Social media and game company Gree is seen snaring its first operating profit growth in six years on the back of hit smartphone games, but sustaining the recovery may prove difficult in a fickle market.
The Tokyo-based company will earn a group operating profit of 14.4 billion yen ($127 million) in the year through June 2018, according to the consensus estimate of analysts surveyed by QUICK. That is more than double the company's 7 billion yen profit forecast for the year ending next month, which would mark a 51% slide from the prior year.
Gree and competitor DeNA once swept the digital world with popular games linked to social media. Gree's operating profit peaked at 82.7 billion yen in the year through June 2012. But earnings plunged suddenly as the main battleground shifted from traditional cellphones to smartphones. The developer's operating profit for the year ended June 2016 was 14.2 billion yen, less than one-fifth the peak.
Recently, the company has focused on smartphone game production, ...
One such hit is "Another Eden," which climbed to the No. 6 spot on the Google Play app store after its release last month. The role-playing game, which has elements of time travel, lets players spend real money to get more useful items. Some say "Another Eden" is "the best received of [Gree's] recent games, and its popularity looks likely to endure," as SMBC Nikko Securities senior analyst Eiji Maeda put it.
But some market observers are less optimistic. "It's unclear whether they can keep putting out hits after this," said Hideki Yasuda, an analyst at the Ace Research Institute. Japan's smartphone game market grew just 2% on the year to 945 billion yen in fiscal 2016, according to the Yano Research Institute, and as the spread of smartphones nears completion, the market is unlikely to grow much more. App stores are also saturated with games, meaning "even hits will have trouble sticking around," Yasuda said.
