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Financial Results for the Third Quarter of the Fiscal Year Ending June 30, 2012
May 8, 2012
Copyright GREE, 2004-2007 GREE,Inc. All Rights Reserved. Copyright Inc. All Rights Reserved.
Contents Initiatives to Improve User Environment FY2012 Third Quarter Business Results Global Strategy
Making the world a better place through the power of the Internet
Provide a wide range of useful Internet services to people around the world
Rapidly implement appropriate measures to improve services and promote proper use
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1. Establishment of a System for Promoting User Environment Improvement 2. Enhancing Customer Support System 3. Promoting Service Improvement and Proper Use 4. Enforcing Prohibition of Real Money Trading (RMT)
Real money trading (RMT) indicates using usage rights of GREE services to make monetary or property exchanges, as well as all related advertising, announcing and soliciting.
Copyright GREE, Inc. All Rights Reserved.
Game development
Customer support
Compliance
An internal committee under the direct supervision of the CEO, established to discuss and plan measures for improving services, promoting proper use of social games, etc.
Advisory Board
An advisory board established for the purpose of discussing with external specialists measures regarding GREE service improvements, proper use and prohibition of real money trading
Customer support and website patrol system staffed by approx. 600 personnel GREE Coin Telephone Support, a call center for paid service users
Dedicated call centers; full-time staff deal with each case Holding discussions on a regular basis Contributing bylined articles and providing information to consumer magazines and booklets issued by consumer organizations
Procedures for reopening a GREE account for customers who have closed their accounts Providing clear explanation of contract cancellation procedures for minors and responding rapidly to each application
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Promoting Service Improvement and Proper Use Measures relating to underage users
Monthly limits: 15 years old or younger: 5,000 yen per month; 16-19 years old: 10,000 yen per month Provision of clearer guidance at the time of item purchases
Improvement of educational contents and notes for customers Provision of the usage status notification service (by the end of May)
Improvement of checking system for game content on GREE Preparation of guidelines for our company and developers
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Enforcing Prohibition of Real Money Trading Raising awareness of RMT prohibition among users
Producing a special page for educational purposes and notes for users Developing a support center for dealing with inquiries regarding RMT activity
Strengthening system for detecting and analyzing RMT activity on GREE Tightening penalties for RMT and preventive measures Improving measures against RMT activity related to games provided by GREE partners
Monitoring RMT outside GREE (number of cases and amounts, etc.) Submitting written requests to RMT agents to delete items Coordination, discussions with related firms, government ministries and agencies
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-50%
3000 2500
2000
1500
1000
500
0
3/6 3/7 3/8 3/9 4/1 4/2 4/3 4/4 4/5 4/6 4/7 4/8 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22 3/23 3/24 3/25 3/26 3/27 3/28 3/29 3/30 3/31 4/9 4/10 4/11 4/12 4/13 4/14 4/15 4/16 4/17 4/18 4/19 4/20 4/21 4/22 4/23 4/24 4/25 4/26 4/27
GREE partners
3.0%
Under 18 18
3.3%
015 015 1619 1619 20 20
21% 27%
12% 6% 34%
93.7%
* As of March 2012
Released Zombie Jombie, GREEs first social game to target the global market (*1). Now offering three titles (*3) Zombie Jombie downloads have exceeded one million (*3) and ranked high in the App Store rankings
