News Article

GungHo Online Entertainment's Market Cap Surpasses Nintendo's

Posted by Andy Green

Puzzle & Dragons owner sees a huge rise in its share price

The mobile gaming market is certainly on the rise as more and more people start to adopt devices such as tablets and smartphones. No longer do you need to have a dedicated gaming console to enjoy games as you can now find them within various app stores.

Naturally, the quality may not exactly be the same as the games found on the 3DS or the PlayStation Vita but the video game market is certainly shifting as more consumers opt to download software on their mobile devices.

This change in the market has been shown again recently as the market capitalisation of GungHo Online Entertainment - which is most famous for its Puzzle & Dragons title - has surpassed Nintendo's.

Following its strong earnings announcement last week, GungHo’s share price jumped nearly 29% to 1,342,000 yen ($13,579). That pushed its market capitaliszation to 1.546 trillion yen, overtaking Nintendo’s 1.539 trillion yen.

For the uninitiated, market capitalisation (often shortened to market cap) is the total value of issued shares of a publicly traded company. Essentially, if you take the share price and times it by the number of shares outstanding you'll find your magic number.

GungHo is actually bringing an RPG version of Puzzle & Dragons to the 3DS in Japan. Puzzle & Dragons Z is down for a Winter release and GungHo CEO Kazuki Morishita has said in a financial results briefing that the company hopes to shift at least one million copies, according to a Morning Star News report.

The mobile version of Puzzle & Dragons has more than 13 million registered users in Japan alone so there's every chance a paid RPG version on the 3DS could achieve such a high goal.

What are your thoughts on the rise of mobile gaming? Where do you see the future of gaming headed? Let us know in the comment section below.

[via blogs.wsj.com, siliconera.com, morningstar.co.jp]

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User Comments (23)

Birthday_Boy

#2

Birthday_Boy said:

I've played the game and I thought it was pretty fun. I wish P&D was as large as it is in Japan, for North America.

Captain_Balko

#4

Captain_Balko said:

I'm still a little bit confused on the whole "market cap" thing. I mean, this company can't be actually worth one one-hundredth of what Nintendo is worth... so what does "market cap" entail?

LittleIrves

#5

LittleIrves said:

This smacks of a bubble waiting to burst. I remember when Draw Something blew up, was worth millions, Zynga bought them, and a few months later.... ? I'll be curious to see what the respective valuations of each company are in 12 months.

ledreppe

#6

ledreppe said:

Tablet and smartphone gaming is here to stay, but I still haven't felt compelled to play any of the games in the iPhone app store after 4 or so years. They just seem to be 'throw away' software, and I actually care about the buying of my games, unlike most of the people who play on tablets etc.

As long as there are traditional portable consoles, I will continue playing them. If the day comes when traditional handhelds become unprofitable for their makers, then that is the day I'll probably give up on portable gaming.

gaby_gabito

#8

gaby_gabito said:

I don't think we should measure success in terms of money. Especially in this case. There are so many people in the world whom depend on smartphones whether it be for work, networking, socializing, etc. and a very large number of that group does not consist of "hardcore gamers". So, of course mobile games are going to sell well when more people have access to phones than video game consoles. I have plenty of iPhone games myself, mostly being free. I just don't get that quality experience that I get when I play a Nintendo game or even a Playstation game for that matter. The depth just isn't there. I'll certainly buy a Zelda game over Angry Birds or Cut the Rope any day. Video game success should always be determined more by the quality of the game.

XCWarrior

#9

XCWarrior said:

Nothing to worry about. Stocks go up and down. Nintendo will be around for the long haul. I love puzzle games (and dragons), but they are a dime a dozen. This can't hold up long term. Heck, it's coming to 3DS. That tells you something right there - they want to actually make money on a platform that sells games for more than 0 cents.

bassoongoon

#10

bassoongoon said:

Hate to be the guy, however "times" is a preposition (i.e. five times seven), the verb multiply would be the correct word in this case :P

Source: pursuing mathematics minor.

That aside, Puzzles & Dragons would be great on 3DS

Kirk

#11

Kirk said:

It's completely baffling to me that given the situation I hadn't even heard of GungHo Online Entertainment until I read this article and yet I follow the industry on sites like IGN and Gamespot etc every single day.

I guess I must have seen articles on this Puzzle & Dragons game and the company but they just never caught my attention enough for me to bother reading them or something.

bassoongoon

#12

bassoongoon said:

@Kirk This surprised me as well. It is interesting to see GunHo's market cap surpass that of Nintendo. That said, I do not know very much at all about mobile gaming.

Dpishere

#14

Dpishere said:

As others have stated mobile games are definitely here to stay, though their quality can come nowhere near that of a focused handheld gaming device, as the E-shop proves that even at a lower price than retail the games themselves are superior than games for mobile phones and tablets.

NintendoPro64

#16

NintendoPro64 said:

@Captain_Balko

Investopedia: http://www.investopedia.com/terms/m/marketcapitalization.asp

Definition: "The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures."

Basically, while the company has far less money than Nintendo, it currently has higher growth potential. The higher your growth potential, the more people want to invest in you and buy shares. The more people invest in you, the higher your market cap and value go. Market cap doesn't actually reflect how much money you have/how big you are. For example, Sony is MUCH bigger than Nintendo, but their market cap only exceeds Nintendo's by about 3 billion. This is due to their piss-poor profit margins and the overall shakiness of a lot of their operations. (Heck, not one year ago, their market cap was actually LOWER.)
http://www.notenoughshaders.com/2012/09/08/the-ten-year-decline-of-sony/

Nintendo currently has about $12 billion dollars in the bank and they never reported a full year loss until 2011 yet their market cap was like $85 billion dollars back in 2008. This was because, thanks to Wii, their growth potential was HUGE and they attracted a lot of investors. But when the recession took its toll that year, the market cap plummeted by like half or so. Even though they continued to rake in cash, (2009 was their most profitable year ever I believe), their growth potential leveled off in 2008 so investors didn't return in the same swarms preventing their market cap from getting back to its former levels.

I am no broker so my perception's probably off but that's how I feel it basically works.

rjejr

#17

rjejr said:

Oh god no, now I'm one of the in crowd? I've been addicted to P&D for about a week now. I'ld never heard of them before last week though they made some game called Hogworld for kids that people probably bought thinking it was Harry Potter related.

And yes, its a match 3 game but a little more strategically involved b/c you don't "swap" pieces, you slide 1 as far as you want. Plus - and here's why its big in japan - you collect littles monsters that you level up by combining together and then make your own team of 5, like Pokemon, and then on top of that you borrow 1 extra from online - you seem to need to be online to play. And there are a bunch of free levels that ramp up slowly but also different daily levels that are difficult to beat, at least for me.
So yeah, its free and not Fire Emblem and you can spend money on kicrotransactions but its more engaging than Bejeweled or Puzzle Hero.

Did I mention I'm addicted?

Ralizah

#20

Ralizah said:

Puzzle Quest, much? Well, if it can strike the brilliant balance between casual and hardcore gameplay that PQ did then I'm in.

The generic title and seeming similarity to a much beloved game of mine worry me, though.

banacheck

#22

banacheck said:

You also have to remember most of these mobile gamer's are only casual gamer's, casual gamer's are not into gaming for the long haul. I can see a totally different story for mobile gaming in years to come, when other trends & device's are in place.

I also don't think Take Two's Revenues for Q4 which almost doubled from $148.1 million to $300 million, if mobile gaming was such a massive threat, in a time between hardware changes where sells usually drop-off.

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