Japan’s Gaming Giant GREE Retrenches In Europe, Shuts Down All UK Operations

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It’s not only Zynga feeling the pinch in the gaming world these days. GREE, the $1.8 billion Japanese mobile gaming giant, is downsizing once again, this time with a focus on Europe. TechCrunch has learned that the company is shutting down operations in the region, which are primarily based in the UK. Lynn Daniel, business development director for GREE in the UK, confirmed the closure of the UK operations in an email — the full statement is below — noting that the company is consolidating its Western-focused operations in its offices in the U.S.. We’re still trying to see how many people exactly this will affect in the UK and what happens in the rest of the region.

“Due to the challenging economic climate and on-going changes within the interactive industry, GREE has proposed to close its UK office,” Daniel’s statement reads. “This decision is being considered in order to focus on developing content from the United States of America for the Western market.”

The UK operations had been around for a while, first as a business development office, and then as an expanded studio, first announced just under a year ago in August 2012, as part of a bigger push into Europe. Following in the footsteps of Zynga, this was part of GREE’s bigger remit to further localize content.

But, also like Zynga (which most recently laid off 18% more of its staff), GREE may have grown too much, too fast, as consumer tastes moved on to the next trendy (non-GREE) game. The knock-on effect on GREE’s financials has not been great, with both sales and net income down over last year. (Like other gaming companies, GREE relies both on advertising and in-game purchases for revenue.) The company’s stock has lost nearly 42% of its value in the last six months since the U.S. closures were announced.

Reports in Japanese business paper Nikkei (via Serkan Toto) from last week also note the company will be closing down some 20 social gaming titles that are underperforming to focus more on smartphone titles.

Right now, the company is having a hard time competing against other gaming apps for top-grossing positions. In the U.S., according to AppAnnie figures, GREE titles currently are not placing into the top 10, or even top 25. It’s closest is Knights & Dragons, at number 37 (and falling).

It’s not clear how and if GREE’s minority stake in eBuddy, the Dutch-based messaging service, is affected by GREE’s step back in Europe.

These are not the first layoffs for the mobile games company. It closed down operations in China in June and laid off 120 employees. Prior to that, the company laid off at least 25 people in its San Francisco operations.

At the time of the U.S. layoffs, an internal memo revealed that GREE would be forming a publishing and partnerships team in the U.S., along with a growth and revenue team, two moves aimed squarely at driving revenues. In the meantime, platform operations would be devolving back to Tokyo.

We’re still looking for more information and will update this post as we learn more. The full statement from GREE is below.

“Due to the challenging economic climate and on-going changes within the interactive industry, GREE has proposed to close its UK office. This decision is being considered in order to focus on developing content from the United States of America for the Western market.

“GREE has seen significant growth since it was founded in December 2004, but during 2013 the GREE board have found it necessary to re-assess and streamline the global business with a view to consolidating certain functions.

“This realignment of the business is a necessity to ensure that GREE can continue to invest and enhance its business offering moving forward. The management team are confident that the proposed restructure of the business will benefit the company due to the changing nature of the digital industry over the coming years.”