With Layoffs At Japanese Gaming Giant GREE’s SF Offices, Internal Memo Reveals Plans For Scaling Back To Tokyo

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Here’s some more background on the GREE layoffs. The $3.9 billion Japanese mobile gaming company announced a restructuring yesterday that will move much of the platform team back to its headquarters in Tokyo from San Francisco. It’s also consolidating a couple of teams in the U.S. to focus on publishing and partnerships for third-party developers and growth and revenue for first-party games.

GREE didn’t provide much more than a brief statement yesterday acknowledging the redundancies, and we had been hearing from sources that there were more than 30 layoffs [Update: the company has confirmed that the number is 25]. This follows a poor quarter in which profit actually declined by more than 25 percent quarter-over-quarter. They face a regulatory crackdown from the Japanese government on certain kinds of game mechanics and increased expenses from the effort to expand abroad. Although the company is one of Japan’s most notable startup success stories from the last decade, it faces a market that’s becoming more saturated back home.

Here’s an internal memo describing the restructuring:

Today we are announcing a reorganization of GII to better focus our growing US operations on 1st and 2nd party game development. These changes will combine the majority of Platform Product and Engineering with Studio teams (managed by VPs Ram Gudavalli and Andy Keidel) and Platform Developer Relations and Marketing teams with Player Marketing teams (managed by VP Sho Masuda).

This organizational change is our best path to revenue acceleration for our core US Studio business and the GREE platform business globally. A transition of the GII platform business operations will be managed over the next few weeks in conjunction with this reorganization. Overall we expect this reorganization will achieve two goals for us here at GII:

1.Simplify US operations from two separate business lines to one aligned organization, increasing our operational efficiency.
2.Create additional support to accelerate revenue growth for the GII Studio business by concentrating talent and resources into one business line.

To support these goals we are creating two new organizations:

1.We are creating the Publishing and Partnerships team, a hybrid publishing business for equity investments in outside studios with emphasis on our 2nd party expansion. VP Jim Ying will lead this effort supported by SVP Shanti Bergel’s corporate development team.

2.Also being created is a new Growth and Revenue team formally the “Incubation Layer” and will focus on tools and services for 1st and 2nd party games and investment partners. The Growth and Revenue Product will report to SVP Anil Dharni with VP Ram Gudavalli leading the engineering team.

Unfortunately, there are individuals who will be leaving the business today but wherever possible, we’ve re-assigned team members to new roles allowing us to take full advantage of the incredible talent at GII.

We expect to share additional details on the re-organization with the entire company in the coming days and weeks.

This reorganization impacts us all and we ask that you handle the situation and information in the most responsible manner. We appreciate everyone’s support and focus during this time of transition.

Business leaders will be available and walking around if you or your team have questions.

Thank you.

Libby

We’re hearing that most of the layoffs were done by department, with the OpenFeint team feeling most of the brunt. Employees from the $210 million acquisition of Funzio were largely unaffected. GREE paid $104 million for mobile-social gaming network OpenFeint back in 2010, but it hasn’t really used much of the technology. The company actually said it was closing down OpenFeint, which has angered many developers. Shutting the platform down would break many popular games if the studios behind them don’t move fast enough to push updates.