Frances Ubisoft, Gameloft, and major Asian game developers will offer popular titles as new GREE Expanded GREE partners (scheduled) partnerships and Comprehensive business alliance with Level-5 Inc., alliances maker of games such as Ni no Kuni, Inazuma Eleven and Danboru Senki (*1) Major markets excl. Japan and several others
(*2) As of end of March 2012 (*3) As of end of April 2012
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12
(Jan.-Mar. 2012)
3Q of FY2012
2Q of FY2012
(Oct-Dec. 2011)
QoQ (%)
3Q of FY2011
(Jan.-Mar 2011)
YoY (%)
Net sales
46,189
41,529
+11%
16,372
+182%
Operating profit
Ordinary profit Net income
24,549
24,505 13,448
22,535
22,461 12,740
+9%
+9% +6%
8,199
7,963 4,695
+199%
+208% +186%
Record-high net sales on strong growth of paid services revenue (12% increase QoQ) Expenses increased due to strengthening data center infrastructure in anticipation of global expansion and other expenses related to global expansion (including labor costs). However, all profit lines grew due to higher net sales
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45,000
40,000 35,000 30,432 30,000 25,000 21,093 20,000 15,000 10,000 6,221 5,000 0 1Q 2Q 3Q 4Q 1Q 14,302 12,410 6,924 8,199 9,789 16,372 16,646
41,529
24,549 22,535
2Q 20126 FY2012
3Q
20116 FY2011
Net sales
Operating profit
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* Consolidated financial statements are prepared from 3Q of FYE 6/2011. Non-consolidated figures for preceding quarters are presented for reference
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Advertisement Sales
(Unit: million yen)
50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,147 10,000 13,906 11,938 18,387 27,503 38,290 42,882
3,306
2,500
2,262
2,363
2,000
1,500
1,000
500 5,000 0 1Q 2Q 3Q 4Q 1Q 2Q 20126 FY2012 3Q 20116 FY2011 0 1Q 2Q 3Q 4Q 1Q 2Q FY2012 20126 3Q FY2011 20116
* Consolidated financial statements are prepared from 3Q of FYE 6/2011. Non-consolidated figures for preceding quarters are presented for reference
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3Q of FY2012
(Jan.-Mar. 12)
2Q of FY2012
(Oct.-Dec. 11)
3Q of FY2011
(Jan.-Mar. 11)
Advertising
Paid-charge commissions Labor costs Others
5,246
5,501 1,968 5,245
5,321
4,925 1,761 4,238
(1%)
+12% +12% +24%
3,104
1,889 481 1,253
+69%
+191% +308% +318%
Rental charges: Strengthened data center infrastructure significantly in anticipation of further global growth Paid-charge commissions: Increased in line with paid services revenue growth Labor costs: Increased due to smooth progression of global hiring plan
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16
3Q of FY2012
(Mar. 31, 2012)
2Q of FY2012
(Dec. 31, 2011)
QoQ (%)
+21%
3Q of FY2011
(Mar. 31, 2011)
YoY (%)
+150%
Current assets Cash and cash equivalents Receivables Others Fixed assets Assets Current liabilities Liabilities Paid-in capital Capital reserves Retained earnings Others
102,657
84,851
41,108
51,662
32,993 18,001 22,715 125,373 53,914 54,102 2,172 2,169 67,009 (80)
31,634
38,833 14,383 18,740 103,591 46,225 46,413 2,165 2,163 53,560 (712)
+63%
(15%) +25% +21% +21% +17% +17% +0% +0% +25% -
23,165
12,656 5,286 5,309 46,418 14,240 14,246 2,134 2,131 27,745 160
+123%
+161% +241% +328% +170% +279% +280% +2% +2% +142% (150%)
Shareholders equity
71,270
57,178
+25%
32,172
+122%
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Japan
+45
220 205
234
100%
24.3% 22.9% 21.4% 19.9% 18.8% 17.8% 17.4% 16.4% 15.3% 14.3% 13.5% 12.9%
200 174 150 105 100 113 123 145 155 162
189
80%
134
60%
50
20%
March-12
April-11
May-11
June-11
July-11
0% October-11
May-11 September-11 January-12 August-11 November-11 December-11 February-12 March-12 April-11 June-11 July-11
The GREE global user base* has increased steadily to approximately 234 million, of which Japanese members comprise 12.9%.
