January 26, 2011 / 7:52 AM / 9 years ago

UPDATE 2-Gree to tie-up with China's Tencent Holdings

* Gree and Tencent to share platforms for online games

* China has 120 mln mobile gamers and number growing-Gree

* Tencent is China’s largest Internet firm by market value

(Adds details)

TOKYO, Jan 26 (Reuters) - Japanese mobile social gaming firm Gree Inc (3632.T) said Wednesday it would tie-up with China’s Tencent Holdings (0700.HK), giving it access to a market where 120 million people already play mobile games.

Gree said it would share a common development platform with China’s largest Internet firm by market value, allowing developers of games and other applications to offer their services to customers of both companies. [ID:nTOE70I06D]

With more than 20 million subscribers Gree, which makes about four-fifths of its revenue by selling virtual clothing and accessories that users buy for on-screen representations of themselves, in August became Japan’s largest online social network.

But with growth likely to slow at home as the pool of untapped customers shrinks, the company needs to find new markets to keep profits rising.

Gree brings experience in social gaming on mobile phones, a platform that in Japan is already larger than PC-based networking, to Tencent, which controls about one-third of China’s online gaming market and runs the country’s largest online messaging platform.

China’s mobile games market was estimated to be worth 2.6 billion yuan ($395 million) in 2010 and may grow to 13.5 billion yuan by 2014, according to iResearch data.

Baidu (BIDU.O), China’s largest search engine, is also bullish on the mobile search space, and is rumoured to be developing its own mobile operating system, local media reported last year.

Gree said it was still studying what impact the tie-up will have on earnings. (Reporting by Junko Fujita and Tim Kelly in Tokyo, Melanie Lee in Hong Kong; Editing by Nathan Layne and Joseph Radford)

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