Consolidated Financial Results for the Fiscal Year Ended December 31, 2015: Supplementary Materials

GungHo Online Entertainment’s financial results for the fiscal year ending December 31, 2015, highlight a period of transition characterized by a maturing domestic smartphone game market and increased investment in promotional activities. The company reported net sales of 154.3 billion yen, representing a 10.8% year-on-year decline, while net profit fell 30.0% to 43.4 billion yen. This contraction in profitability was primarily driven by a 48.2% increase in advertising expenditures, as the company intensified marketing efforts for its flagship title, Puzzle & Dragons, and other smartphone games like Divine Gate and Summons Board to combat rising industry competition.

The company’s core strategy remains centered on maintaining high monthly active user (MAU) counts for Puzzle & Dragons, which accounted for 88.6% of total net sales in 2015. Despite the game entering its fourth year, management continues to extend its lifecycle through frequent in-game events, collaborative content, and the introduction of new gameplay modes such as cooperative dungeons. While the domestic market shows signs of saturation, the company maintains a stable user base and has expanded its reach through international initiatives, including localized testing in China and targeted advertising in North America.

Looking ahead, the company has prioritized long-term engagement over short-term growth, opting to postpone the release of new titles, including a PlayStation 4 game, to ensure higher quality. Furthermore, the company has decided to discontinue the disclosure of monthly financial reports, shifting focus toward quarterly reporting to provide investors with more comprehensive and reliable performance data. These efforts reflect a broader commitment to sustaining long-term profitability through continuous game updates and data-driven user management.