Monday, February 4, 2013

Interview: GREE on social games: "we're not afraid to make mistakes"

It's easy to look at the misfortunes of Zynga and assume that social gaming is one of those fads that will soon die.

That assumption of course completely neglects that fact that Japanese social giant, GREE, is not only making big inroads into the western market, but it's doing so in a way that is oh-so-much more sustainable than Zynga.

Zynga relied on Facebook, where GREE has a diverse portfolio of supported platforms. Zynga has struggled to build a mobile business and go to where they players are, but for GREE that is its home ground.

I sat down with Eiji Araki, SVP of Social Games at GREE, to discuss the company's plans for 2013, the benefits of the free-to-play model, and the differences in the Japanese and western markets.

Digitally Downloaded (DD): How is 2013 shaping up for GREE, and what are your goals for the year?
Eiji Araki (EA): 2013 has been great so far for us. We have already released NFL Shuffle - a fully licensed NFL game - and a great update to our highly successful Modern War which reached #2 in top grossing charts - and it is barely a month in. This year, our focus continues to be on innovative content both in building new games and in creating new features and content from existing titles that the players love. We continue to look at forming partnerships with great international developers and major licensing partners (like we have with NFL and MLB) as well as hoping to drive innovation within the industry as a whole. We will also focus on making games more live and social through our live-operations efforts in addition producing high-production quality games. Lastly, we will be creating free-to-play content for different types of audiences including mid-core, sports, family and more, as we build on our knowledge and expertise to take the next step in mobile gaming.

DD: GREE has been working hard to engage with western consumers – and has grown a great deal. What differences and challenges have you faced in engaging with western customers when compared to your traditional Japanese users?
EA: We have a lot of great experience and expertise in Japan and have spent a lot of time over the past year really learning about the Western market and the what users here want. Our biggest learning is that there aren't major differences between Western and Japanese users outside of the obvious character themes and art-styles so a lot of the game mechanics, and features, can work worldwide. The biggest challenge for us was to figure out how to replicate our successes in Japan here in the US, UK, and other emerging markets like Brazil and the Middle East.

We have seen great success by updating content and making sure we keep our games fresh - meaning we need to constantly push our games to the next level and ensure we are constantly embracing the latest technologies, gameplay mechanics, and industry trends. Additionally, based on last year's experience, we have been able to develop best practices and leverage what has been successful in Japan and bring them over to the US market. We try fast and fail fast so we can innovate at a faster pace and overall, we still feel it is important to have successes and failures to continuously improve and analyze howe we can do better. We are still learning and are not afraid to play with different genres and styles - in fact, we see them as valuable learning experiences to understand how they and their mechanics do in this market and understand what we need to evolve to make them more palatable for global users.

NFL Shuffle
DD: There’s a lot of resistance and cynicism towards in-app purchases and other mobile and social monetisation strategies. How do you strike the balance between keeping customers happy and generating revenue?
EA: Keeping users happy and engaged is always our number one priority. Our goal is to create great free-to-play game experiences that keep players happy and that if players choose to spend money, it does not take away from the players who don't, but helps to enhance everyone's experience. Our number one priority is to keep our users happy and engaged which is why at GREE, we don't design games that require spending money to complete them. It's very different from what console/ PC gamers are used to - where they pay up front and what they get is what they get. With free-to-play, it is much easier for a player to play a game without spending a single dime, and it is completely up to their discretion whether or not they want to pay. Currently, we try to make updates at least five times a month with all our games - including Crime City and Modern War which both launched over a year ago and still successful today due to content updates, so players can keep enjoying our games over an extended period of time.

DD: What can a social gaming specialist do to differentiate itself from the massive number of rivals and innovative startups?
EA: I think content and experience are key differentiators that will set your company apart from the millions of other companies in our space. Users are naturally attracted to robust, fun, and engaging content. Attention to detail is key - which is why we put so much energy and effort into our art and live-ops - as is making sure our users are constantly getting new content.

