Market Insight

Gree agrees Singtel deal following quarterly revenue decline

November 14, 2012

Jack Kent Jack Kent Director, Media and Advertising

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Japanese mobile social games operator Gree has signed a deal with leading Singapore-based mobile operator Singtel which will see the carrier provide direct operator billing for Gree's mobile web-based games platform.

Gree's deal with Singtel extends beyond billing as the two companies will engage in joint marketing initiatives to promote the service.

Gree, which reported a quarter on quarter decline in revenues for the second consecutive quarter (revenues dropped from 40.1bn Yen to 37.9bn Yen from Q2 to Q3) also announced:

-plans for a browser-based HTML5 mobile games platform

-a new partnership with Yahoo! Japan that will enabling users to pay for content using their Yahoo! Wallet and direct Yahoo! users to Gree's smartphone platform

-a partnership with Konami to bring its hugely successful Japanese mobile social game Dragon Quest to Western smartphone platforms

Despite the quarter-on-quarter decline, which follows new Japanese regulations on mobile games monetisation mechanics, Gree has continued to grow year-on-year, with revenues up 25% on the 30.4bn Yen reported in Q3 2011. 

DeNA, operator of the Mobage mobile games platform and Gree's leading Japanese competitor, also reported year-on-year growth, reporting total Q3 revenues of 50.3bn Yen (up 45% year-on-year and 6% on Q2 2012). DeNA also reported that its international activities have started to pay off with $30m spent on Mobage coins in Q3 2012. DeNA continues to lead Gree in the domestic Japanese mobile games business with 42.2bn Yen game-related revenues (the remainder of DeNA's revenues come from e-commerce and advertising ventures).

Gree's move to partner with SingTel for its mobile web-based games platform is a good one. Providing a clear and trusted billing platform is a must for any mobile games service. For a service that exists outside established application store platforms, operator deals are the only logical route for an operator such as Gree which is unlikely to be able to provide its own platform (due to both logistical challenges and issues with gaining user trust).

The move to offer a mobile-web based service, alongside existing native app services, will help Gree provide its developer partners with a more unified development platform and also enables them to bypass the application stores' 30% revenue share to provide a more favourable deal (provided operator billing deals are acceptable).

Despite these advantages of browser-based mobile services, IHS Screen Digest does not expect HTML5-based services outside application stores to challenge the dominate position of native smartphone application stores from the likes of Apple (App Store) and Google (Google Play) in the short-to-medium term. Gree will need to quickly extend its line-up of supported billing partners to make a success of this new platform - it has ambitious plans to add support for PayPal, Visa, MasterCard, JCB, American Express and up to 166 mobile operator partners.

Localisation is also vital to the success of such games platforms; Gree plans to support 14 languages which should provide it with a solid foundation to grow its international service.

Gree's deal with Yahoo! will help it recover ground on DeNA in the highly competitive domestic Japanese mobile games market. DeNA has partnered Yahoo! for a number of years and PC-based Yahoo-Mobage users account for 9m (20%) of Mobage's Japanese audience. Gree's Yahoo! mobile deal is not exclusive, however; DeNA has recently agreed a similar partnership with Yahoo.


Japan Singapore
DeNA GREE Konami SingTel
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