Japanese social gaming giant Gree (TYO:3632) announced today that it is the lead investor in the series B funding round for popular news application SmartNews. Gree has not commented on the size of the investment but the SmartNews camp is saying the total is US$36 million.
Though an enormous amount of digital ink has been spilled over rival news app Gunosy’s frequent trips to the funding trough, the Gree investment gives SmartNews a healthy war chest for the fight ahead. The two apps have similar download numbers – the funding announcement claimed SmartNews has exceeded four million downloads and, back in May, Gunosy told The Bridge it was about to hit four million.
SmartNews is trying to outpace the pack by mining Twitter for hot news topics and curating them into different categories. The investment offers insight into how Gree will use its new $100 million business development investment fund, which is separate from dedicated investment arm Gree Ventures. The fund is used for finding companies which can build useful business relationships with Gree.
The firm is in need of such relationships as it searches for alternative businesses to replace revenue lost by the fickle gaming industry. Gree has been walking a fine line, initiating a strict cost-cutting plan in order to keep profits up in the face of falling sales. Targeting a smartphone media company could prove to be a solid play as SmartNews, like the in-house produced hotel app Tonight, can be used to grow Gree’s library of mobile apps.
After seeing messaging powerhouse Line muscle in on Gree’s mobile gaming turf with its own $100 million fund for finding game developers, Gree has to be feeling a bit relieved that it has found a potentially strong source of alternative revenue. As a Gree spokesperson told Tech in Asia, “[SmartNews is] run by a great team of experienced developers. Considering the size of SmartNews’s user base and ad inventory, we see good potential for synergies with Gree’s own services.”
Those synergies will not be limited to Japan. Gree has a San Francisco office and the Gree spokesperson confirm that SmartNews will be eyeing an American expansion next.