Why Mobile Social Games Need a Platform Now More than Ever

Ethan FassettSVP of Product

Founded

Founder & CEO

January 2011

Naoki Aoyagi

Tokyo

San Francisco

Founded

December 2004

Yoshikazu Tanaka

CEO

International

GREE Overview

Japan’s Leading Mobile Social Gaming Platform

OpenFeint Overview

Leading Mobile Social Gaming Ecosystem

• Mobile social gaming standard with millions of users globally

• Cross platform ecosystem: iOS + Android

• Open source & customizable UI

• Founded in April 2009 in Burlingame, California

• Acquired by GREE in April 2011

Net Sales & Operating Profit*

USD 2007 2008 2009 2010 2011

Net Sales 3.8M 34.6M 164.1M 414.5M 750M

O. Profit △ 1.2M 12.3M 98.4M 230.3M 370M

US

D (

Mill

ion

s)

* Fiscal year-end, June

GREE Financial Overview

• $5 Billion market cap

• Fastest Growing Tech Company in Japan* with 2,636% revenue growth over three years

• Net sales and operating profit grew 36% and 35% respectively over Q1 to Q2, FY2012

* Deloitte Technology Fast 50 Japan 2010

GREE’s Global Reach

San Francisco

London

Tokyo

Beijing

Singapore

Amsterdam

São Paulo

Seoul

Dubai

2010 2011

7500+Live Games

Live G

am

es

2010 2011

Growing User and Game Network

190+ MM Unique User Accounts

Pla

yers

(M

illio

ns)

2012 2012

mobile social designA Platform Symbiosis

Growth in Free-to-Play Games

Game Design Shifting to Freemium with IAP

Premium games monetize users once

F2P games monetize users many times

Virtual goods market was $7.3B in 2010; will double by 2014

Premium Game

Free-to-play with IAP

Longer play = more $$$$

Download App

Time game played

$ Paid

User Revenue

Source: Zynga SEC filing, via In-Stat market intelligence firm.

Free-to-Play Games Monetize

16 of Top 25 Grossing Games are Free

Source: iTunes store January 18, 2012

Free Apps Increasingly Generate Revenue

Source: Distimo Report, 2011 (* Top 200 grossing iPhone apps in the US per month)

% of 2011 Apple App Store Revenue from Free Apps

Goal of Freemium Games

=LifetimeValue(LTV)

Revenue Per User X

Player Engagement

Cost Per Acquisition

(CPA)

Increase Player Lifetime Value (LTV)

Goal of Freemium Games

=Cost Per

Acquisition (CPA)

Ad Campaign Costs + Marketing Campaign Costs

Users Acquired through Campaigns

Minimize Cost Per Acquisition (CPA)

SNS or social platform

Game Economics

Social Games are Special

=LifetimeValue(LTV)

Revenue Per User

X

Player Engagement

Cost Per Acquisition

(CPA)

Social is a unique variant of “freemium”, that uses social network effects to increase LTV and lower CPI/A

Request

s fr

om

fr

iends

Social Gaming Ecosystem

Social Games are More Efficient on Platforms

Facebook: Users Start with SNS, then Discover and Play Games

Mobile: Users Start with Games, then Tap into SNS

Benefits of Social Games Ecosystem

• App portal optimizes distribution

• Cross promotion builds user base

• Social & communication tools engage users

• Games and platform engage users

• Viral effect cross games

• Standard virtual currency across all games on platform increases ARPU

Optimizes Acquisition, Retention, Monetization

SNS

Acquisition

Retention

Monetization

SNS

Why Fragmentation is Inefficient

Multiple campaignsAvg optimization

“Loose coupling” of users

Email, SMS, notifications

Dependent on retentionUniv. currency, VG tools

High cost

Lesser results

Low retention

Difficult to increase ARPU

Inhibits Acquisition, Retention, Monetization

Acquisition

Retention

Monetization

Ad Networks

Native Services&

Weak Channels

LimitedEconomic

Scale

Market comparisonPlatform Examples: JP & US

GREE Japan Platform

Grew as a Game Platform on a Carrier Platform

Use

rs (

Mill

ion

s)

GREE

2003 2004 2005 2006 2007 2008 2009 20102000 2001 2002

Japanese Mobile Carriers

1st mobile social game

launches GREE goes public

Launched in 2007.

