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Blaming market saturation, GungHo sees 2015 profits down 23%

Blaming market saturation, GungHo sees 2015 profits down 23%

Japanese mobile and console game publisher GungHo Online (TYO:3765) has announced its FY15 financials for the 12 months ending 31 December 2015.

Sales were down 11% compared to 2014's record amount to $1.3 billion (¥1.5 trillion).

Operating profit was down 23% year-on-year to $600 million (¥724 billion).

More worryingly for the company, and investors, all four quarters of 2015 saw GungHo's sales and operating profit decline.

The company - which generates the majority of its revenues from Japan - noted that "domestic smartphone game market has moved out of the explosive growth phase" and is "moving into a saturation period due to the slowdown of such diffusion and an oversupply of games".

Managing decline

Of course, the main driver of GungHo's financials remains Puzzle & Dragons, which generated 89% of sales in 2015.

Despite competition from Mixi's Monster Strike and LINE: Disney Tsum Tsum, GungHo claims it remained the most popular mobile game in Japan during 2015.

GungHo is still very profitable, just not as much as previously

Its monthly active player numbers are in longterm decline, though; something GungHo hopes to address with Cooperative Play Dungeon Alpha, a separate co-op dungeon version of the game, which was released in October.

In brighter news, Puzzle & Dragons experienced strong growth in North America during 2015, and the game will be officially released in China through Tencent in Q1 2016.

New blood?

Aside from Puzzle & Dragons, GungHo revealed that new game Summons Board had done 4 million downloads in Japan, and it has just been released in Taiwan, Hong Kong and Macao.

RPG Divine Gate has done 5 million downloads in Japan.

During 2015, each quarter saw a decline in sales and profit

The company has also signed a strategic deal with Gameloft, which will see GungHo release Disney: Magic Kingdoms in China.

In addition, it's planning to release a new mobile game in Spring, and survival action title Let It Die (from inhouse studio Grasshopper) for PlayStation 4.

[source: GungHo Online]

Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.

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Thomas Streetman Community Relations Manager at Smilegate
Do you think that it is a decline in the game itself or a decline in the market for puzzle-rpg games?
jon jordan
I can't see the Japanese market growing very much in terms of value over the coming years. It's already mature. But in this case, Puzzle & Dragons is a 4 year old game, so it's in decline in terms of users. Monetisation remains strong, but eventually.... everyone churns.