Japanese social game company GREE reported a 74 per cent reduction in profit for the first quarter of its 2014 fiscal year, as it continued to struggle with the consumer shift to smartphones.

According to The Wall Street Journal, GREE chief executive Yoshikazu Tanaka said the company is focusing more resources to target the smartphone market. Just a quarter of its game revenue currently comes from native mobile games.

GREE reported a net profit of JPY2.4 billion ($24 million) for the fiscal first quarter, compared to JPY9.1 billion a year ago. However, the situation has improved since the prior quarter, when it made a JPY300 million loss.

Net sales for the most recent period were JPY35.3 billion, down 6.9 per cent year on year.

GREE said new native game releases performed well during the most recent quarter and that it plans to launch more game titles to bolster its position, and also strengthen its cost control.

During the period, smartphones accounted for 65 per cent of revenue generated by GREE’s virtual currency. However, overall coin consumption fell due to a decline from feature phones.

GREE’s main revenue stream is its social gaming platform which it charges developers to use. Some developers are becoming less keen on this model as they also have to pay fees to Apple and Google to sell apps via their respective app stores.

As part of its efforts to adjust to the shift to smartphones, the company has reorganised its operations into separate business divisions for native app games and browser-based games.

The company announced several months ago that it would scale back its operations overseas and has been cutting jobs at home and abroad.

Looking ahead, GREE expects to achieve a turnaround in sales in profits in the fourth quarter of the fiscal year through continued growth in native games for overseas markets and strict cost control.