Gree overtakes Mixi to become Japan's No.1 SNS site

* Early focus on mobile services fuelled rapid growth

* Gree announces 5-for-1 stock split

* April-June operating flat year-on-year, sales up 18 pct

* Shares end up 2.8 pct before announcement

TOKYO, Aug 13 (Reuters) - Gree Inc 3632.T said on Friday that it has overtaken Mixi Inc 2121.T to become Japan's biggest social networking site, having seen a near tripling in subscribers in just the past two years as users flocked to its mobile games.

The company, whose founder Yoshikazu Tanaka was named Asia’s youngest self-made billionaire last year by Forbes magazine, also announced a stock split, saying it will offer shareholders five new shares for each existing share.

Gree, which offers subcribers free games on their mobile phones, said it had 21.13 million users -- or about one in six Japanese -- by the end of July, up 56 percent from a year earlier and topping Mixi’s 21 million subscribers.

The rapid growth came as Gree focused earlier on mobile services than Mixi and other rivals, as many Japanese favour cellphones for social networking.

Deep penetration of third-generation mobile phones in Japan has also helped to keep Japanese SNS providers ahead of foreign sites such as Facebook that target PC users.

More than 100 million phones in Japan are 3G, about 30 million more than in the United States.

In June, Gree recorded 35 billion page views from cellphones compared with only 400 million from PCs. At Mixi the ratio was 25 billion to 5 billion.

Gree makes about four-fifths of its revenue by selling virtual clothing and accessories that online users buy for their avatars. In contrast, most of Mixi’s sales come from advertising.

On Friday, Gree also said that its operating profit in the April-June quarter was flat from a year earlier at 5.3 billion yen ($62 million), while sales rose 18 percent to 9.3 billion yen.

Tanaka, 33, founded Gree in 2004. The company’s name is derived from the concept of six degrees of separation proposed by psychologist Stanley Milgram that argues no one is more than six connections away from anyone else.

Mixi founder Kenji Kasahara is also one of Japan’s wealthiest people.

Shares of Gree ended up 2.8 percent at 6,340 yen before the announcement, outperforming the benchmark Nikkei's .N225 0.4 percent rise. Mixi shares gained 1.4 percent to 430,000 yen. (Reporting by Tim Kelly; Editing by Chris Gallagher)