FinancialGREE
Summary of Main Supplementary Explanations Questions and Answers at the FY2023 Second Quarter GREE Results Briefing Held on February 8, 2023
1 Feb 20232 pages~4 min full read
GREE's Metaverse platform, REALITY, has reached profitability and is now scaling globally with high user concentrations in North America, Indonesia, and Thailand.
The company projects Q3 operating income for its Internet and Entertainment Business to reach between ¥1.0 billion and ¥1.5 billion, supported by the one-year anniversary of Heaven Burns Red.
Heaven Burns Red is expanding into Korean and traditional Chinese markets to offset the temporary sales decline experienced following the conclusion of major anniversary events in Japan.
GREE plans to increase advertising expenditures to scale the REALITY platform, which currently attracts a core demographic of female Generation Z users for private communication.
The Anime Business is shifting toward in-house production of proprietary IP to create a synergistic ecosystem that drives deeper engagement with the company's gaming titles.
The Investment and Incubation Business is expected to face near-term volatility and potential quarterly losses, though the company maintains a positive medium-to-long-term outlook for its portfolio.
GREE’s financial performance for the second quarter of fiscal year 2023 reflects a strategic transition toward global expansion and internal IP development. While the Game and Anime business experienced a temporary sales decline following the conclusion of major anniversary events for Heaven Burns Red, the Metaverse and Commerce and DX segments maintained steady growth. Management anticipates a recovery in the third quarter, projecting operating income for the Internet and Entertainment Business between ¥1.0 billion and ¥1.5 billion. This outlook is driven by the one-year anniversary of Heaven Burns Red in Japan and its expansion into Korean and traditional Chinese markets, where pre-registration interest has been high.
The Metaverse Business, centered on the REALITY platform, has reached a significant milestone by surpassing its breakeven point to achieve profitability. Growth is increasingly driven by international markets, with North America, Indonesia, and Thailand following Japan in user concentration. The platform attracts a predominantly female, Generation Z demographic who utilize the service for private communication. Monetization remains consistent across regions through live-stream gifting, avatar sales, and in-game purchases. To sustain this momentum, the company plans to increase advertising expenditures to scale REALITY into a global platform with hundreds of millions of users.
Strategic initiatives in the Anime Business focus on securing proprietary IP and diversifying development pipelines to enhance long-term profitability. By producing anime in-house, the company aims to create a synergistic ecosystem where media content drives deeper engagement with its gaming titles. Although the Investment and Incubation Business faces near-term volatility and potential quarterly losses due to current market conditions, the company maintains a positive medium-to-long-term outlook based on its diversified investment portfolio. Overall, the strategy emphasizes aggressive promotional investment to solidify market share in the global entertainment and metaverse sectors.
