Gumi to lay off 100 in wake of Korea embezzlement scandal, post-IPO woes

Just a week after Gumi confirmed that its South Korean operation was being investigated for alleged embezzlement, the embattled Japanese gaming company is bracing for layoffs. According to TechCrunch Japan, Gumi announced today that it will solicit “voluntary retirement” from 100 staff at both Gumi (Tokyo) and development center Gumi West (Fukuoka).

The firm’s justification for the move is that the skill set of some employees no longer matches the company’s needs. When it made the decision to switch from browser games to native games, Gumi hired new staff with the appropriate skill set while also creating numerous training programs for current staff to learn new development methods. Now, with the transition to native games essentially complete, and the company’s bottom line still suffering, it has created an opportunity for staff whose skill development is lagging to find new work. The restructuring is scheduled to take effect on April 30.

Gumi listed on the Tokyo Stock exchange last December in one of the country’s biggest IPOs of 2014. While it fell just short of achieving the coveted unicorn status, the exit signaled a big turnaround for the firm, which nearly fizzled out after being late to embrace native smartphone games.

Unfortunately for Gumi, the IPO honeymoon was short lived. Just three weeks ago, the company was forced to revise an anticipated US$10.6M profit to a US$5M loss for the fiscal year. It blamed weak overseas revenue on Japanese smash hit Brave Frontier, missed schedules for international versions of other games, and poor overall growth in foreign markets.

Gumi founder and CEO Hironao Kunimitsu has promised to address the firm’s woes by speeding up development of more than a dozen native games, strengthening overseas publishing operations, and taking a personal six-month pay cut.

As one of Japan’s mobile gaming giants flounders, another is poised for a boom. Competing publisher DeNA earlier this month inked a deal with Nintendo to bring Mario and company to smart devices for the first time. Gumi has alliances with once prominent Nintendo rival Sega and blockbuster chat app Line.

(Hat-tip: TechCrunch Japan)