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GRAVITY CO., LTD. 2013 Fiscal Year Report


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#1 GreenIvy

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Posted 08 May 2014 - 10:59 PM

ldJ2l.jpg

(I was a little surprised that iRO isn't a paid royalty and license type. I'm not sure if I'm making the right connection but this makes the content update delay even more puzzling to me.)

 

GungHo Online Entertainment, Inc. they own 59.31% of Gravity's stock by the end of 2013

 

We currently depend on one online game product, Ragnarok Online, for a significant portion of our revenues.


A significant portion of our revenues has been and is currently derived from a single online game product, Ragnarok Online, which was commercially introduced in August 2002 and is currently commercially offered in 60 countries and markets. We derived Won 21,531 million (US$20,404 thousand) in revenues from Ragnarok Online in 2013 and Won 32,308 million in revenues from Ragnarok Online in 2012, representing approximately 45.2% and 55.9% of our total revenues in 2013 and 2012, respectively.

Ragnarok Online has been in the market for twelve years and has reached maturity in most of our principal markets. The life cycle of an online game generally lasts from four to seven years and reaches its peak popularity within the first two years of its introduction after which usage gradually stabilizes and begins to decrease over time. The number of users of Ragnarok Online worldwide reached its peak in the first quarter of 2005 and has continued to decline since such time. Our failure to maintain, improve, update or enhance Ragnarok Online in a timely manner or successfully introduce it in attractive new markets is likely to lead to a continual decline in Ragnarok Online's user base and subscription revenues and royalties. This will likely lead to a decline in our overall revenues, which would materially and adversely affect our business, financial condition and results of operations. 

None of our other online games to date has proven to be as commercially successful as Ragnarok Online, and none of our mobile games to date has been a great commercial success.

 

Full content can be found here


Edited by GreenIvy, 13 May 2014 - 11:09 AM.

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#2 Zinja

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Posted 08 May 2014 - 11:22 PM

******* ... cant give proper updates when they know its their main source of revenue ... i don't even...


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#3 AlmrOfAtlas

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Posted 08 May 2014 - 11:36 PM

******* ... cant give proper updates when they know its their main source of revenue ... i don't even...

 

As Gravity Interactive is a wholly-owned subsidiary of Gravity Co., the contract they're under must be very different.

 

I'd like to know how accurate the following few paragraphs is with regard to us:

 

"We are committed to providing superior customer service to our users directly and through our licensees. As of December 31, 2013, 6 employees were game masters, or persons who are in charge of testing, updating and providing server maintenance for online games, as well as dealing with customer complaints, 26 employees were members of our domestic customer service team and 44 employees were members of our overseas customer support team.

 
In Korea, we provide customer service for our online games through bulletin boards of the Web sites of our online games, call centers, email and facsimile and at our walk-in customer service center. Our bulletin boards of the Web sites of our online games allow our customers to post questions to, and receive responses from, other users and our support staff. In our overseas markets, our licensees administer customer service through varying combinations of bulletin boards of the Web sites of our online games, call centers, email and facsimile, with assistance from time to time from our overseas customer support staff.
 
In addition to providing customer service to our users, our customer service staff also collect user comments with respect to our games and generate daily and weekly reports for our management and operations that summarize important issues raised by users as well as how such issues have been addressed."
 
Since that document is huge, I'm still parsing through it. Can anyone clarify?
 
e: Seems like Grav Interactive is easily the most profitable of all Gravity Co.'s subsidiaries and affiliates.
 
e2: And apparently, as of Dec 31, 2013, Grav Interactive (being us) only has 29 employees on staff, two of which are seconded from Grav Co. :v
 
e3: "None of the employees of Gravity Interactive, NeoCyon or Gravity Games is represented by a labor union or covered by a collective bargaining agreement."  :p_swt:
 
e4: According to this document, iRO pulls more concurrent users than kRO does xD
 
However, both are absolutely dwarfed by jRO's concurrent user stats, which are 19,547 peak and 7,296 average to iRO's 5,895/4,239 and kRO's 5,503/2,759.
 
e5: "special events are held from time to time to stimulate community formations. For example, we periodically host "fortress raids" whereby players are encouraged to organize themselves into a team to compete against other teams to capture a fortress within a set time".
 
lol fortress raids wut.

Edited by AlmrOfAtlas, 09 May 2014 - 12:08 AM.

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#4 Tkwan

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Posted 09 May 2014 - 12:02 AM

It says elsewhere in there that they're adopting yet another game...a chinese game called Weapons of the Gods.

 

Go on Gravity, keep adding on new fail games just because your report says RO is past its lifetime, meanwhile you neglect it and cause the demise of the game that is your only saving grace.

 

 

It also says in there that their equity (basically how much the company is worth) was $85 million in 2012, and by the end of 2013 its worth $63 million. They lost 22 million in assets. I may have done my maths wrong, but I believe that's a 26% decrease in assets. When you lose more than a quarter of your net worth in one year, that's not something you or your investors take lightly.

