In a sign of the shifting dynamics of the videogame industry, the market capitalization of GungHo Online Entertainment Inc. – known for its addictive mobile Puzzle & Dragons game – surpassed on Monday that of Nintendo Co., which has ruled the industry for three decades with its iconic titles such as Super Mario Bros. and Pokemon.

Fueled by the runaway success of its hit title, GungHo's share price jumped nearly 29% to ¥1,342,000 in mid-afternoon trade extending gains following its strong earnings announcement last week....