Successful for over 4 years.

Goals are to fish, buy special tools, participate in events, and show off skills.

Why so popular?•Popular hobby•Simple rules•The more you play, the more you discover – simple but involved game play

World’s First Mobile Social Game

GREE’s Tsuri Star Shows Early Design

Facebook & Zynga Users

Zynga DAU Grew on Facebook Platform

Sources: Zynga SEC Filing and Facebook SEC Filing.

Daily

Act

ive U

sers

(M

illio

ns)

Zynga Revenue Growth CityVille

Farmville

Café World

Daily

Act

ive U

sers

(M

illio

ns)

Reven

ue (M

illion

s)

FacebookDAU

ZyngaDAU

Zynga Annual

Revenue

*

Note: FY 2011 Zynga revenue is speculated based on the assumption that Q4 revenue will be the same as Q3 revenue.

Case Study: Zynga

Acquired 400K new users Acquired 1M new users

Sources: http://www.pocketgamer.biz/r/PG.Biz/NaturalMotion+Games+news/news.asp?c=37153http://www.gamasutra.com/view/news/39747/Analyst_Zynga_is_losing_150_per_new_paying_customer.php?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fingergaming+%28FingerGaming%29

Lost $150 Per New Paying Customer

Earned $30 Per New Paying Customer

Each new user

spends $150

Each new user

spends $150

A B

Zynga Spent $120M on Marketing (Jan-Sep 2011)

Current global marketEmerging Mobile Social Platforms

High-DAU vs. High-ARPU

CityVille

•10MM+ DAU•Highest MAU FB game•Lions share of FB users•Leverage DAU to cross promote other games

Strategies Differ with Platform Conditions

Kingdoms of Camelot

•210K DAU•High % paying users•Maximize LTV•Competitive strategy in consolidated market

NimbleBit: Tiny Tower

Social games can be successful without platforms and viral friending loops

Apple named Tiny Tower the 2011 iPhone Game of the Year

Boasts 1 million DAU

Zynga recently announced similar title on mobile called Dream Heights

Mobile Social Game Without a Platform

Sources: http://www.pocketgamer.biz/r/PG.Biz/Tiny+Tower/news.asp?c=36660http://www.gamesbrief.com/2011/07/ios-tiny-tower-on-track-to-make-3-million-in-its-first-year/

Global Mobile Market Challenges

… but several platforms are emerging

Potential Platform Landscape

SNS Focus

Game Focus

Social Platforms Meta-Platforms

Studio PlatformsOS Platforms

Business Field

SNS Platform

✔

✔

-

-

Game Mobile

✔ ✔ ✔✔

✔

DeviceGlobal

Unified ID

✔ ✔ ✔ ✔ -

✔

✔

✔

✔

✔

Business Strength

✔

GREE Integrates User IDs, SNS, Games, Platform

Game Center

Google+

✔ ✔ ✔

✔ ✔ ✔

✔ ✔

- ✔

GREE global platform

GREE Platform:Addressing a Global Mobile Audience

Social Games7,000+ Games

Current

GREE Japan

Platform

Current

OpenFeint Platform

New Global

GREE Platform

140MM users 12,000+ developers

27MM High-ARPUusers, plus social

know-how

GREE + OpenFeint

A New Global Platform for Developers and Gamers

GREE Platform Strategy

Global

Social

Open

Offer developers the most robust toolset to take advantage of the global mobile gaming market

Comprehensive Offering

Distribution

Analytics

150 MM Users

Unified global platform Key regional distribution partners

Localization services

Cross promotions through developer announcements

Promotional programs

Wall posting

Gifting

Social sharing

Push Notifications

Universal billing

International currency management

Friend invites

Incentivized invites

Social sharing

Gifting

Dashboard access to game analytics

Game, player, and monetization data

Acquisition

Engagement Virality

Monetization

33

We’re Hiring! Apply Now

- Art & UX- Business Analysis- Biz Dev & Operations- Engineering

- Legal- Marketing & PR- Operations- Product - Sales

San Francisco office apply at GREEjobs.com

London, Beijing, Singapore, and Seoul offices apply at corp.gree.net/uk/en/

Thanks! Questions?

@fassetthound