually the same as what Nintendo has been doing, Sony Computer Entertainment, [what] they, I think, have been doing, in console.
Because content is really important, so at the same time, you know if it's only with first party games, it's very difficult to reach the right number of users -- so it's good to have both platform and content.
Though Nintendo has struggled in a certain sense, because its own content is so good that it makes it hard for third party developers to compete with that content.
NA: Yeah, that's right. So we don't want to heavily rely on first party games, and we have to help developers, because to reach the mass market, we need to have the developers help. So we don't want to be very arrogant. Also we have to keep the balance between the first party and third parties. That's my understanding, and GREE has been doing that, operating in Japan.
In Japan, as I said, we have some very good killer content. Some by third parties, but also we have first party games; we have a very good number of users, I would say more than 25 million users.
And we do a lot of promotion in Japan. We are actually one of the largest TV ad clients in Japan. As we have our own first party content, we can do that. That will enable us to do massive TV promotion. Actually, last quarter, we spent 40 million U.S. dollars -- actually more than three billion Japanese yen [$38 million] in promotion and marketing, and the majority of them are used for TV commercials.
Do you think you'll have a similar strategy of heavy marketing for the U.S. market?
NA: I think the answer is kind of yes and no. Yes, we are doing a lot of promotion, but the content and the way of the marketing has to be a little bit different from that of Japan. Because, for example, in Japan -- Japan is a very small country. The TV commercial is very efficient. But we haven't proven that model in the U.S., so we're going to make a lot of tries. Try things [and] find out the best way to promote our platform.
Obviously you have a great deal of experience so far, and a lot of success in Japan, but moving from one country to another presents a lot of challenges, and you start to see differences in the market.
NA: Yeah, you're right, so that's another reason why we acquired OpenFeint. Also, now we are hiring the U.S. local people very aggressively, because I totally agree with you. Each market is very unique, so that's one of the reasons why we keep the OpenFeint brand, also the OpenFeint team. It's, I think, a different approach from other Japanese companies. Yeah, building a team here in the U.S. is, I think, a key factor of GREE's success.
Now you said you've been recruiting aggressively. Is that management? Is that development talent to make games?
NA: Both. Both management talent and development talent. I think the majority of our members are engineers and designer artists, so yeah, now our focus is on the development talent. But also to expand the operations, and I understand we need to have a variety of people from marketing, operations, finance, strategy.
Also one of the important things is to build a metrics-driven company, which, for example, Zynga and other major Facebook developers do. So we have to build a very strong technology base, also metrics-driven management -- also a sound team with a variety of experiences.
So we're going to hire people from the web industry, like companies like Google, Yahoo. Also from the traditional gaming companies like say EA, Activision, and other gaming companies, because now we're going to see the convergence between traditional gaming, and the web type of social network, so we have to have talent from both the web service industry and also the traditional gaming industry.
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