Gree, DeNA stocks still down due to mechanic ban

Gree, DeNA stocks still down due to mechanic ban
Seth Tipps

By Seth Tipps

May 18th 2012 at 8:16PM

Despite company health, investors fretful over 'complete gacha' ban

Japanese social game companies are still struggling on the stock market, despite assurances that the recently confirmed "complete gacha" ban will not significantly alter earnings.

The game mechanic in question involves purchasing spins at a wheel that produces a random virtual item. If a player collects the full set - complete gacha - they recieve a highly valued and rare reward.

Shares in Gree and DeNA tumbled by over twenty percent a few weeks ago on the news that a Japanese government agency considered the mechanic illegal.

The two companies promptly removed the mechanic, claiming that it was only responsible for a small percentage of profits.

But Investors are still spooked as the government comes under increased presure to regulate the way social games companies market virtual goods.

The government has imposed restrictions on teen spending in social games, and just this week confirmed that the "complete gacha" mechanic would be banned.

Gree and DeNA are profitable at 29 and 44 percent respectively, with sales of $560 and $530 million.

Until investors are satisfied the companies will remain profitable in a climate of increased government scrutiny, there is no sign that stocks prices will improve.