 

Another fun fact, the guy who is the head over Gravity Interactive is also the head of Gravity Entertainment (which is the company that produces "entertainment products like anime, games, manga, toys, etc) for gravity. This guy lives in Japan. He has his whole life on facebook (like most obsessive FB users), and there isn't one reference to him visiting the US office for as far back as his facebook history goes. Take that as you will.

 

 


 
e: Seems like Grav Interactive is easily the most profitable of all Gravity Co.'s subsidiaries and affiliates.
 
e: According to this document, iRO pulls more concurrent users than kRO does xD
 

 

 

1. Gung Ho is Gravity's main source of income by a vast majority. In the last few years they've made between 2-6 times as much as iRO does. We are below kRO in revenue also. We generate the 3rd highest profit for them.

 

2. That's a number that's hard to account for. We are f2p around the world, so we probably do, however we also allow multiclienting, where as kRO has one account per person unless they've jacked someone else's korean SSN. If all of iRO were only allowed one account per person, we'd see a much more accurate comparison of actual players.


Edited by Tkwan, 09 May 2014 - 12:14 AM.

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#5 CharAznable

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Posted 09 May 2014 - 12:17 AM

kRO should be pulling up more than iRO by a hair. Also, license issue with intellectual property is entirely depends on decision of jRO. kRO is test server to jRO in current state. And agreement on intellectual property doesn't get affected by revenue.

 

Also this is not the first time that someone pulled up revenue documentation. We've all seen it before(at least people who are active) and this does not tell any sort of information that relates to our licensing agreement. It just tells that kRO is still making more than iRO, and GungHo wont care because its already making 2x more than iRO+kRO combined.


Edited by CharAznable, 09 May 2014 - 12:20 AM.

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#6 AlmrOfAtlas

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Posted 09 May 2014 - 12:18 AM

1. Gung Ho is Gravity's main source of income by a vast majority. In the last few years they've made between 2-6 times as much as iRO does. We are below kRO in revenue also. We generate the 3rd highest profit for them.

 

That was discounting the parent company and majority shareholder with unique circumstances :v

 

With that in mind, we're the most profitable.

 

2. That's a number that's hard to account for. We are f2p around the world, so we probably do, however we also allow multiclienting, where as kRO has one account per person unless they've jacked someone else's korean SSN. If all of iRO were only allowed one account per person, we'd see a much more accurate comparison of actual players.

 

Can't disagree with that!

 

I wonder how it's tallied though. By IP, MAC or simply based on logged characters.


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#7 CharAznable

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Posted 09 May 2014 - 12:21 AM

That was discounting the parent company and majority shareholder with unique circumstances :v

 

With that in mind, we're the most profitable.

 

kRO is not shareholder nor parent company anymore. As of 2006, entire gravity korea got sold to GungHo. or was it 2008. Hmmmmm cant remember


Edited by CharAznable, 09 May 2014 - 12:22 AM.

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#8 Tkwan

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Posted 09 May 2014 - 12:23 AM


 

I wonder how it's tallied though. By IP, MAC or simply based on logged characters.

 

Going to go out on a limb here and say it would make the most sense to me if it were tallied by recently active accounts.
 

 

 

 

 

Also this is not the first time that someone pulled up revenue documentation. We've all seen it before(at least people who are active) and this does not tell any sort of information that relates to our licensing agreement. It just tells that kRO is still making more than iRO, and GungHo wont care because its already making 2x more than iRO+kRO combined.

 

Yeah it was brought up last year too. I think Facekiller asked for it if I remember right. I was reviewing it a couple days ago actually and was going to make a thread about some interesting tidbits in there. In any case, one of the financial sections listed jRO making like 30million in 2012, and only about 14 million in 2013 and kRO made 15 million. I can't remember what specifically that was, just thought that was odd that they had a 50% decrease in that particular revenue. Made us in the iRO raidcall go  O.O and wonder what the heck happened that caused such a steep decline.

 

 

Another interesting bit that was in there that should make RO2 users relatively happy, they intend on expanding RO2 to chinese and phillipine markets, which means they probably have no current plans of canceling the game.


Edited by Tkwan, 09 May 2014 - 12:32 AM.

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#9 CharAznable

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Posted 09 May 2014 - 12:47 AM

Yeah it was brought up last year too. I think Facekiller asked for it if I remember right. I was reviewing it a couple days ago actually and was going to make a thread about some interesting tidbits in there. In any case, one of the financial sections listed jRO making like 30million in 2012, and only about 14 million in 2013 and kRO made 15 million. I can't remember what specifically that was, just thought that was odd that they had a 50% decrease in that particular revenue. Made us in the iRO raidcall go  O.O and wonder what the heck happened that caused such a steep decline.

 

Its pretty odd, but GungHo is making tons of money from their mobile revenue. And expending it as they grow. I think they're trying to squeeze out more from international revenue by 2015 tho.


Edited by CharAznable, 09 May 2014 - 12:48 AM.

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#10 Sapphic

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Posted 09 May 2014 - 12:52 AM

They need to make more casual games. The mobile RO games seem so time consuming. I'd love one that's similar to Puzzle Quest 2.


