GREE purchases developer Pokelabo for $173 million

With Zynga's shrinking position, GREE may be ready to strike in the U.S.

Financial trends and news by Steven Loeb
October 24, 2012
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Japanese social gaming company GREE has been on a spending spree the last couple of years, gobbling up game developers in both the U.S. and Japan in an effort to expand its global footprint. And now that Zynga has taken a major hit, the time may be right for GREE to strike.

GREE has purchased Japanese game developer Pokelabo for ¥13.8 million, or $173 million U.S. dollars, it was announced Wednesday.

Tokya-based Pokelabo was founded in November 2007, and has two million subscribers. The company focuses on mobile and social card games, such as Sangoku Infinity and Clan Battle of Fate. Pokelabo games have placed high in the App Store and Google Play in Japan. Of its four released titles, four are ranked within the top 20 in the App Store, and two are in the top 20 on Google Play.

While primarily based in Japan, the company also recently released a game called Mystic Monsters to English-speaking regions.

GREE says that use the purchase of Pokelabos to coordinate with its development team, in order to further strengthen the development of mobile social games in smartphones.

GREE’s other purchases

GREE says that its aim is to continue to expand its cooperation with development partners around the globe. 

That expansion to new regions is GREE’s ultimate goal is not a surprise. The gaming company has been making an effort to expand into the global market over the past few years, and seems especially interested in penetrating the U.S.

First, GREE purchased the gaming platform OpenFeint, based in Burlingame, CA, for $104 million in April 2011.

Then, in November, it announced plans to launch a new global gaming platform to be released this year. It also revised their projected earnings up 40 to 50% after seeing their network growing at a rate of 3.8 new users per second. In 2011, GREE opened new offices in the United States, China, Korea, Singapore, UK, the Netherlands and had plans for Brazil.

In March of this year GREE launched its first U.S. created app, Zombie Jombie, a month after announcing that it was setting up a new 41,000 square foot office space in San Francisco.

GREE also acquired mobile game developer Funzio in May, and in September it purchased mobile game developer App Ant Studios, creator of Dino Life for Android, for an undisclosed amount.

Could GREE be the next Zynga?

GREE’s purchase of OpenFeint gave them the platform to launch games, and with the procurement of Funzio and App Ant, it got its U.S. developers as well. GREE has put the pieces in place to become a major player in the U.S. gaming developing industry, which should allow it to compete with some the biggest U.S. companies, like Zynga.

It also has not hurt that GREE has seen some amazing growth recently.

In May, GREE released its Q3 2012 earnings report , announcing that its sales and income had both tripled year to year.

GREE had 13.4 billion yen ($168.5 million) in net income, up from 4.7 billion the year before, and 46.2 billion yen ($578.9 million) in net sales, up from 16.4 the previous year, in the quarter ending March 31. The company also added 45 million new users, and announced that it had over 234 million worldwide.

Zynga, on the other hand, is going in the opposite direction.

Zynga was once the biggest mobile gaming company in the United States. Recently, though, times have been really tough, and it has had to lower its outlook for the remainder of 2012. Just yesterday it announced that it was going to be forced to layoff 5% of its workforce, and close 13 of its older games.

Given Zynga’s rapidly shrinking position in the social gaming sphere, GREE is one of the company’s no doubt looking to take its place.

GREE and Pokelabo could not be reached for comment.

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