Japanese online game developer Gala Inc. reported widening losses for its fiscal first quarter as revenue from its metaverse platform declined, underscoring the challenges facing smaller players in an otherwise rapidly expanding virtual gaming sector.
The Tokyo-listed company posted a net loss of ¥186 million ($1.26 million) for the three months ended June, compared with a ¥146 million loss in the same period last year. Operating losses nearly doubled to ¥247 million from ¥102 million previously, while revenue fell 4.8% to ¥1.14 billion.
Gala’s troubles center on its UVERSE metaverse campus platform, which experienced declining sales during the quarter. The company also faced higher amortization costs related to HTML5 games, including payment channeling fees and royalties. Additional pressure came from consultant expenses at its Cambodian subsidiary TREEFUL for licensing requirements.
The poor performance contrasts sharply with the broader metaverse gaming market, which analysts project will reach $648 billion globally by 2034, expanding at nearly 39% annually. Major research firms forecast the overall metaverse sector will grow from $105 billion in 2024 to over $900 billion by 2030.
Gala’s struggles highlight the difficulties facing specialized metaverse companies as they compete against tech giants like Meta and Microsoft for market share. The company has been developing blockchain-based metaverse games including “Flyff World for Metaverse” and “Rappelz World for Metaverse” through partnerships with Korean entertainment companies.
The widening losses raise questions about Gala’s ability to capitalize on the metaverse boom while managing rising development costs and competitive pressures in an increasingly crowded virtual gaming landscape.
