Japanese Game Companies See Kuro & Aka

Japanese game companies have been struggling with the transitions in the game market; see Nintendo for a prime example. Not all the Japanese companies have been seeing aka (red) in their results; some have been getting nice kuro (black) ink.

Here's a company that's making some serious money from casual games.

Let's check in with Square Enix... they've been struggling with release dates and poor reviews of their latest Final Fantasy games. Their first fiscal quarter ended June 30, and they're reporting sales of $314.9 million with income of $8.8 million. Sales are down 25% over last year, and profits are down 62%. Lack of major releases was the big reason, while they struggle to get their development back on track. The only bright spots they cite are  “robust growth” in its online sim title Sengoku Ixa and its online community site Nicotto Town.

Meanwhile, Konami's been on a roll. Their first quarter was $705.9 million, up a few percent from last year, but profits more than tripled (to $52 million from $16.3 million last year). Was it some big software sales and hot new releases? Quite the opposite; their software sales were only 2.76 million units, down from 4.63 million last year. So what did the trick? Here's what IndustryGamers.com said:

Konami’s mobile freemium offerings like Dragon Collection, Sengoku Collection, and Professional Baseball Dream Nine were a huge success for the division and made up for the lack of premium titles in the console space.  The titles accounted for a total of 5.5 million registered players for Konami’s mobile games and the publisher will be pushing more properties over into the social space over the coming year.


Freemium games made a huge amount of money for Konami. Not surprisingly, they're planning on doing more of them. It seems pretty obvious that it's the business model of the future, and the way to expand the audience. It doesn't mean you have to stop making software for consoles that's sold in retail stores, but it certainly should affect how you allocate your development resources. We can only hope that Nintendo is learning something from these earnings reports.