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#11 kijudoav

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Posted 09 May 2014 - 02:53 AM

So I start yapping to GungHo for getting Rebellions here faster?


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#12 Hireme

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Posted 09 May 2014 - 03:26 AM

So I start yapping to GungHo for getting Rebellions here faster?

 

 

Says the plankton to the shark: "I'm gonna beat you up"


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#13 Himeyasha

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Posted 09 May 2014 - 04:13 AM

Gungho's revenue is now in it's mobile games

 

If I recall right the population in jRO plummeted with renewal and their failure to adjust woe. 

 

http://d.hatena.ne.j...agnarok_is_dead

 

Date from which data was taken, Total number, Number of Decline, % of Decline.

 

Capture_zpsf4201820.png

 

 

Although the numbers are only for their p2p servers and I don't recall if they even have a f2p server.

RR was in November of 2012 according to this article. 

 

Capture_zps3d2733c1.png

 

 

Hence my surprise that they haven't tried to make RO into a better mobile game even general RO would be relatively easy mechanics wise to make into a tablet/android game because in general it's clicking game and it adjusts to the needs of the players.  

 


Edited by Himeyasha, 09 May 2014 - 04:22 AM.

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#14 albaoregine

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Posted 09 May 2014 - 04:34 AM

the business thing


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#15 Izzy1

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Posted 09 May 2014 - 06:23 AM

Maybe I missed it somewhere but I didn't see iRO's license date/expiry date.

 

Also, Looks like it might be time to invest into some RO Related shares since they are quite cheap right now.


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#16 UnknownBeing

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Posted 09 May 2014 - 06:26 AM

Glad someone took the time to post this. However what wasn't mentioned is Gravity Co. is still bleeding cash and they haven't been pulling any positive net income.

Edited by UnknownBeing, 09 May 2014 - 06:26 AM.

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#17 Ramen

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Posted 09 May 2014 - 07:55 AM

So basically all this report is saying is that RO is a sinking ship?  Sorry, I don't really care about nor understand economics enough to make sense of this report.  Also, tl;dr


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#18 Tkwan

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Posted 09 May 2014 - 08:52 AM

Maybe I missed it somewhere but I didn't see iRO's license date/expiry date.

 

Also, Looks like it might be time to invest into some RO Related shares since they are quite cheap right now.

 

Under this amendment with our licensee in Japan, the term of the 2nd Renewal of Ragnarok License and Distribution Agreement was extended for three years to September 28, 2015 for a renewal license fee of US$1,200,000 and a monthly royalty payment of 40% of the licensee's net revenue amount from Ragnarok Online.

 

jRO has to pay 1.2m and 40% of all their profits. Ouch.

 

 

Now to answer your question:

Seventh Amendment to the Exclusive Ragnarok Online License and Distribution Agreement dated January 1, 2013 between Gravity Interactive, Inc. and Registrant

        Under this amendment, the term of the Exclusive Ragnarok Online License and Distribution Agreement was extended for two years to December 31, 2014.


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#19 hmc317

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Posted 09 May 2014 - 10:59 AM

Seventh Amendment to the Exclusive Ragnarok Online License and Distribution Agreement dated January 1, 2013 between Gravity Interactive, Inc. and Registrant

        Under this amendment, the term of the Exclusive Ragnarok Online License and Distribution Agreement was extended for two years to December 31, 2014.

 

uh oh, when do companies like warpportal re-up their licensing agreements? I hope i don't see any crazy overpowered events leading up to x-mas this year like cash shop mvp cards T_T


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#20 HeIIraiser

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Posted 09 May 2014 - 11:43 AM

Greedy1.jpg

greed_trust2.jpg


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#21 Damara

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Posted 09 May 2014 - 11:56 AM

You guys, I work in accounting, and that list of revenues has very little to do with the amount of money available to a business.

 

In the OP's link, the profit and loss statement for the last several years indicates that the parent company lost $17,000,000 in 2013. For the especially ignorant, that means that even if subscribers paid $20,000,000 in, it cost $37,000,000 to pay everybody's salary and keep the lights on.

 

It doesn't MATTER if RO is their main source of revenue. If it's not making enough money to pay all the bills, it will go under. It may be that iRO is still marginally profitable, but the reason they keep it that way is because the staff consists of Oda, Campitor and their small crew working like slaves in the hell that is southern California. I get frustrated by nearly everyone in this forum being completely and utterly ignorant of business operations. 


Edited by Damara, 09 May 2014 - 11:58 AM.

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#22 Ramen

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Posted 09 May 2014 - 01:31 PM

So, if RO eventually goes under, aside from private servers (which I loathe) would there be any possible way to keep the game going, or are we pretty much screwed?


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#23 zr0rieu

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Posted 09 May 2014 - 01:57 PM

lol


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#24 CharAznable

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Posted 09 May 2014 - 01:58 PM

screwed


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#25 UnknownBeing

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Posted 09 May 2014 - 02:46 PM

Well if gungho decides to liquidate gravity co. they certainly would not want to keep running a US base operation and will probably source all the jobs in Japan. Leaning towards screwed should that day comes..
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