Konami just released its quarterly financial figures for fiscal year 2016, and all numbers are in the black, with positive operating profit, and overall results overperforming predictions slightly.
The digital entertainment business remains the company’s most profitable segment, even if predictions for fiscal year 2017 show that Konami expects a sharp drop in its revenues.
Incidentally, the Digital Entertainment segment is where console and mobile games are located: “Gaming & Systems” is the arcade hardware business.
Below you can see the announced incoming games for the Digital Entertainment business: the landscape isn’t exactly rich.
We also get a detailed explanation of the current results, recognizing the rapid spread of smartphones and tablets, but also the record-setting pace for new console sales in the west. Interestingly, potential opportunities in the Virtual Reality market are also mentioned:
“The business environment surrounding the Konami Group in Japan remains weak personal consumption despite solid corporate earnings and improvement in employment conditions and personal incomes supported by the weakening yen and rising stock prices. Also, the Japanese economy continues to stall mainly due to anxieties over deteriorations in corporate earnings and consumer trends. These may be affected by the rising yen and declining stock prices since the beginning of 2016 owing to concerns over an economic slowdown in emerging countries and unstable financial markets.
In terms of the global economy, the economic environment remained uncertain due to concerns that an economic slowdown in emerging Asian countries, including China, may affect foreign economies. In the entertainment market, along with the rapid spread of smartphones and tablet PCs, which spurred a worldwide increase in users, as well as enhanced device functionality and the development of information and telecommunications infrastructure, game contents continue to diversify.
As new video game consoles also continue to spread at a record-setting pace in Western countries and production of video games utilizing virtual reality (VR) becomes full-scale, business opportunities in the game industry are increasing. In the gaming industry, gaming business is expected to continue to grow as the casino market worldwide continues to see the spread supported by development of resources related to tourism and opening new casino facilities”
A specific breakdown for the Digital Entertainment business follows, including a mention of of high worldwide acclaim for Metal Gear Solid V: The Phantom Pain:
“As for mobile games, JIKKYOU PAWAFURU PUROYAKYU has surpassed 22 million downloads and became the top seller in the App Store sales ranking (game category) in March 2016, for the first time since its distribution began. In addition, PROFESSIONAL BASEBALL SPIRITS A (Ace) was released in October 2015. This title reproduces the real experience of a professional baseball game with top-quality graphics.
Moreover, the WORLD SOCCER COLLECTION series, the CROWS×WORST series and the Professional Baseball Dream Nine series are enjoying strong performance. In overseas markets, Star Wars™: Force Collection and Winning Eleven CLUB MANAGER (known in overseas as PES CLUB MANAGER) continued stable operation. In regards to arcade games, our e-AMUSEMENT Participation system titles, centered on MAH-JONG FIGHT CLUB and music genre games, continued to operate steadily.
In February 2016, we also released TSUNAGA Lotta, which is new generation ball-drawing medal game that connects cabinets via a network. This allows for a single physical jackpot to be shared nationwide. In addition, we held the 5th KONAMI Arcade Championship, which is to decide the ultimate arcade game player, and it was more exciting than the previous time. As for card games, the Yu-Gi-Oh! TRADING CARD GAME series continued to develop in the global market. Especially in Japan, this series continues to receive favorable reviews from many customers, including the annual world tournament held in Kyoto.
As for computer and video games, METAL GEAR SOLID V: THE PHANTOM PAIN, which is the latest title in the METAL GEAR series, received high acclaim from a number of users around the world. In addition, Winning Eleven 2016 (known in overseas as PES 2016 – Pro Evolution Soccer -), which is the latest title in the Winning Eleven series, celebrated the 20th anniversary of its first release with improved controllability and realism.
Furthermore, we will strive to operate it in such a way that it will offer long-term enjoyment to customers. This includes the 7 online mode myClub and a large-scale update featuring the UEFA EURO 2016, one of the pinnacles of worldwide soccer competition featuring competing national soccer teams representing European countries.”
We also get a discussion of the forecast for fiscal year 2017 for the Digital Entertainment business:
“With the spread of smartphones and tablet PCs worldwide, the available means of providing games continue to diversify, and 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, the total number of registered users of all contents we developed continues to increase steadily. JIKKYOU PAWAFURU PUROYAKYU, surpassed 22 million downloads, and Winning Eleven CLUB MANAGER (known in overseas as PES CLUB MANAGER), being distributed worldwide, are expected to continue to contribute toward our profits. We are further focusing our managerial resources on the development of content that we believe will become major hits in order to produce more hit content, especially in the native application market. Looking ahead, we will continue to expand our lineup, utilizing previously established production and operational expertise and rich content resources.
We also intend to develop more content for overseas market and enhance new releases with attractive content by adapting to local preferences. As for global expansion titles, Yu-Gi-Oh! DUEL LINKS will be distributed in advance in Japan, and expanded globally later. We intend to enhance both mobile conveniences and the enjoyment of the Yu-Gi-Oh! TRADING CARD GAME.
As for arcade games, Konami Group intends to work to revitalize the amusement arcade industry by providing new entertainment that can be enjoyed only at an amusement facility through “interpersonal communication” using the e-AMUSEMENT system. This will involve promoting the continual development of equipment compatible with the PASELI e-money service and e-AMUSEMENT Participation, as well as enhancements to and the expansion of various services. Concerning the introduction of e-money services to amusement arcades, we have agreed with other major companies in the industry to consider cooperative operations of the services in order to offer a joint infrastructure in the summer of 2016. We also continue to promote medal games that are enjoyed by wide range of users.
As for card games, we will continue the aggressive promotion of the popular Yu-Gi-Oh!TRADING CARD GAME series in order to continue to please customers in worldwide as well as in Japan by implementing various measures. As for computer and video games, in April 2016, we released JIKKYOU PAWAFURU PUROYAKYU 2016, the latest, long-awaited title in the series, as well as started the simultaneous distribution of JIKKYOU PAWAFURU PUROYAKYU SUCCESS SPECIAL, 11 an online-only title that is free of charge for basic functionality.
Players, items of the title, developed in JIKKYOU PAWAFURU PUROYAKYU SUCCESS SPECIAL can also be used in JIKKYOU PAWAFURU PUROYAKYU 2016. This is expected to offer new ways to enjoy the series. We intend to continue global introduction of titles that have been carefully chosen according to selection and concentration.
Furthermore, the new game mode myClub, which has been adopted for the Winning Eleven series (known in overseas as the Pro Evolution Soccer series), is expected to provide a sustained enjoyment to our customers. As we continue to move with the times and take on new challenges, we aim to create and provide “Valuable Time” to customers, including through the production of new games that utilize virtual reality (VR) and the serious development of e-Sports.”
Konami plans to focus its management resources on content that the company believes will become a “major hit,” especially on mobile games games. On top of that, the company also intends to spread its business further overseas, including an upcoming global release of Yu-Gi-Oh! Duel Links following a launch in Japan.
Last, but not least, Konami is looking at producing new games using virtual reality and engage seriously in the development of eSports.