{"id":43567,"date":"2025-01-31T17:56:02","date_gmt":"2025-01-31T08:56:02","guid":{"rendered":"https:\/\/automaton-media.com\/en\/?p=43567"},"modified":"2025-02-03T10:03:56","modified_gmt":"2025-02-03T01:03:56","slug":"all-youve-done-is-waste-100-billion-yen-japanese-gacha-game-giant-put-on-blast-by-shareholders-for-milking-same-hit-for-13-years-while-releasing-failures","status":"publish","type":"post","link":"https:\/\/automaton-media.com\/en\/news\/all-youve-done-is-waste-100-billion-yen-japanese-gacha-game-giant-put-on-blast-by-shareholders-for-milking-same-hit-for-13-years-while-releasing-failures\/","title":{"rendered":"\u201cAll you\u2019ve done is waste 600 million dollars\u201d Japanese gacha game giant put on blast by shareholders for milking same hit for 13 years while releasing failures\u00a0"},"content":{"rendered":"\n

Japanese game company GungHo Online Entertainment has been criticized for its stagnating performance, lack of transparency, and inability to create another hit that comes close to their long-running, successful smartphone game Puzzle & Dragons. Investment advisor Strategic Capital has submitted a lengthy proposal<\/a> on behalf of the company\u2019s shareholders. It highlights numerous issues, calling on GungHo to \u201cup its game\u201d and implement reforms to win back shareholder trust. <\/p>\n\n\n\n

Although they have developed other titles over the years, Japanese game company GungHo is currently best known as the operator of Ragnarok Online in Japan and the developer of 2012 gacha mobile title Puzzle & Dragons.  <\/p>\n\n\n\n

\"Puzzle<\/figure>\n\n\n\n

However, Strategic Capital\u2019s report highlights that GungHo is still very dependent on this 13-year-old enduring hit. The company estimates that GungHo has spent upwards of 100 billion yen (over 640 million dollars) on developing around 20 other games over the past decade or so, none of which have come anywhere near Puzzle & Dragons\u2019 profitability. The report shows that since 2012, titles other than Puzzle & Dragons have only produced around 10 billion in revenue, despite the 100+ billion yen invested in their development. This includes titles relating to well-known IPs like Disney and Level-5’s Yo-kai Watch franchise.\u00a0\u00a0<\/p>\n\n\n\n

\"GungHo
Bar graph comparing Puzzle & Dragons’ sales revenue against that of new releases (source: Strategic Capital’s GungHo presentation<\/a>)<\/em><\/figcaption><\/figure>\n\n\n\n

This lack of a hit to match Puzzle & Dragons\u2019 success is far from GungHo\u2019s only issue. The report highlights that GungHo has seen its operating profit and market capitalization decline significantly over the last 10 years. However, the pay of its CEO Kazuki Morishita has increased from 120 million yen to 340 million yen over that period.  <\/p>\n\n\n\n

\"GungHo
Graphs comparing GungHo’s operating profits, market capitalization and CEO renumeration (source: Strategic Capital’s GungHo presentation<\/a>).<\/em><\/figcaption><\/figure>\n\n\n\n

For context, this puts Morishita\u2019s total annual salary for 2023 (340 million yen) nearly on the same level as that of Nintendo\u2019s CEO (360 million yen). It goes without saying that Nintendo is a far bigger and more profitable company than GungHo. According to the report, GungHo makes less than a tenth of Nintendo\u2019s profits. These disparities are clearly indicated in the diagrams comparing GungHo\u2019s profits and CEO renumeration to those of major Japanese game companies. <\/p>\n\n\n\n

\"Japanese
Japanese game company CEO pay comparison<\/em> (source: Strategic Capital’s GungHo presentation<\/a>)<\/em><\/figcaption><\/figure>\n\n\n\n

As the report rather scathingly puts it, \u201cIn his message, president Morishita talks about \u2018Challenge and Creation\u2019 and \u2018aiming to become the world\u2019s No. 1 entertainment company.\u2019 Over the past 10 years, only Morishita\u2019s salary has continued to Challenge and Create, to the point it is now on par with one of the world\u2019s leading video game companies, Nintendo.\u201d <\/p>\n\n\n\n

\"\"
GungHo’s profits compared to big-name Japanese game companies (source: Strategic Capital’s GungHo presentation<\/a>).<\/em><\/figcaption><\/figure>\n\n\n\n

Strategic Capital proposed a detailed Financial Stability Plan to GungHo. Overall, they suggest that entering a private partnership with another company \u201cis the best option for GungHo\u201d as it would allow them to diversify and expand their reach, instead of relying heavily on Ragnarok Online and Puzzle & Dragons. Other proposed actions include a fundamental review of GungHo\u2019s renumeration system and far more transparency. <\/p>\n\n\n\n

As an aside, the report noted that GungHo has comparatively large cash reserves, which it terms \u201cexcessive.\u201d On the surface, having large cash reserves may seem like a good thing. However, with all this money essentially sitting there for a rainy day, this is also being viewed negatively by shareholders. Strategic Capital argues that GungHo should be making better use of this money to drive the development of potential hit games.   <\/p>\n","protected":false},"excerpt":{"rendered":"

Puzzle & Dragons’ developer GungHo has received a very salty call from an investor relations company to “up its game.”<\/p>\n","protected":false},"author":61,"featured_media":43579,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_gspb_post_css":"","footnotes":""},"categories":[3],"tags":[261,17],"class_list":["post-43567","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-financial-news","tag-japan-related-news"],"blocksy_meta":[],"yoast_head":"\n\u201cAll you\u2019ve done is waste 600 million dollars\u201d Japanese gacha game giant put on blast by shareholders for milking same hit for 13 years while releasing failures\u00a0 - AUTOMATON WEST<\/title>\n<meta name=\"description\" content=\"Puzzle & Dragons' developer GungHo has received a very salty call from an investor relations company to "up its game."\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/automaton-media.com\/en\/news\/all-youve-done-is-waste-100-billion-yen-japanese-gacha-game-giant-put-on-blast-by-shareholders-for-milking-same-hit-for-13-years-while-releasing-failures\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u201cAll you\u2019ve done is waste 600 million dollars\u201d Japanese gacha game giant put on blast by shareholders for milking same hit for 13 years while releasing failures\u00a0 - 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She has a soft spot for old-school Sierra adventure games and Final Fantasy VIII (yes, 8!). Can often be found hunting down weird forgotten games and finding out everything about them. Frequently muses about characters and lines from Metal Gear Solid and Disco Elysium. 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