The Gameloft logo (Photo : Gameloft)
French game developer Gameloft SE has shut down its office in Chengdu, Sichuan Province, as part of its global restructuring plan and efforts to stay profitable, according a report from the China Daily newspaper on Saturday.
The move, which will see the loss of around 300 jobs, follows the company's recent closure of its Shenzhen unit in Guangdong Province due to poor profitability and increasing market competition.
Mainly operating as a gaming development studio, Gameloft's Chengdu branch published mobile games that can be downloaded in Chinese app stores, the report said.
"Gameloft is planning to restructure its operations in China to initiate smart growth," said Yinan Wang, an analyst at China Market Research Group.
"The company will have just one office in China, in Beijing, and operate it as a joint venture. Such a strategy will help Gameloft understand the Chinese market more closely."
In July, Gameloft confirmed media reports that it had closed seven units in various international locations since the start of this year as part of a cost-reduction program.
The Paris-based developer posted a net loss of 16.6 million euros ($18 million) during the first six months of 2015, mainly due to poor sales in China and Japan.
"The first-half loss is due to the seasonality of our business as well as the disappointing level of revenues achieved by the three games developed by Gameloft specifically for the Japanese and Chinese markets," said Gameloft CEO Michel Guillemot.
Analysts, however, remain optimistic that the company's shutdown of operations in China will not significantly affect its overall performance.
"China roughly represents six percent of Gameloft's total revenues," said Neil Shah, research director at Counterpoint Technology Market Research,
Shah expects Gameloft to rework its strategy in order to provide more attractive content and enter better partnerships "in the mid- to long-term."
China's mobile gaming market is experiencing rapid growth, thanks to increasing spending power of the population and the widespread use of smartphones and tablet devices in the country.
However, increasing competition, the fragmentation of distribution channels, and insufficient market research could continue to hurt companies like Gameloft, China Daily said in its report.
