Losses on game investments due to intensifying competition and a shortage of hit titles
First written in FY2016. 6 of 16 entries say "Worsened", first in FY2019-Q1. Latest entry: FY2020.
Media Kobo moved to the "Worse" side of this theme in 2019, 1 year before the typical company in this theme (2020).
The whole theme swung hardest in 2019: 9 of 13 companies on the "Worse" side.
5 other companies' latest entry also says "Worsened".
- FY2020WorsenedAnnual report
「However, sales of the new title remained poor immediately after its release. Although the Company attempted to improve revenue through modifications, it was forced to conclude that reaching the target figures would be difficult. In addition, given the impact of COVID-19 on Japan's real economy, the Company impaired ¥52 million of the related intangible fixed assets in order to concentrate investment in selected areas of the Group's businesses.」
Poor sales of the new game did not improve after modifications, leading to impairment of ¥52 million of intangible fixed assets and ¥16 million of goodwill relating to the operating company, as well as a reduction in the scale of the game business. - FY2020-Q3MaterialisedAnnual report
「Following the recognition of an impairment loss of ¥52 million on intangible fixed assets related to 「コスプリ！！」, the Company also recognised an impairment loss on ¥16 million of goodwill relating to ルイスファクトリー and recorded an extraordinary loss.」
Poor sales of the new in-house title resulted in impairment treatment for ¥52 million of intangible fixed assets and ¥16 million of goodwill relating to ルイスファクトリー, as well as the recognition of an extraordinary loss. - FY2020-Q2MaterialisedAnnual report
「The Company produced and released the new in-house title 「コスプリ！！」, but sales were extremely poor. Additional development was required as a result, and the longer operating period for existing secondary-market titles reduced profitability, leading to a substantial operating loss.」
Poor sales of the new title, additional development, and lower profitability from the longer operation of existing secondary-market titles actually occurred and led to an operating loss in the game content business. - FY2020-Q1WorsenedAnnual report
「Revenue supporting production declined year on year due to the reduction in the number of operated titles following the sale of secondary-market operated titles during the previous fiscal year and lower profitability resulting from longer operating periods.」
The decline in the number of operated secondary-market titles following their sale and the lower profitability of existing titles due to longer operating periods have continued, resulting in lower revenue in the game business. - FY2019WorsenedAnnual report
「The market has become markedly more competitive, and a large number of projects are now being passed over because acquiring them is not considered profitable.」
Intensifying competition in the secondary game market has become further evident in the large number of game operation transfer projects being passed over. - FY2019-Q3WorsenedAnnual report
「During the first three-quarter cumulative consolidated accounting period, the Company distributed and operated games, mainly through its subsidiary ルイスファクトリー, and planned and advanced the development of new in-house titles. However, revenue declined year on year due to the decline in the number of operated titles and lower profitability of existing titles resulting from longer operating periods.」
The decline in the number of operated titles and lower profitability of existing titles due to longer operating periods have resulted in lower revenue and earnings in the game business. - FY2019-Q2WorsenedAnnual report
「At ルイスファクトリー, revenue and earnings declined as the Company continued to be affected by the increasingly competitive secondary market, which prevented it from acquiring new titles to be transferred for operation. This was compounded by an increase in the number of new titles entering the market and a decline in the profitability of existing titles as users became more dispersed due to longer operating periods.」
In addition to intensifying competition, the increase in new titles and user dispersion resulting from longer operating periods reduced the profitability of existing titles, resulting in lower revenue and earnings in the game business. - FY2019-Q1WorsenedAnnual report
「The failure to acquire new titles to be transferred for operation due to the secondary market becoming a red ocean and rising production costs」
Intensifying competition in the game market became evident in the difficulty of acquiring titles in the secondary market and rising production costs. - FY2018MitigatedAnnual report
「The sale of existing operated titles resulted in positive operating income.」
In response to the risk of losses related to competition in the game market and a lack of hit titles, the game business achieved operating profitability through measures including the sale of existing operated titles. - FY2018-Q3MitigatedAnnual report
「As a result, revenue from the game content business during the first three-quarter cumulative consolidated accounting period was ¥252 million, down 31.9% year on year, while operating income was ¥19 million, compared with an operating loss of ¥85 million in the same period of the previous year.」
Although game revenue declined, the business moved from an operating loss in the same period of the previous year to operating income, limiting the impact of losses from poorly performing titles and intensifying competition. - FY2018-Q2MitigatedAnnual report
「Although a pure year-on-year comparison is not possible for the game content business because, beginning in the first quarter of the current consolidated fiscal year, sales have been recorded net of fees and other deductions from subsidiary sales, and because we restructured our game business at the end of the previous consolidated fiscal year, the business finished with positive operating income.」
After the reorganisation of the game business at the end of the previous fiscal year, the game content business became operating-income positive, limiting the impact of deficits and losses from poorly performing titles. - FY2018-Q1MitigatedAnnual report
「Operating income increased as the reorganisation of part of the game content business carried out during the previous consolidated fiscal year proved effective.」
The reorganisation of the unprofitable game business eliminated the operating deficit caused by poorly performing titles. - FY2017MaterialisedAnnual report
「Continued poor sales of OBOKAID'EM titles required the early amortisation of titles released during the previous consolidated fiscal year. In response, the Company decided to withdraw from OBOKAID'EM as an unprofitable business and recognised an extraordinary loss of ¥168 million.」
Poor performance by the game titles resulted in early amortisation, withdrawal from the business, and recognition of an extraordinary loss of ¥168 million. - FY2017-Q3MaterialisedAnnual report
「The Company recognised an impairment loss of ¥14 million due to the continued poor performance of OBOKAID'EM titles, following the previous consolidated accounting period. This affected the results, with total impairment losses for the first three-quarter cumulative consolidated accounting period amounting to ¥25 million.」
The poor performance of OBOKAID'EM titles continued, and total impairment losses of ¥25 million were recognised during the first three-quarter cumulative consolidated accounting period. - FY2017-Q2MaterialisedAnnual report
「However, poor performance by titles released by OBOKAID'EM resulted in impairment losses in addition to higher amortisation expenses. Despite a substantial increase in revenue, the game content business as a whole did not become profitable.」
Poor performance by released titles actually led to the recognition of impairment losses and prevented the game business as a whole from becoming profitable. - FY2016First statedAnnual report
「The game industry has many competitors and countless titles, making it extremely difficult to create major hits, while production and advertising costs are expected to increase.」
The Company identifies intensifying competition in the game industry, the difficulty of producing hit titles, and increases in production and advertising costs as risks.