Translation Results Requested Through Conyac Made Public

GREE Is Wrong: Their Hybrid App/Browser Distribution Strategy Will Not Work [Social Games]

What I learned is that many people in the social gaming industry outside Japan don’t know that GREE and Mobage operator DeNA have actually been running multiple platforms in Japan over the last few years, not just one.

Apart from Yahoo Mobage on the PC, these are GREE and Mobage on:

・Japanese feature phones (browser-based)
・iOS (app-based)
・Android (app-based)
・smartphones (browser-based). For a lot of games, i.e. 2D card battle games that require no sound, GREE and Mobage (plus their third-party devs) go for the browser on smartphones, as the 30% tax by Apple and Google isn’t an issue. And in this case, even Japanese iPhone users can pay for items via carrier billing.

To make it clear: in Japan, DeNA and GREE try everything in their power to avoid the App Store and Google Play, as they lose control, have to follow Apple’s and Google’s guidelines, and pay 30% fees on every single cent (or yen) their own and third-party games generate over their lifetime. So far, this hybrid distribution strategy has worked in Japan. Many old feature phone hits, which are technically limited by nature, have been simply ported to smartphone browsers, especially in the early days of iOS and Android. I have even seen quick and dirty ports of games where users are still told to “press a key” to skip a cut scene. Japanese users seem to be OK with this so far.

So far, DeNA has resisted to the urge to offer web-based games internationally to circumvent the Apple and Android ecosystems.

But now GREE announced it is trying to do exactly that, via an “expansion of the HTML5 compatibility of the GREE platform” that’s supposed to start this month. In other words, GREE thinks that it can replicate their smartphone distribution model internationally – but I am pretty sure this won’t work.

It’s worse. It looks like GREE doesn’t know what they are doing outside Japan.

There are more than 2 or 3 reasons I can think of that speak against a “worldwide” hybrid distribution strategy. Here are just some examples:

・As stated by more than just a few people over the last months, HTML5 is not yet ready for prime time, at least not in games. It’s as simple as that. (Note: I am saying this as one of the believers in HTML5.) ・Mobile games are maturing at a fast clip, and many of the top titles can only be offered as native apps, not through the web. This is becoming more and more evident within Japan, too. Most of GREE’s own “next-generation” social games are app-only (example 1, 2, 3). And it makes sense, as users are getting more and more demanding over time. Mobile games in 2012 have nothing in common with those that have come out in 2008. ・GREE says one advantage is that users can pay with their cell phone bill for web-based games. But users worldwide are OK with downloading and paying for games and IAP. Google and Apple have millions of users and credit cards on file. They make billions with the app business model. They are established. Google has enabled carrier billing for Android apps in many markets already, including Japan and the US. ・Hybrid distribution means that GREE will offer users and developers two destinations. This is neither a clear nor a sustainable value proposition. There are some games in Japan, i.e. Dragon Collection from Konami, which have both a browser and an app version at the same time: what’s the benefit for the user – or the developer – here?

・There is no other platform in the US or Europe that has been successful with such a (or similar) strategy. GREE would be the first to “crack” the distribution duopoly of Apple and Google. The question is if this is realistic scenario. And GREE apparently still doesn’t want to integrate Facebook, while DeNA caved in months ago. ・GREE says that one of the reasons for their expansion to the web is that it helps to solve the problem of discoverability that has appeared with the rapid growth of the iOS and Android app ecosystems. But wasn’t that the key pitch of the original/app-based GREE social gaming network to solve exactly that problem for non-Japanese social game developers? There is a whole lot more to say here, but the bottom line is that, at least in my humble opinion, GREE is making a strategic mistake by betting on HTML5 as the key to international success. There is no benefit for users whatsoever. Developers will not suddenly move over to the GREE platform in favor of the App Store or Google Play just because GREE can save 30% platform tax and regain control. I also wouldn’t be surprised to see the company getting watched more closely by Google and Apple from now on for obvious reasons. One consequence could be that GREE-powered games (apps) will not get featured/recommended on the App Store and Google Play, as GREE clearly attempts to establish an alternative platform here.

For now, the only GREE game in English offered in HTML5 is Cerberus Age. More are apparently coming.

Too bad this move doesn’t give me reason to revise my personal perspective on GREE’s and Mobage’s chances as platform providers outside Japan – quite the contrary.