GungHo Online Entertainment reported a steep decline in first-quarter profit as revenue from its aging flagship mobile game Puzzle & Dragons continued to deteriorate while marketing expenses climbed.
Net income plunged 59.8% to ¥1.61 billion ($10.5 million) in the three months ended March 31, the Tokyo-based mobile game developer said Friday. Revenue fell 7.6% to ¥25.78 billion, while operating profit slumped 54.8% to ¥2.83 billion.
The disappointing results highlight the challenges facing the company as it struggles to maintain player interest in Puzzle & Dragons, which celebrated its 13th anniversary in February. Despite continued seasonal events and collaborations with popular characters from other franchises, the title’s revenue generation has weakened significantly.
GungHo has been attempting to diversify its portfolio. The company expanded its MMORPG “Ragnarok X” to PC platforms in January after launching on mobile in November 2024. Its subsidiary Gravity also released “Ragnarok M: Classic” in Southeast Asia in February.
These newer titles have shown “steady activity,” according to the company, but their contributions have not been sufficient to offset the decline in the core business. Rising costs in outsourcing and advertising further pressured profitability as GungHo invests to reinvigorate growth.
