GREE (TYO:3632), Japan's $4.7 billion online media giant and regional rival to U.S.-based companies like Facebook Inc. (Nasdaq: FB) and Zynga Inc. (Nasdaq: ZNGA), ventured further into American soil Monday with another developer acquisition.
The company, known for its nationally popular social network of the same name, acquired the California-based mobile game developer App Ant Studios for an undisclosed amount. GREE already has a leg up against other social networks like Facebook since the vast majority of its users access the server through mobile devices already -- a transition Mark Zuckerberg recently said his company must make soon. Already focused on selling virtual goods and other freemium services and mobile games, GREE is angling for continued growth by securing first-party development to expand its user base beyond Japan.
"GREE strives to build the world's leading global mobile gaming ecosystem," the company said in an emailed statement Monday. "The acquisition of App Ant Studios will help GREE reach its goal of having 1 billion users worldwide as it expands its robust portfolio of games on GREE Platform." In addition to its high-quality games, GREE says the Platform will deliver unique social gaming experiences, as well as offer developers access to a growing, engaged global audience.
Rivals like Zynga have had to retreat from their hasty acquisitions of mobile wonders like "Draw Something" creators OMGPOP thanks to their struggling business prospects, and even established publishers like Electronic Arts Inc. (Nasdaq: EA) face buyout rumors. So the foreign GREE's bold acquisitions in a fiercely competitive American marketplace stand out. Just last year, the Japanese company bought the mobile gaming social network OpenFeint for another $104 million. It followed with a similar purchase of the highly profitable developer Funzio in May for $210 million. All the while, the company has remained profitable while its competitors in the United States posted slower growth or losses. GREE netted ¥12.3 billion ($156 million) in net profits on ¥40.1 billion ($508.5 million) in revenue last quarter alone.
"The team at App Ant Studios has continually impressed us with the quality of its engineering, art, and overall product," said Naoki Aoyagi, chief executive of GREE International, the company's U.S. subsidiary, in an emailed statement. "They share the same strong passion GREE has for mobile social gaming, and we genuinely respect their dedication to evolving the gaming industry. With our constantly growing and evolving mobile-game market, having such exceptional talent on board to build great experiences for the latest hardware is a huge priority for us."
GREE and App Ant Studios previously worked together in developing "Dino Life," App Ant's most recent mobile game. With plans for an ambitious expansion into the U.S. and Europe, GREE is hoping to make the most of its lineup of titles for user conversion and diverse monetization models. "Dino Life," for instance, focuses on Pokemon-like card and character collecting. And given Monday's news that more than half of the European video game market consists of these sorts of freemium titles, GREE may very well be poised to unseat struggling online gaming giants like Zynga and even Facebook in the near future.
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