The paper attempts to conduct an internal and external analysis of Gree, Inc. and provides recommendations to the Gree management to cope up with the challenges faced by the company. The paper addresses the internal analysis of Gree through SWOT and VRIN analysis, whereas, the external analysis is performed with the insertion of Porter’s five forces model. Lastly, the paper also provides a brief summary of the entire paper and the analysis of the case.
Since the inception of the Dashboard Model, Gree was focused on collecting important information in terms of figures that relate to the revenues of Gree, the usage level of its users, and daily connections. This strategy allowed Gree to develop its greatest strength in focusing on the key performance indicators of a particular business. The company successfully analyzes the experience, behavior, and interest of a user and then makes changes accordingly in a developed game. The company advanced in determining an accurate return on marketing investments through its advertisement in different media channels with zero percent waste in the advertising budget.
The highest percentage of the company’s strength rested upon a business model that allowed consumers to avail themselves free-to-play games with the in-game purchases which increased the value of its consumers. This strength of the company tempts users to play for a longer period of time while contributing to more revenues. Gree, Inc. developed a unique platform for third-party developers in which they could display their games to 18 million users. In return, the third-party game developers offer payments for the services being offered by Gree. The company established a strategic alliance with KDDI, the second-largest mobile operator to enhance its customer reach and to enter a wide field of mobile services. Gree also had a team of experts working in Japan and outside Japan that have earned their degrees from top research universities.
While comparing with the traditional portable video games offered by Sony and X-box, their business model is based on one-time cost. However, the business model for Gree is based on free-to-play games with in-game purchases which allow users to purchase virtual goods and virtual currency to get a competitive edge in the game. This promotes dissatisfaction amongst consumers who spends time in playing the game for most of their time. This also leads to the loss of Gree’s potential customers. The company has weaknesses in following its competitors through ‘competitors watch’ as most of the time the company delays their entrance in a new market in which their competitors are already present. In the case of social gaming, the main rival of Gree ‘DeNA’ had already entered the particular market and the company developed this idea through the Dashboard model applied by Gree.
Gree has favorable advantages of the declining fortunes of Zynga as a social game provider. It provides an opportunity to attract investors in expanding the market for Gree and to capture the largest market share in social games. Gree can also convince the investors of Zynga to invest in its business ideas to cater to a global market. The popularity of the gaming market and increase in the overall worth of the gaming industry to $83 Billion in 2016 has increased the prospects and chances for Gree to expand its root further into international markets with full influence. Gree has the opportunity to exploit the user’s experience and interest in in-house gaming in order to sustain its economic growth in the industry or otherwise, it shall be difficult for the company to develop any further pivotal it firstly shifted from social networking to online gaming.
The Japanese government has enforced a new regulation in the country which prohibits the use of ‘Kompugacha’ meaning the excessive use of time and money on internet-related games. Due to this, the overall revenues of the company had also decreased by a healthy ratio, whereas, DeNA’s profit was increased in the same month. This affected the company as it has to redesign its model for its country in order to attract new customers and retain the old ones. The growth of Gree in the Japanese market had reached a certain point of saturation and it can only maintain its growth through innovating new ideas and implementing new concepts.
The mobile social gaming market is highly complex than that of the global market because the mobile service operators held most of the powers in the mobile service market. Gree contends with two players in the market, the first player is the software platform provider (Android and iOS) and the second player is the mobile service operator. Both the players pose a threat to the company in terms of breaking up of strategic alliance.
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