* Group total, combining GREE and OpenFeint registered users
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18
By gender
9%
Tohoku
47%
Tokyo Metropolitan Area
Male
53%
Female
7%
Koshin-etsu/ Hokuriku
5% Chugoku/
Shikoku
34%
Tokai
By age
7%
Kyushu/ Okinawa Kinki
11%
21% 27%
12%
6%
Under 18 18
18,19 1819 20 20to 29
11%
34%
16%
* As of March 31, 2012 * Percentages are rounded to the nearest whole number
The 30- and 40-year-old demographic, which generates relatively high ARPU, continues to account for a large proportion of our domestic user base
19
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More in-house and cobranded social games for smartphones, such as Dragon Ark, Majin Kingdom and AKB48StageFighter
GREE Deco Photo, a decoration photo app for smartphones, launched as the first project in our capital and business alliance with Mind Palette
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Dragon Ark
Majin Kingdom AKB48StageFighter 23 in-house titles Developing strong IP titles Developing new original titles Creating new game design pattern
FY2012 2Q (Jan.Mar.)
FY2012 3Q (Apr.Jun.) ~
Scheduled to release multiple in-house and cobranded social games using strong IP Offer more in-house social games for smartphones in various categories and expand lineup
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21
Global Strategy
1,400
400
200 0
306
2015
*Sources: Ichiyoshi Research Institute Inc. and Ichiyoshi Securities Co.,Ltd. October, 2011
Global mobile gaming market expected to grow to 1.4 trillion yen scale by 2015
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23
Aug. 2011 Nov. 2011 Number of non- Established nine Japan users offices globally reached 100 million
Zombie Jombie
* Major markets excluding Japan, China and Korea
Alien Family
Dino Life
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24
Elements
Measures
Status
Social games
Offer multiple social games by the end of 2012 Funzio acquisition Collaborate with major global partners Acquisition of original technology, strong game engines Launch GREE Platform globally by the end of May Promotion to secure top 5 ranking in App Store Funzio acquisition
Acquisition of success model from America, Europe and Asia Acquisition of leading global IP Strengthening of cutting-edge development technology Seamless global platform
Marketing
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Timing of release
Aug. 2011
8.59 million DL (as of the end of Mar. 2012) No.2 (Oct. 15, 2011)
Timing of release
Dec. 2011
6.82 million DL (as of the end of Mar. 2012) No.2 (Dec. 22, 2011)
Apr. 2012
No.2 (Apr. 20, 2012) No.7 (Apr. 20, 2012)
Through our acquisition of Funzio, we have acquired development and operational expertise in multiplayer simulation roleplaying games popular in North America and Europe Funzios three titles have proved to be smash hits, topping the U.S. App Store rankings and accumulating a combined total download number of 20 million
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The core members of the team, which has created a string of popular games, have worked at companies on the front line of the social game industry such as Zynga, Storm8 and hi5 The team will collaborate on new development projects as members of the GREE Group
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No. of applications
Funzio, Inc
Electronic Arts(*3) TinyCo, Inc. Addmired, Inc Dapper Gentlemen Pocket Gems, Inc.
