Puzzle & Dragons' GungHo has great first half: $523 million in profit

The top-ranked Japanese smartphone publisher reveals strong numbers for the first half of 2014, though its second quarter saw a slight year-on-year dip in profit.
Today, GungHo Online Entertainment, creator of chart-smashing mobile game Puzzle & Dragons announced its second-quarter and first-half results for its current fiscal year. For the first half of the year, GungHo raked in profits of 53.7 billion yen ($523 million) on revenues of 94.3 billion yen ($918 million). The company had revenues of 44.4 billion yen ($432 million) for its most recent quarter and profits of 24.9 billion yen ($243 million). This is actually slightly down both year-on-year and quarter-on-quarter, which the company ascribes to a mixture of seasonality, increased promotional activity, and Japan's recent sales tax hike (the company chose not to raise the price of its in-game items.) The company's presentation is full of interesting stats about the Japanese mobile market -- now the most profitable on the globe, and one which is dominated by free-to-play games using in-app purchases. For example, according to numbers the company has put together, GungHo had a 51 percent share of Japanese mobile game revenues in 2013 -- 163 billion yen ($1.59 billion) on 317 billion yen ($3.08 billion) in the total market. Amidst a strong shift to mobile games in the territory, GungHo does note that the 3DS iteration of its franchise, Puzzle & Dragons Z, has shipped over 1.5 million copies so far. It also launched one game during the quarter: Picotto Kingdom, which it says hit number one in the Japanese iOS App Store's top free charts. But that launch may have been a bit shaky: It's nowhere to be found in the top 100 just two weeks later. The company says it has no plans to promote the game further just now, but instead intends to concentrate on operating the game service until it hits a large enough download threshold, at which point marketing will commence. This jibes with what GungHo president Kazuki Morishita told Gamasutra a few months ago: that the company carefully manages promotions to keep from burning out its user-base. In that interview, Morishita explained his philosophy toward free-to-play game development, telling Gamasutra, "We're not trying to focus on the user base -- we're trying to create a game that's solely good based on quality, and what we think is good. If that sticks, then good. If not, we've got to go back to the table and rethink everything." GungHo has 10 games under development across the company and expects to launch one in the next quarter, it said, alongside its results.

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