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With FY14 sales down 27% to $1.2 billion, GREE pivots, switching 700 staff to native games

With FY14 sales down 27% to $1.2 billion, GREE pivots, switching 700 staff to native games

Japanese mobile game platform GREE (TYO:3632) has announced its full year 2014 financials, for the 12 months ending 30 June 2014.

Net sales were $1.2 billion (¥125 billion), down 27 percent year-on-year.

Net income was $170 million (¥17.3 billion), down 5 percent.

Breaking out the fourth quarter, sales were down 28 percent year-on-year or 14 percent quarter-on-quarter to $263 million (¥26.6 billion).

Net income in Q4 was $27 million (¥2.78 billion), down 41 percent quarter-on-quarter.

Innovator's dilemma

The background to this performance is GREE's continual struggle to deal with the transition in its core Japanese market from browser-based mobile web games to native iOS and Android games.

Late to this disruption, GREE has struggled to compete with the likes of GungHo Online and Colopl, which have take a stranglehold on the top grossing charts in Japan with games like Puzzle & Dragons and Quiz RPG.

GREE's platform rival DeNA has experienced a similar problem. Its FY14 Q1 revenue was down 37 percent to $349 million.

Going native

In terms of restructuring, GREE has announced that it will double the number of native games it develops, boosting its headcount from 300 to 1,000, by switching internal resources.

As part of this, GREE says it now has a strong focus on "game originality and playability", which raises the question about what it was previously focused on.

Whether this is move is too late is unclear, but the slightly better news for GREE shareholders is that the company saw revenue from smartphones up 14 percent year-on-year, with growth strongest outside of Japan, up 120 percent.

GREE's League of War  has been one bright spot in the west

It also says that its new internal Wright Flyer Studios has seen its debut title Shometsu Toshi  generated 1 million downloads in a month.

GREE-owned Pokelabo has also seen some success in Japan with games such as The Samurai Kingdom and Cross Summoner.

Rise in the west

Outside of Japan, GREE is looking to new international COO Andrew Sheppard - hired from rival Kabam - to help it regain the initiative, in terms of more hardcore titles and increasing the number of titles created with external developers.

Two of GREE's relative success stories in the west are Knights & Dragons, which was developed by Canadian outfit IUGO and League of War, made with US studio MunkyFun.

More strangely, GREE Is also looking for opportunities outside of games, releasing a last-minute hotel booking app, and a luxury goods consignment service, as well as investments into mobile rewards, online reservations and enterprise communications companies.

[source: GREE]

Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.

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