GREE pays $104 million for OpenFeint network

Like the DeNA/ngmoco of 2011, GREE and OpenFeint aim to build a global mobile/social/gaming company

Financial trends and news by Ronny Kerr
April 22, 2011
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GREE Inc., operator of Japan’s largest mobile gaming social network, announced Thursday that it has paid $104 million for all shares in OpenFeint, a social gaming developer for Android and iOS devices. The acquisition of Burlingame, Calif.-based startup OpenFeint is intended to signal GREE’s “entrance into the global market” and the start of a worldwide ecosystem for mobile, social and gaming.

Pocket God and Mega Jump (iOS) as well as Blockerix and Jet Car Stunts (Android) are just a few examples of games supported on OpenFeint’s network. GREE carries 500 games on its network and generate hundreds of millions of dollars in revenue every year. Combined, GREE (75M) and OpenFeint (25M) already serve 100 million users worldwide.

Not much will be physically changing at OpenFeint, especially since the entire team is staying on board to continue building the platform. (Long-term incentives are packaged into the deal.)

“Simply put, we are stepping on the gas pedal,” said Jason Citron, OpenFeint founder and CEO, in a statement.

“We share a common vision with GREE - to make the world a happier place through gaming experiences. It may sound idealistic, but it's true. Your games connect families and friends and even strangers - giving millions of people reasons to smile and laugh with each other. In two short years we’ve connected 100 million people. In the next 3 years, with your help, we intend to connect 1 billion.”

If you haven’t figured out why Zynga and other social gaming companies are such a big deal, then maybe the sky-high valuations and revenues don’t have any effect on you. Instead, reread Citron’s statement and try not to think of it as just more fluffy press fodder. These companies aren’t just trying to make a couple bucks from a few virtual goods; they’re attempting to lay down foundations for megalithic entertainment companies of the next generation.

Think about it: a major Japanese mobile corporation with its money deeply invested in social and gaming spends over a hundred million on a Silicon Valley startup developing mobile social games...? Experiencing deja vu, anyone?

That would be because, last October, DeNA (a Japanese mobile company) acquired ngmoco (a San Francisco iOS game developer) for $400 million. And, as I discovered in an exclusive interview with ngmoco founder Neil Young, the ultimate aspiration behind DeNA’s acquisition of ngmoco is to build a “future entertainment company.”

Despite whatever social or gaming bubble there might be in the Valley or the States even, some of these companies are really looking to take over the world with these networks and communities.

Coincidentally, we just reported this week that GREE would be a supporting investor for DCM’s A-Fund, a $100 million fund dedicated entirely to Android-focused developers and startups.

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