Konami Posts Solid Financial Results; Keeps Looking at VR and e-Sports for the Future

on October 28, 2016 2:36 AM

Konami released its financial results for the first half of the fiscal year, ended on September 30th, also giving information about the outlook for the rest of the year, ending on March 31st, 2017.

All the financial figires are in the black, and while revenue suffered a slight decline year on year, all profit numbers were significantly higher.

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The earnings forecast for the full year also shows a decline from the past year, but slightly higher profits.
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Revenue and profit figures split by segment can be found below, with the digital entertainment business (games) still firmly at the top among the company’s businesses.

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The press release accompanying the announcement had a detailed overview of the performance of the company as a whole.

The economic environment surrounding the Konami Group in Japan continues to stall mainly due to concerns over prospects for capital investments and personal consumption, which have been affected by declining corporate earnings triggered by the sharply rising yen since the beginning of 2016. The global economy also remained under uncertain conditions owing to the impact of issues such as the U.K. leaving the European Union (EU) and an economic slowdown in emerging countries.

In the entertainment market, game contents continue to diversify along with functional enhancement of various devices, including mobile devices and video game consoles, and development of information and telecommunications infrastructure. As device markets utilizing virtual reality (VR) grow further, various VR software and contents are being developed. Business opportunities in the game industry are also increasing. In conjunction with the changing times, the preference for “enriching daily life through full and abundant experiences” in personal spending has been strengthened. In that context, game industry is also placing emphasis on providing opportunities to share experience, such as video streaming services and e-Sports. Points of contact between customers and games are expanding further and contributing to the increasing popularity of game contents.

In the gaming industry, opportunities of gaming business are expected 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.

In connection with the health and fitness industry, there is a growing health consciousness throughout society, especially among senior citizens and women, who year after year have shown an increasing tendency to focus their leisure activities on improving health and physical strength. We continue to see growing a preference for sports, health-consciousness and an interest in preventing the need for nursing care in old age. In addition, we are seeing a steady increase in customers engaging in exercise to improve personal appearance, and other diversification of needs. Markets for household training machines continue to grow. This is because household health and fitness equipment has dropped in price, and because a wide variety of machines were released by primarily overseas manufacturers.

In the Konami Group’s businesses — Digital Entertainment, Health & Fitness, Gaming & Systems, and Pachislot & Pachinko Machines —, we have conducted business operations based on the management strategy of evolving into a flexible and sustainable entity responding appropriately to this rapidly changing market environment which includes diversifying consumer tastes and the revision and abolition of the various regulations surrounding the businesses. To further strengthen our business operating structure, we carried out a business restructuring to combine the arcade games business segment, which formed part of our Digital Entertainment Business, with another BtoB business, the Pachislot & Pachinko Machines Business, and changed the business domains and name of the latter to the “Amusement Business.” We are pursuing the utilization of our business knowhow in the arcade game business cultivated since the Konami Group’s foundation, provision of higher value-added products and services through the KONAMI brand and streamlining through business integration.

In terms of the overview of the Digital Entertainment segment for the six months ended September 30, 2016, which reflected the restructuring of the business segment, mobile games, including JIKKYOU PAWAFURU PUROYAKYU, PROFESSIONAL BASEBALL SPIRITS A (Ace) and Winning Eleven CLUB MANAGER (known in overseas as PES CLUB MANAGER), continued to enjoy steady sales. Meanwhile, card games continue to receive favorable reviews from many customers, including its holding of the global tournament of the Yu-Gi-Oh! TRADING CARD GAME in August 2016. As for computer and video games, we released Winning Eleven 2017 (known in overseas as PES 2017 – Pro Evolution Soccer -) in September 2016. JIKKYOU PAWAFURU PUROYAKYU 2016, released in April 2016, also continued to enjoy strong performance and be available to provide the enjoyment to many customers.

In our Health & Fitness segment, we continued to develop our pricing and membership plans. These plans enable customers to select a pricing plan based on the number of times they use our facilities and to use more than one facility. We have intended to promote and spread the Konami Sports Club’s services supporting the concept of “sustainable fitness.” As for products related to health and fitness, we began to develop new products with the aim of enhancing its degree of recognition and increasing its market share in the health and fitness equipment market. This market is expanding centered on household machines.

In our Gaming & Systems segment, we have promoted sales of Concerto the new cabinet of the video slot machine as well as the Podium cabinet series and the SYNKROS casino management system mainly in the U.S., Asian and Oceanian markets. In our Amusement segment, our e-AMUSEMENT Participation system titles of arcade games, centered on MAH-JONG FIGHT CLUB ZERO and music genre games, continued to operate steadily. As for pachislot and pachinko machines, we released a new pachislot machine, SEVEN’S BEAT, in collaboration with beatmania, a music genre game from the Konami Group.

