Profits fall at Puzzle & Dragons developer GungHo Online
Shares take a hit as market cap falls
Japanese firm GungHo Online Entertainment, the company behind the incredibly successful Puzzle & Dragons, has published its financial report for Q3, with both sales and profit suffering a dip.
GungHo saw $424 million worth of sales in Q3 2013, a figure that shows a 5 percent drop in sales since Q2. As a result, operating profit also suffered a 12 percent drop to $238 million.
Crucially, this is the first time GungHo has suffered any kind of decline since Puzzle & Dragons took the east by storm last year.
Reaction to the news has been swift and, despite the firm's investment in fellow mobile superstar Supercell just weeks ago, shares in the developer fell by – at peak – 19 percent.
The big event
As a result, the company's market cap has now fallen to $9.3 billion. For some context, back in May GungHo had a market cap of more than $15 billion, placing it ahead of Nintendo.
The news doesn't come completely out of the blue, however.
As recently reported by Tokyo-based consultant Serkan Toto, Puzzle & Dragons' take up of new users has been dropping off in Japan in recent months, with the developer now targeting a 3DS release and launches overseas to stimulate new growth.
"That’s how brutal Japan’s mobile gaming market can be: it’s strange though, as the dip in sales and profit shouldn’t have come as a big surprise to anybody in the industry over here," detailed Toto on his blog.
"GungHo says it is trying to turn Puzzle & Dragons into a brand with long term value – which is why the original game will continue to be updated with events like the in-game collaboration with Batman this week, both in Japan and globally.
"Japanese mobile gaming companies are masters when it comes to planning and executing in-game events, and I would put GungHo on top of the list."
Indeed, in more positive news, GungHo's unofficial Puzzle & Dragons follow up, Divine Gate, has also just hit 1 million users in Japan, with Toto claim the title is "monetising nicely" so far.
[source: Serkan Toto]
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