Social games company Gree said it is targeting a “decisive pivot to a native games business structure” in the coming twelve months, as it looks to counter a drop-off in demand for its web-based titles.
The company’s numbers reflect the same situation that is facing rival DeNA, as the pair look to transition from web-based to native titles. With the native games market being competitive enough already, both Gree and DeNA are struggling to secure new hits, despite their strong online pedigree.
Gree saw sales in its fiscal Q4 fall short of estimates, due to delays in new title releases and “other factors”, and falling sales on existing titles. The rapid growth of the native game market has made it difficult to “reproduce past success models – in the resulting environment it is difficult to create a web game that is a major hit”.
In a statement, the company said it intends to boost the headcount at its native game studios in Japan from 300 to 1,000, and double its number of native game production lines from 10 to 20. This will include shifting staff from its web games operation.
Gree also said it will also strengthen its publishing operations, looking to maximise sales through “cross border, cross-platform opportunities”. Among its focus areas are products targeting “hard-core genres”, expanding its portfolio on Android and in European languages, and increasing the number of titles produced in collaboration with “leading developers”.
Its “top priority” is the “creation of [a] native game hit title”.
Away from the games business, it said that it launched two new services in “non-game business domains”, with three more in beta in preparation for launch imminently. It has already launched a “luxury goods consignment service” and a hotel booking app.
The company reported a profit for the quarter of JPY2.78 billion ($27.15 million), compared with a prior-year loss of JPY310 million, on sales of JPY26.58 billion, down from JYP37 billion.
Operating income was JPY5.80 billion, down from JPY9.55 billion year-on-year.
In the current quarter (Q1 FY2015), it expects native games sales to be flat and web game sales to decline. It is forecasting a net profit of JPY3.3 billion and net sales of JPY26 billion.