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Gree shifts focus from HTML5 to native games, amidst earnings slump

Gree shifts focus from HTML5 to native games, amidst earnings slump

August 13, 2014 | By Alex Wawro

Japanese social games company Gree is moving to make major changes in the way it does business as its earnings continue to slump.

The company laid out a plan in its 2014 fiscal year earnings report to shift its focus from HTML5 development to native apps in the new fiscal year, which will entail increasing the number of people working on native game development at its Japanese studios from 300 to 1,000 and doubling the number of native app-based franchises it operates.

A spokesperson for the company told Tech in Asia that by making the switch, it can better take advantage of the capabilities of mobile platforms it launches games on.

This is a big deal, because the company made a show of focusing on HTML5-based games via its Gree Social Platform in 2012. The idea was to streamline development and create an ecosystem that would sidestep the revenue cuts that come with distributing games through proprietary app marketplaces like the Apple App Store.

Amidst this push away from HTML5, Gree is also shifting focus to produce more "hardcore" mobile games for the Western market -- which explains the hiring of former Kabam Studios president (and newly-appointed Gree International COO) Andrew Sheppard.

Gree says that overall consumption of coins (its in-game currency) grew 14 percent year-over-year, due primarily to the growing popularity of its native mobile games in markets outside of Japan. Coin consumption on smartphones (as opposed to feature phones) now accounts for roughly 73 percent of the company's total coin consumption.

Still, earnings slumped; for the fiscal year ended June 30, 2014, Gree posted revenues of 125.6 billion yen ($1.22 billion USD), 26.64 billion yen ($259 million) less than it reported in the previous year. Profits also dropped year-over-year, falling 5.17 billion yen ($50.4 million) for a total of 17.35 billion yen ($169.3 million) for the current fiscal year.

Looking ahead, the company expects to generate 26 billion yen ($254 million) in revenue during its first 2015 fiscal quarter, and forecasts profits of 3.3 billion yen ($32.2 million) in the same period.

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