3
3 3 2 2 2
2nd
3rd 3rd 3rd
Jul.-Sep. 2011
Funzios sales are increasing rapidly, and reached US$12 million for the term from Jan. to Mar. 2012 When the top 50 applications in U.S App Store In April, in which Kingdom Age was released, Overall Grossing are ranked by company, monthly sales exceeded US$5 million, Funzio ranks highly accelerating growth
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Source: U.S App Store Overall Grossing *1 Top 50 applications as of the end of April *2 Including OMGPOP acquisition *3 Including PopCap Games acquisition
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Gang Domination,* the companys first The first mobile social game from the social game from the popular Gang series is scheduled to be released Star series is scheduled to be released through the GREE Platform (in English through the GREE Platform (in English and Japanese) and Japanese) 29
*Working title
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Company
Representative Location Established Main businesses
Company
Representative Location Established Main businesses
IUGO Mobile Entertainment Inc. Hong-Yee Wong Vancouver, Canada 2003 Development of social games for mobile phones
Remarks
Developed original HTML5(*) game developing engine Mithril, possesses high technology strength
Remarks
Specializes in mobile phones; possesses original technology (Games Library, IRender3D Engine, IUGO Mesh Social Game Engine)
* HTML5 is gaining prominence as the new standard for the widely used markup language for web applications, HTML (HyperText Markup Language)
Formed capital and business alliance with Wizcorp. In the future will also focus on game development using HTML5
Use original technology of IUGO Mobile Entertainment to develop highquality mobile social games
30
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Looking ahead
Further promote expansion and monetization of members, through the global rollout of the GREE Platform and a rich variety of social games
2012
May 2012 Begin global rollout of GREE Platform (to be distributed in 153 countries)
By Dec. 2012 plan to release multiple in-house and cobranded games, several hundred partner games
31
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Appendix
Users
SNS
My Apps Diary / Comments Community / MB
Social games
Purchase of items
Advertisement Sales
GREE
33
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Tsuri-Sta
Feeling Fantastic! Play Fishing Game with your mobile! (released in May 2007)
Odoriko Clinoppe
One-of-a-kind pet you can keep in your mobile (released in July 2007)
Tanken Doliland
New exploration type card game (released in August 2008)
Hacniwa
Easy gardening experience with your mobile (released in September 2008)
Mon-Pla
A Blockbuster! Monster Adventure (released in June 2010)
Cerberus Crusade
The Social-Strategy RPG (released in April 2011)
Decobito
A Delightful Life with Animals (released in June 2011)
Dragon Master
Hunt the dragons! The king of RPG is here! (released in August 2011)
Sangokushi Kingdom
A full-scale game of The Chronicle of the Three Kingdoms (released in September 2011)
Bakumatsu Kingdom
Lets conquer Japan with Bakumatsu patriots! (released in November 2011)
Majin Kingdom
Dragon Ark
Sankoku Shinki
Sankokushi+ fantasy+ card (released in Feb 2012)
A battle game with summoning Classical fantasy + simulation + action game (released in Feb. 2012) legendary heroes! (released in December 2011)
Zombie Jombie
Alien Family
Dino Life
Cavemen and dinosaurs getting along together? Popular simulation game (Released April 2012)
Major U.S. hit with more than 1 million downloads (Released March 2012)
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Advertisement Sales
Social games
- Free-to-play games linked to social network
- Rich lineup includes in-house games
Avatar
- User can create a virtual self by combining face expressions, clothes, and items freely.
35
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EMA
(Content Evaluation and Monitoring Association)
Restrictions by age
Messaging between users over 18 and those under 18 is restricted. Users under 18 are excluded from the searches of users over 18. Friend request messages to under 18s are limited to standard wording.
GREE Patrol
User authentication
New sign-ups to GREE are verified using mobile phone authentication. Users in violation are blocked from signing up again. Membership of a mobile phone filtering service is checked to verify the users age. Age information held by KDDI and SBM is checked for verification. (Discussions with other carriers underway.)
Screening/ Monitoring
Warning/ Deletion
Third-party certification
The first website approved by EMA (Content Evaluation and Monitoring Association) (Aug. 2008) Maintains management system that exceeds EMA standards, passing continuous and periodic inspections
GREE booth in the Workshop Collection 8 with Monozukuri Taikan Stadium at Keio Universitys Hiyoshi Campus (Feb. 25, 2012)
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Making the world a better place through the power of the Internet.
This document includes some forecasts, which are based on currently available information. The authenticity of the information is not guaranteed. Actual performance may differ due to various factors, etc. When producing this document, we were careful not to include errors or omissions, but the authenticity and integrity of the information are not guaranteed.
Copyright GREE, Inc. All Rights Reserved.