Experience and know-how can also be a huge advantage; the more knowledge and expertise you have in free-to-play, social, or games in general - the better and more effective you will be in figuring out what market demands are and how to tackle them. Lastly - make sure you are making games for players, by players. If you don't play games, how can you build them? It's important for us that our teams know what makes a good game because they spend time enjoying them.

At GREE we are always learning from our experience in Japan and here and using that as valuable assets in our game development business that we continuously build on.

DD: What do you see as the potential biggest game changers for social gaming over the next year or two?
EA: There is tremendous opportunity in this industry. In addition to all the new technologies - from 3D graphics, new hardware, and better processing performance - there is also the fundamental evolution of social interaction and overall game discovery. There has also been an explosion of Android devices in emerging markets which naturally increases the total volume and size of the non-US gaming audience which means more opportunities for growth in those territories. We are also seeing more sophisticated game design overall and as a result, an average ARPDAU that in successful titles is ten times higher than a full year ago. Given this fact, we will continue to innovate on game design adding better live-ops to make games more "live", new, and attractive for players.

New devices and tablets will also play a big role in the way gamers will play and connect and how users find games and recommend them to their friends is all going to play huge roles in how the industry changes and evolves over the next little while. The truth is though, in this industry, we look as far out is six months. At the pace at which we are moving and changing, two years from now things will be completely different. It is what makes this industry so exciting. You never know what the future brings!

DD: Do you see opportunities to expand GREEs game portfolio beyond social games?
Modern War
EA: We don't have any plans to expand beyond social mobile games in the short term.

DD: GREE’s great success story in Japan was the compu-gacha mechanic that was present in many of its games. Despite the new restrictions in Japan, are there plans to replicate these mechanics in western markets?
EA: GREE's actually had some great success stories in Japan long before the comp-gacha mechanic caught on. Building Japan's biggest social network and finding a way to for those users to connect through games has been a huge innovation. In terms of the regulated gacha mechanic, there is no plan to bring this to the US. We will, however, continue to focus on creating new innovatives and fun events based on our users' needs.

DD: GREE’s acquisition of Funzio in 2012 provided it with some valuable social gaming IPs. What are the plans for that subsidiary this year?
EA: Funzio is not actually operated as a subsidiary. Once we acquired the team, we made it a point of immediately integrating them into GREE and bringing together all the talent from both the GREE and Funzio pools. We don't see or have a separation anymore. Our plan is to continue to leverage the talent, technology, and knowledge gained from both sides to create best-in-class experiences for all user to enjoy. In fact, our latest achievement was Modern War reaching #2 in the top grossing charts a whole after its release thanks to new content, which is a direct result of our combine synergy and expertise from Japan. There are lot of new and exciting projects coming out of the fully integrated team and we look forward to doing much more in the coming year!

DD: The other big acquisition from the year before was OpenFeint. Now that the service has been shut down, what benefits has it brought the company?
EA: We learned a lot from the OpenFeint acquisition, its expertise in the Western mobile gaming market, and its talent. The acquisition was our big jump into the Western market especially thanks to their leadership and team.

Although the service itself has been shut down, we continue to grow our business based on the knowledge we gained from them. We've migrated OpenFeint's technology into GREE Platform and through this integration, we will continue to work on the platform in Japan. Our goal still remains the same - and parallels that of OpenFeint - to create highly engaging and robust mobile social gaming experiences for users around the world.

DD: Does GREE have further acquisition plans for the West?
EA: We are always open to new and interesting opportunities that fit our business objectives.

DD: What games industry personality inspires you?
EA: I don't really have one person in mind, however, I constantly find myself inspired by different leaders in different industries - especially those in the start-up world who teach me and encourage me to innovate.

DD: Finally, what games are you currently playing?
EA: Knights & Dragons; Clash of Clans, Kerihime Suites
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