A group of Shareholders shared its Dissatisfaction to the publisher, its high CEO Compensation, and lack of Innovation
GungHo, the Japanese gaming giant behind Puzzle & Dragons, has found itself in a precarious situation.
The company announced significant financial waste after investing over $100 billion in various titles since 2012, only to see these projects yield less than $10 billion in revenue.
This disparity has sparked widespread criticism from shareholders who are questioning GungHo’s strategic decisions and executive compensation.
The situation is further complicated by CEO Kazuki Morishita’s substantial salary increase to nearly 340 million yen annually, comparable to Nintendo’s president but underperforming significantly in terms of company profits.
Here is what is in the article!
- “GungHo faces financial struggles and investor scrutiny after heavy investment in new games fails to match Puzzle & Dragons’ success.”
- “The company spent over ¥100 billion on new titles since 2012, yet generated less than ¥10 billion in revenue, sparking criticism.”
- “GungHo’s reliance on Puzzle & Dragons and failure to innovate leaves it lagging behind competitors in the gacha genre.”
- “CEO Kazuki Morishita’s rising salary, despite financial struggles, fuels shareholder anger over mismanagement and lack of transparency”
Case study to the Crisis
Declining profits over rising CEO Salary
GungHo, the Japanese gaming giant behind Puzzle & Dragons, has found itself in a precarious situation.
The company announced significant financial losses after investing over $100 billion in various titles since 2012, only to see these projects yield less than $10 billion in revenue.
This disparity has sparked widespread criticism from shareholders who are questioning GungHo’s strategic decisions and executive compensation.
GungHo has heavily relied on Puzzle & Dragons since 2012, pouring over ¥100 billion into new titles.
However, none of these projects have come close to matching the profitability of its iconic game.
Competitors like Nintendo have maintained strong market positions and innovative game strategies, further emphasizing GungHo’s stagnation.
Despite the financial struggles, CEO Kazuki Morishita’s salary has increased significantly, reaching ¥340 million over the decade.
Shareholders are increasingly dissatisfied with GungHo’s inability to diversify its revenue streams and improve its financial performance.
The company’s failure to innovate has left it lagging behind industry standards.
Games like Arknights and Nikke have set new benchmarks in the gacha genre by offering engaging narratives and innovative gameplay mechanics.
Financial Flops and Executive Pay
GungHo’s failure to innovate and diversify its revenue streams is starkly contrasted by the successes of these new titles.
Despite investing over 100 billion yen in new projects, GungHo’s non-Puzzle & Dragons games have collectively generated less than 10 billion yen in revenue.
This disparity is a clear indicator of the company’s misallocation of resources and its inability to adapt to changing market demands.
The high salary of CEO Kazuki Morishita, while comparable to Nintendo’s CEO, does not justify the company’s poor financial results.
Investment advisor Strategic Capital shared a proposal to GungHo Online titled “Proposal to GungHo Online Entertainment to up its game” on behalf of its shareholders.
The report compares the high salary of its CEO Kazuki Morishita and increase over past couple of years to the declining market capitalization and operating profit.
The salary of its CEO increased by 181% to ¥340 million from 2014 to 2023, its operating profit has seen a decline of almost – 69% over the same period of time.
This controversy underscores shareholder dissatisfaction and highlights the need for GungHo to reevaluate its compensation structure and investment strategies to align with industry innovations,
Feedback from the Gaming Community
Reddit User – skpom said, ” I miss Ragnarok online. It’s such a shame that 2 was atrocious and they did nothing with the IP beyond mobile stuff.”
This sentiment reflects the nostalgia for GungHo’s older titles, but also highlights the company’s failure to innovate beyond its flagship game.
Reddit User – Wonderful-Arm7014 said, “Those are some wild numbers. How has this guy not been fired yet?“
This comment underscores the controversy surrounding CEO Kazuki Morishita’s salary, which has increased from ¥120 million to ¥340 million over ten years.
Industry Shifts and Competitor Innovations
Gacha games have evolved significantly, outpacing GungHo’s stagnant strategy.
Titles like Genshin Impact, Arknights, and Azur Lane showcase innovative gameplay and narratives that leave GungHo’s approach lagging.
These games offer complex stories, engaging narratives, and stunning artistry, setting a new gold standard for the industry.
Reddit User – PlayOnPlayer said, “Gacha games have taken a pretty massive shift over the last few years, Genshin changed the game whether they like it or not, especially if you are a publicly traded company.“
This observation highlights the industry’s rapid evolution, with modern gacha games requiring significantly larger scopes and international appeal to succeed.
Nostalgia and Unrealized Potential
Users have expressed strong nostalgia for GungHo’s earlier titles, such as Ragnarok Online and other classic games.
However, these nostalgic efforts failed to translate into successful new releases.
Despite spending over ¥100 billion on developing around 20 other games since 2012, none of these titles have matched the profitability of *Puzzle & Dragons*.
GungHo’s prolonged reliance on Puzzle & Dragons and its failure to innovate have left the company financially strained.
Shareholders are pushing for reform, emphasizing the need for new strategies that could revitalize the gaming giant.
The evolving landscape of gacha games now demands bold innovation, which GungHo seems to be missing.
With competitors like Genshin Impact setting new standards, GungHo’s inability to modernize its approach threatens its long-term success.
It is imperative for GungHo to step up its game by adopting more inclusive and innovative strategies that meet player expectations and align with industry standards.