GungHo Online Entertainment Co. reported a sharp decline in profit as the Japanese mobile game developer grappled with weaker performance across its portfolio, particularly from its subsidiary Gravity Co.’s Ragnarok franchise.
Net income fell 32% to ¥11.17 billion ($74.5 million) for the fiscal year ended December 2024, while revenue dropped 17.3% to ¥103.6 billion. Operating profit declined 37.3% to ¥17.49 billion, the Tokyo-based company said Wednesday.
The company’s marquee title Puzzle & Dragons managed to buck the trend, recording year-over-year revenue growth through collaborations with popular franchises and regular content updates. However, this wasn’t enough to offset the significant drop in earnings from Gravity’s Ragnarok Origin, which had been a major contributor to the previous year’s results.
Marketing expenses increased as the company launched new titles, including Ragnarok X, a mobile MMORPG released in Japan on November 20. Development outsourcing costs also rose substantially for games still in production.
The results highlight the challenges facing Japanese mobile game developers as they try to maintain growth in a mature market while investing in new titles. GungHo’s PC game Ragnarok Online marked its 22nd anniversary in December, underscoring the company’s need to successfully transition its aging franchises to mobile platforms.
