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Konami Announces 10% Gaming Profit Drop for Due to Production Costs For New Titles and R&D

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Konami Announces 10% Gaming Profit Drop for Due to Production Costs For New Titles and R&D

Today Konami revealed its financial results for the third quarter of the fiscal year 2020, related to the period ended on December 31, 2019.

Today Konami revealed its financial results for the third quarter of the fiscal year 2020, related to the period ended on December 31, 2019.

As you can see in the table below, all the relevant figures are in the black.

That being said, but while revenue grew slightly year-on-year, profit declined.

On top of that, Konami announced a cut to its full-year forecast (for the twelve months ending on March 31) for both revenue and profit.

“The Company revised its consolidated earnings forecast for the fiscal year ending March 31, 2020 as stated above since it predicted the earnings results would finish below its previous forecast, mainly due to recognition of impairment loss for property, plant and equipment and goodwill amidst the increasingly competitive environment surrounding the sports business, looking to mprove and strengthen our profit structure, and timing revision of product launche”

Speaking of the gaming segment in particular, the digital entertainment follows the trends of the company as a whole, with higher revenue and declining profit compared to the same quarter last year.

We also get an extensive overview of the performance of the Digital Entertainment business, which includes video games.

Interestingly, we see the mention that profits decreased decreased “due to increase of production costs for new titles and research and development costs.”

In the entertainment market, future development of game contents is expected through the functional enhancement of various devices, including mobile devices and video game consoles, and the standardization of next generation communication systems. In conjunction with the changing times, the preference for enriching daily life through full and abundant experiences in personal spending has been strengthened.

In the game industry, new experiences through game content are being offered in various ways, including eSports, which is regarded as a form of sports competition and is becoming well-known to a wide range of users and attracting more and more fans.

Under such circumstances, as for mobile games in the Digital Entertainment segment, Yu-Gi-Oh! DUEL LINKS has led our revenue in the global market and eFootball Winning Eleven 2020 (Known overseas as eFootball PES 2020) that was implemented a large-scale update has received favorable reviews.

In the domestic market, PROFESSIONAL BASEBALL SPIRITS A (Ace) has continued to perform well and multiple titles attracted much attention through activities such as anniversary events and sales promotions.

As the new titles, LOVEPLUS EVERY, the latest title in the LOVEPLUS series, and beatmania IIDX ULTIMATE MOBILE were released and continues to perform strongly.

[…]

As for computer and video games, we released eFootball Winning Eleven 2020 LITE, a simplified free version of last September’s addition to the Winning Eleven series. In addition to myClub, which received favorable reviews, new online mode, “Matchday,” was introduced and the title is attracting a lot of attention from players compared to the previous title. As part of our continued active efforts in eSports, the  “eBASEBALL Pro League,” which will be organized along with the Nippon Professional Baseball (NPB), 2019 season has begun.

From this season, the game is getting much more attention over last year through new activities such as the introduction of “legend players,” in which users are able to use retired players from the professional baseball league, and eInterleague games between the Central and Pacific leagues.

The Winning Eleven series were selected as a Culture Program at the 74th national Sports Festival, “Iki Iki Ibaraki Yume Kokutai”, and the final round was held. The computer and video game series, JIKKYOU PAWAFURU PROYAKYU and Winning Eleven were officially selected as titles for the Culture Program for the “National Prefectural Competition eSports Championship 2020 KAGOSHIMA” at the 75th National Sports Festival, “Burning Passion National Sports Festival KAGOSHIMA,” and the 20th National Sports Festival for the disabled, “Burning Passion Athletic Sports Tournament KAGOSHIMA.” In addition, the “eFootball League 2019-20 Season”, the new eSports official tournaments in the Winning Eleven series, has begun and is performing strongly with a wide range of players from beginners to experts.

The segment profit from this business decreased due to increase of production costs for new titles and research and development costs.

Last, but not least, we get the outlook for the full fiscal year for the Digital Entertainment business.

With the spread of entertainment offered through networks, the available means of providing games continue to diversify. Opportunities to reach an even greater audience for games are increasing. Against this background, we intend to develop ways of playing games that match the characteristics of each device.

As for mobile games, Yu-Gi-Oh! DUEL LINKS will mark third anniversary soon since its release.

As for multiple other titles, we continue to make efforts to perform
strongly through activities including in-game promotions and sales promotions.

[…]

As for computer and video games, the PC Engine mini, a compact version of the classic home console released in 1987 as the PC Engine, is scheduled to be released. The console will contain a range of game titles previously released for the original system.

As part of our continued active efforts in eSports, we continue to host the
“eFootball League 2019-20 Season”, the new eSports official tournaments in the Winning Eleven series. In regard to “eFootball.Pro,” where players who belong to professional soccer clubs from European countries can compete for their clubs through exciting matches, we will continue to make efforts to attract more fans for the “knock out” stage. As for the “eBASEBALL Pro League,” which will be organized along with the Nippon Professional Baseball (NPB), 2019 season, eClimax Series and eNippon Series were held. We will also continue to attract baseball fans by providing new experiences through eSports.

If you want to compare, you can check out Konami’s results for the previous quarter, released in October.

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