Japanese game publisher GungHo Online (TYO:3765) has announced its FY14 Q2 financials, for the three months ending 30 June 2014.

Net sales were $440 million (¥44.4 billion), down 11 percent quarter-on-quarter, but up 2 percent year-on-year.

Operating profit was $250 million (¥25 billion), down 13 percent quarter-on-quarter, and down 6 percent year-on-year.

Net profit was $150 million (¥15 billion), down 12 percent quarter-on-quarter, and down 5 percent year-on-year.

The company ended the quarter with cash and equivalents worth $729 million (¥73 billion).

Puzzle & Futures

Of course, Puzzle & Dragons is the main driver of revenue for GungHo.

It said that sales were hit by issue such as the increase of the sales tax in Japan.

Unsaid, however, is the assumption that Puzzle & Dragons is now experiencing saturation in terms of finding new users.

After all, the game has been so successful that GungHo says its sales accounted for 51 percent of all smartphone game sales in Japan during 2014.

Thanks to competition from the likes of Colopl, LINE and Square Enix, this clearly won't be the case in 2014.

And GungHo does point out that the number of monthly active players of Puzzle & Dragons in Japan has plateaued.

Perhaps more worrying, this is also happening internationally too.

Re-engagement

For this reason, GungHo is now looking forward to new products.

It's just launched Picotto Kingdom, an "easy-touch" game that was #1 on the Japanese downloads charts for iPhone.

It's also looking to maximise the value it has in the Puzzle & Dragons brand with move such as releasing an arcade version of the game. Apparently there are already 2,600 machines currently in Japanese arcade.

[source: GungHo Online]