Image: Social networking service GREE promotion at game show
Koji Sasahara  /  AP
Staff members promote at a booth for social networking service GREE at the Tokyo Game Show in Makuhari, Chiba, east of Tokyo Thursday, Sept. 15, 2011.
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updated 9/15/2011 9:04:53 PM ET 2011-09-16T01:04:53

Social games played on smartphones are hogging the attention at this year's Tokyo video-game exhibition, boasting new ways of making money by selling "virtual" goodies, not the usual expensive machines and software packages.

Gree Inc., a social networking service that began just seven years ago in the founder's living room, was the big star at the annual Tokyo Game Show, with its first booth ever. The show previewed to media Thursday ahead of its opening to the public later this week at Makuhari Messe hall in this Tokyo suburb.

Its stardom underlines the arrival of so-called "social games" aimed at casual users passing the time on smartphones and tablet devices rather than the sophisticated plots, imagery and controls found on gaming devices.

With Gree, mobile games are an additional feature to its social networking service, similar to those already common in the U.S. and other nations with Facebook and Twitter, although those don't focus as much on gaming.

Yoshikazu Tanaka, the 34-year-old founder and chief executive of Gree, said his business model of attracting massive users was similar to other sectors such as computers, fast-fashion and autos, in which prices were rapidly coming down despite high quality.

He said he was serious about expanding business overseas, targeting 1 billion users in the next several years. Gree already has drawn 140 million users worldwide, and has opened overseas offices, including San Francisco and London.

Serkan Toto, a mobile and game industry consultant, said the enormously successful Gree business model that has made Tanaka a billionaire is different from conventional game makers in that it gives away games for free, and it doesn't sell any expensive machines.

However, once users become fans of the games, some of them pay for special virtual "items," such as fancy clothes and cute pets, bringing in lucrative profits for Gree, thanks to sheer user scale.

Toto said Gree's show-stopping presence was telling, underlining its ambitions to grow globally.

"It was a demonstration of power: 'We are the future. We have the money'," he said, noting that Gree had reached an older crowd than the teenagers usually associated with games. "Social games are a way to reach new demographics."

Gree's booth was among the biggest at the Tokyo Game Show.

And it was drawing just as much of a crowd as Sony, which exhibits every year, and was showing off its new portable machine, PlayStation Vita, set to go on sale Dec. 17 in Japan and early next year in the U.S. and Europe.

Image: PlayStation Vita
Koji Sasahara  /  AP
Sony's new portable game PlayStation Vita is displayed at the Tokyo Game Show on Sept. 15, 2011. The upgraded portable video game machine PlayStation Vita is going on sale in Japan on Dec. 17, but won't be available overseas until next year.

In Japan, PS Vita will face off this holiday season against DS3, the portable from Nintendo, which features glasses-free 3-D imagery.

Both Nintendo and Sony executives, in presentations earlier this week, expressed worries about keeping growth going in the gaming business, perhaps because of competition from devices like smartphones, Gree's specialty.

The shift to smartphones was affecting game-software makers as well.

"The network itself is the new platform," said Yoichi Wada, head of Japanese game software maker Square Enix. "Game developers need to keep in mind that gaming is spreading to casual users, including newcomers."

But the advantage of offering gaming on cellphones is simple: Almost everyone in the industrialized world owns a cellphone, and as more nations join that fold, people in those nations are bound to buy cellphones, too.

Tanaka said the advent of social gaming had changed the industry because people were always connected to networks with smartphones and tablets like the iPad, and people aren't necessarily going to go out and invest hundreds of dollars in a special game machine.

Tanaka said he envisioned a time when cellphones would become plentiful in places like Africa and South America for low prices, and people, who would never dream of buying expensive game machines, would be accessing Gree services from cellphones as gaming newcomers.

"What is coming next is very important," he said as a keynote speaker, a good indicator of his spot in the limelight. "Gree is targeting all cellphone-users."

Takashi Sensui, general manager at Microsoft Japan Co., said Microsoft sees social gaming as an opportunity to grow, as it is strong in games for cellphones and computers, as well as with those for its Xbox 360 home console. (Msnbc.com is a joint venture of Microsoft and NBCUniversal.)

What computer device people may want to use merely depends on where they are, such as whether they are on the move or they are at home, he said.

"You can use Microsoft's platform anywhere, anytime and everywhere, on any type of device to enjoy entertainment," he said.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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