GungHo Online has become one of Japan’s largest mobile game companies. With some of the most downloaded games in the smartphone market, including Puzzle & Dragons, GungHo Online has been partnering with some of the biggest names in the sector, from Nintendo and Gameloft to Square Enix and Sony. Founder, President and CEO Kazuki Morishita explains the keys that have made GungHo Online reach the leading position it holds today.
GungHo Online, founded in 2002 is now one of Japan’s largest mobile game companies. What have been the key drivers behind its excellent results?
Our success is partly due to good luck. As a gaming company, we should come up with new ideas, be creative. We have to work hard every day. We are not aiming to be in the second place in the market. We are only aiming to be number one and are not going to imitate others; we want to be imitated by others. We analyze market trends, trying to predict the future, and do things that other gaming developers do not do. For example, in 2002, when we established our company in Japan, we started spreading online gaming all over the country. At that time, we had to work very hard to obtain funds. However, after our growth in the online gaming market, all other companies wanted to enter into it. At that moment, we expected there would be further chances for online games in smaller portable devices in the near future.
We had the chance to interview some of the biggest gaming companies in Japan. All of them consider that IP is one of the main driving forces behind their growth. How do you promote innovation and ensure that new IPs are constantly being developed? What drives new products?
We differentiate ourselves from other gaming developers thanks to our game concept design model. The majority of management leaders in other gaming companies are not involved in the game development process. However, in GungHo, as the President and CEO, I also participate in the research and development of our games. As you mentioned, the IP actually is a way to build more characters and a better environment in gaming. We are aiming to do more in the future and we hope we can promote it more on the user experience side through the IP creation.
GungHo Online has been growing with MMORPGs (massively multiplayer online role-playing games) as a core component of your business. However, you have been diversifying it. For instance, in 2007 you concluded a license agreement with Nintendo and you have also been launching games for PS Vita. What are the most promising business areas, in your opinion, for the next five years?
We are not actually fixed to a specific platform. You can see that Sony and Nintendo are limited to devices such as the PS4 or the Nintendo DS. However, we are different as we also provide games for the operative systems of Apple, Google or Microsoft. We are also putting efforts in R&D regarding VR, AI and other advanced technologies. We need to keep innovating and at the same time improve our skills regarding these new technologies.
For some developers, virtual reality is a crucial issue. However users, players, have not experienced it very much yet. This is why for other developers augmented-reality will be more important, and the best example is Pokémon-Go. How do you assess the state of virtual reality and the augmented reality in the entertainment industry at the moment? To what extent is GungHo Online putting efforts on these technologies?
Regarding AR, we started to research and put effort into it in 2009 and we still keep on working on that. For VR, we were putting efforts in earlier back. Five years ago, VR technologies were in a very primitive stage. It is the same as when video cameras started to be sold to the mainstream users, they were huge. But nowadays, cellphones can take good quality videos. The same is happening with VR. Now it is not a big deal and you still require a relatively big device to use it. However, there is a great possibility to see it in a smaller and mobile size in the following five years. We aim to contribute to it with our R&D efforts too.
Puzzle & Dragons, your most iconic smartphone game, has had more than 42 million downloads worldwide, 10 million of them in the US. In April 2015 you launched a title for Nintendo 3DS that represents a mash-up of this immensely popular game and probably the world’s best-known game series: Super Mario. What are the ingredients of the success of Puzzle & Dragons in your opinion?
The Puzzle & Dragons success is also based on good luck. When we launched it, it was good timing. When we created it, we were trying to come up with an action game. At first, in the development process, we thought about the relationship between customers and smartphones, which was our target platform. This is why we decided to incorporate puzzle elements and not just action, to fit the mobile devices environment. It turned out to be a way of gaming that had never been created before. When playing games in smartphones, gamers have to use the touch panel. Having that in mind, we decided that our game would be playable with only one thumb. I pictured our users on a train, commuting to work or school while fiddling with their smartphones single-handed. Before the launch of Puzzle & Dragons there were several games with puzzle and action elements. GungHo was one the first companies mixing both elements well thanks to our special attention to users’ lifestyle. Tetris, for example has its own rules and its way of being played and everybody knows it. But for the Puzzle & Dragons case, you can move multiple pieces dynamically. In Japan, two smartphone game users out of three are playing this game.
Another reason that made our game so successful was the collaboration we established with several of the biggest companies in the sector and making use of their branded characters, such as Super Mario. These characters are already well known in other countries.
To what extent are you considering new partnerships with US companies in your product development and distribution expansion strategies?
We are closely working with many big companies, not only with Super Mario from Nintendo, but also with Square Enix and Capcom. You can see Final Fantasy characters in our game, as well as those from the Evangelion and Dragon Ball franchises. We are also interested in collaborations with US companies, and in fact we have already established some informal agreements with, for instance, Warner Bros.
Our main priorities are the European and North American markets, as they are the biggest ones in the world. In fact, our newest game for PlayStation 4, “Let it Die”, will be released first in those Western markets before we launch it in Japan. We provided a demo on the last E3 and people were lining up for two hours just to play it.
When talking about the future, we are not focused on specific countries, but more on R&D for us to penetrate further the markets. In Japan, most of the games are produced only to stay inside. We are trying to do the opposite. Attention to detail is one of the keys of development. While American companies tend to focus on efficiency, Japanese ones are focusing more on the detail side steadily, and this is what we have as our identity. We are passionate about game development and we take care of every single detail, from the story to the music.
How do you see the US market as capital for you, not only in terms of sales but also regarding product development and, of course, investors?
Last year, we successfully entered the stock market to attract more foreign investors. Going abroad is crucial for us in order to understand the needs in other markets.
As GungHo Online Holdings founder, if we came back in five years from now, where would you like the company to be?
My main goal as President and CEO was to be number one in the mobile industry in Japan. Now that we have reached it, I hope that in the future GungHo will not be a Japanese company, but a global one. To achieve this, I rely on our background regarding innovations and technology as a good basis for game developing in the future. We will keep coming up with great new games.