Company history

GungHo began in July 1998 as Onsale, Inc., a company wholly funded by SoftBank and set up in the Nihonbashi district of Tokyo. It was a joint venture with the American auction operator OnSale Inc., which took 40%, and the plan was simple: transplant the booming U.S. online-auction business straight into Japan. Masayoshi Son’s younger brother, Taizo Son, became president in 2000 and was the public face of the online business.

The plan collided almost immediately with Yahoo! Auctions, launched in September 1999. Free listings and traffic from the Yahoo! search engine gave it roughly 90% of the domestic market within two years; Onsale never won share and pulled out of auctions in 2002 — losing its founding business just four years in. The defeat left a lasting lesson the company would draw on for decades: trailing a front-runner yields limited returns.

In August 2002 the firm renamed itself GungHo Online Entertainment and pivoted to a different trade entirely. Its new core was the Japanese operating rights to Ragnarok Online, an MMORPG built by South Korea’s Gravity. GungHo would now run games other studios had made — a contract-operator model that defined the company for the next decade, until it finally built a hit of its own.

In March 2005 GungHo listed on the Osaka Securities Exchange’s Hercules market for emerging companies. The stock ran from a ¥1.2 million offer price to more than ¥20 million at its peak, a poster child of the new-market bubble. GungHo used the moment to spread out — into portals, a game portal called GungHo Games, and consumer titles — even as the core business remained the operation of Ragnarok Online.

The expansion overreached. A 2007 delay to Ragnarok Online 2 and trouble in the portal business pushed the company into the red, and it restructured, unwound a joint venture and raised fresh equity to repair its balance sheet. Then, in April 2008, GungHo bought its own supplier: it took control of Gravity, the Korean developer of Ragnarok, turning from a licensee into a vertically integrated group that owned both the development and the operation — the organisational base for the global Ragnarok rollout of the 2020s.

For all that, through the late 2000s GungHo stayed a mid-tier company: revenue around ¥10 billion and operating profit of ¥1–2 billion. More than a decade after its founding it had not outgrown the venture stage, and the transformation, when it came, would arrive from an entirely different quarter — a smartphone.

In February 2012 GungHo released Puzzle & Dragons on iOS, a puzzle-RPG from a team led by Daisuke Yamamoto. It deliberately rejected the "social" mechanics then driving DeNA and GREE, pairing pure gameplay with free-to-play item billing — and it caught fire. Consolidated revenue leapt from $323.3M (¥26bn) in FY2012 to $1.7B (¥163bn) in FY2013, peaking at $1.6B (¥173bn) in FY2014. Market capitalisation briefly passed Yahoo Japan and touched Nintendo’s level; Morishita said in 2013 he meant to "surpass Nintendo." For the first time, an operator of borrowed IP was earning on a title of its own.

The hit pulled its old backer back in. In April 2013 SoftBank — the original 1998 founder — raised its stake and made GungHo a subsidiary. That October the two jointly took 51% of Finland’s Supercell, maker of Clash of Clans, for about $1.5 billion; GungHo held only 20% and sold the stake back to SoftBank within a year. The episode showed GungHo folded into SoftBank’s global investment portfolio rather than steering it.

SoftBank then unwound the tie as quickly as it had made it: parent in April 2013, mere "other affiliate" by June 2015, and no relationship at all by August 2016. GungHo moved from JASDAQ to the Tokyo Stock Exchange First Section in 2015 and to Marunouchi’s JP Tower in 2016 — an independent company once more. Its distance from SoftBank had run a full arc: 1998 joint venture, 2002 independence, 2013 parent, 2016 independence.

Puzzle & Dragons peaked in FY2014 and then eased into decline as rivals such as Monster Strike took share; revenue slid from its ¥173 billion peak toward the ¥90-billion range. Yet the economics stayed strong — operating margins in the 30–47% band and essentially no debt. Through the 2020s a new pillar emerged from the 2008 acquisition: Gravity’s mobile Ragnarok titles (Ragnarok Origin, Ragnarok M) took off across Korea, Taiwan and Thailand, roughly tripling Gravity’s revenue and cutting Puzzle & Dragons’s share of group sales below half by FY2022 and to about a third by FY2023.

Shrinking sales atop a swelling balance sheet drew activists. Consolidated equity grew from $732.9M (¥89bn) in FY2015 to $850.2M (¥129bn) in FY2024 even as revenue fell, and Strategic Capital built a stake and pressed, at successive shareholder meetings, for better capital efficiency — arguing that new IP such as Ninjala and LET IT DIE had not become durable earners and that the idle cash should be put to work. FY2025 revenue of $622.8M (¥93bn) and operating profit of just $34.1M (¥5bn) lent weight to the critique.

In January 2026 GungHo announced that Kazuki Morishita — president since 2004 — would move to chairman and Chief Development Officer, while CFO Kazuya Sakai became president and CEO on 1 February 2026, ending a 22-year run. The design split the company in two: the man who built Puzzle & Dragons keeps command of development, while capital allocation and shareholder dialogue pass to a finance executive, with executive pay tied harder to results. Whether separating the maker from the allocator settles the activist standoff — or whether the market wants a deeper change — is, at this writing, undecided.