In terms of the consolidated results for the six months ended September 30, 2016, total revenue amounted to ¥101,401 million (a year-on-year decrease of 5.9%), operating profit was ¥17,040 million (a year-on-year increase of 36.9%), profit before income taxes was ¥16,248 million (a year-on-year increase of 33.3%), and profit attributable to owners of the parent was ¥12,217 million (a year-on-year increase of 55.7%).

We also get more specific data about the digital entertainment business, which is dedicated to games.

“As for mobile games, JIKKYOU PAWAFURU PUROYAKYU saw more excitement than the previous time, surpassing 26 million downloads, ran a campaign to mark “the day of PAWAPURO” on August 26, and held a “PAWAPURO Festival 2016” tournament. It continues to enjoy popularity among its many followers. Moreover, in domestic market, various titles continued to receive favorable reviews, including PROFESSIONAL BASEBALL SPIRITS A (Ace), reproduced the real experience of a professional baseball game with top-quality graphics. In overseas markets, Winning Eleven CLUB MANAGER (known in overseas as PES CLUB MANAGER) and Star Wars™: Force Collection continued stable operation.

As for card games, the Yu-Gi-Oh! TRADING CARD GAME series continued to develop in the global market. In August 2016, the global tournament, “Yu-Gi-Oh! World Championship 2016,” was held in the U.S, with heated DUEL match-ups seen gaining, showing a great deal of excitement.

As for computer and video games, following of the releases in April 2016 of JIKKYOU PAWAFURU PUROYAKYU 2016, the latest title in the series, and UEFA EURO 2016/Winning Eleven 2016, we released Winning Eleven 2017 (known in overseas as PES 2017 – Pro Evolution Soccer -) in September 2016, the latest title in the series. The latest game has been determined by its concept of “Control reality,” with particular emphasis on the sheer fun of playing competitively against other users, which has always been a hallmark of the series. In addition, we signed a partnership agreement with a renowned soccer team in Europe to enhance reproducibility in-game. We are planning various measures to provide the most fun and exciting soccer game experiences to customers.

In terms of financial performance, total revenue for the six months ended September 30, 2016 in this segment amounted to ¥44,894 million (a year-on-year increase of 2.7%) and segment profit for the six months ended September 30, 2016 amounted to ¥15,469 million (a year-on-year increase of 52.1%).”

Last, but not least, the press released included the outlook for the rest of the fiscal year, ending on March 31st, 2017. Interestingly, we get a mention about the intention of delving into VR and e-Sports for the future.

“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 26 million downloads, and Winning Eleven CLUB MANAGER (known in overseas as PES CLUB MANAGER), being distributed worldwide, are expected to continue contributing toward our earnings. We are further focusing our managerial resources on the development of contents that we believe will become major hits in order to produce more hit contents, 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. In addition, we are currently preparing for the new titles of native applications, Yu-Gi-Oh! DUEL LINKS, JIKKYOU POWERFUL SOCCER and Winning Eleven 2017 (known in overseas as PES 2017 – Pro Evolution Soccer -). Furthermore, Yu-Gi-Oh! DUEL LINK has surpassed 0.7 million in advance registrations and seen high expectations toward its launch.

As for card games, we will continue aggressive promotion of various measures for the Yu-Gi-Oh! TRADING CARD GAME series, to provide the enjoyment to players, not only in Japan, but in various regions of the world, with this year marking the twentieth anniversary of the start of the Yu-Gi-Oh! manga series.

As for computer and video games, we globally released Winning Eleven 2017 (known in overseas as PES 2017 – Pro Evolution Soccer -) in September 2016, the latest title in the Winning Eleven series (known in overseas as the Pro Evolution Soccer series). The game mode myClub, adopted for the Winning Eleven series, is expected to provide a sustained enjoyment to our customers. In addition, JIKKYOU PAWAFURU PUROYAKYU Heroes, the latest title in the JIKKYOU PAWAFURU PUROYAKYU series, will be released in December 2016.

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.”

 /  Executive News Editor
Hailing from sunny (not as much as people think) Italy and long standing gamer since the age of Mattel Intellivision and Sinclair ZX Spectrum. Definitely a multi-platform gamer, he still holds the old dear PC nearest to his heart, while not disregarding any console on the market. RPGs (of any nationality) and MMORPGs are his daily bread, but he enjoys almost every other genre, prominently racing simulators, action and sandbox games. He is also one of the few surviving fans of the flight simulator genre on Earth.