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GungHo’s smash hit title takes social gaming by storm

by Kazuaki Nagata

Staff Writer

Thanks to the startling success of its smartphone game “Puzzle and Dragons,” the spotlight is beaming brightly on GungHo Online Entertainment Inc.

“We’ve been very lucky with the success of ‘Puzzle and Dragons,’ ” CEO Kazuki Morishita said in a press briefing Friday at the video game maker’s Tokyo headquarters.

GungHo announced Thursday that it posted ¥18.6 billion in operating profit for the January-March quarter, some 75 times higher than in the same period last year, while sales skyrocketed to ¥30.9 billion from ¥3.2 billion.

For the business year ending in December 2012, the firm booked an operating profit of ¥9.29 billion, a 7.8-fold increase year-on-year, on sales of ¥25.82 billion, 2.68 times higher than in 2011.

Since its release in February 2012, “Puzzle and Dragons” (“Pazu Dora”), has been downloaded around 13 million times. Given that the number of smartphone users in Japan is estimated at 43 million, it has proven a staggering hit that has consistently topped the rankings at Apple Inc.’s App Store and its counterpart run by Google Inc.

While downloading the role-playing game is free, users can purchase special items — generating a key source of revenue for GungHo. Players get to explore a variety of dungeons and battle monsters through puzzles, giving “Puzzle and Dragons” far more gaming features than so-called social games, which consist mostly of card games.

With users apparently growing less interested in social gaming, “the timing of the (game’s) release also was good,” Morishita noted.

GungHo produces games for smartphones, computers and platforms such as Nintendo Co.’s 3DS portable game console, but it is often mistaken by the media as a social game or IT firm. Morishita was keen to stress that GungHo is a video game maker with a mission to create fun products, but the popularity of “Puzzle and Dragons” already has brought the firm to the attention of Japan’s business world.

GungHo’s stock price is trading at around 10 times higher than at the beginning of the year, and its market value has exceeded ¥1.2 trillion, ranking it third on the Jasdaq and behind only Internet giants Yahoo Japan Corp. and Rakuten Inc.

Mobile service provider Softbank Corp. in March revealed that it planned to acquire GungHo, and the takeover bid was completed April 26. GungHo’s chairman, Taizo Son, is a brother of Softbank founder and CEO Masayoshi Son.

Despite all the buzz, Morishita appears to be handling it calmly, saying the mood at the firm has not changed — even after topping ¥1 trillion in market value.

“People often ask me if we had a party to celebrate the ¥1 trillion market value, but there’s been none at all,” he said, adding he still lives in a run-of-the-mill apartment in Chiba.

“But we greatly appreciate receiving this level of expectation, it’s such an honor.”