Tose, one of Japan’s biggest outsourcing game companies, reports losses due to games being cancelled
Tose, one of Japan’s major co-development game companies, published financial statements for the period from September 1, 2023 to May 31, 2024. According to the report, Tose saw a significant decline in profit in their digital entertainment sector, mainly caused by the cancellation of multiple in-progress games.
With a long history of both private and co-development projects, Tose has been involved in the Dragon Quest Monsters series, Bandai Namco’s Scarlet Nexus, numerous Dragon Ball games, and a wide range of other titles.
According to Tose’s recently published financial report, the company’s net sales went down by 27.6% compared to last year, coming to 3,243 million yen (about $20 million). In addition, the company posted an operating loss of 599 million yen, an ordinary loss of 580 million yen, and a final loss of 367 million yen.
The company reports that several game development projects were cancelled due to clients’ policy changes and other factors. Because of the cancellations, the company was unable to recover profits from games that had already been in development since the beginning of the fiscal year.
This has contributed to Tose revising its annual earnings forecast. The company lowered its previous net sales forecast from 5,520 million yen to 4,830 million yen, noting that it expects orders and development conditions to remain uncertain due to policy changes on the clients’ side. Tose is working on strengthening project management, and it intends to steadily launch currently scheduled projects to recover its business performance.
With economic conditions in the game industry worsening on a global scale, big publishers are more likely to cancel development projects, including outsourced work. While Japan is not seeing mass layoffs as a result of this, its outsourcing and co-development studios are suffering. The fact that even a major company like Tose is reporting losses is indicative of the difficult circumstances studios are faced with.
Hideaki Fujiwara
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That is major honestly, I thought it was more of a medium to small sized studios having this issue. But when you think of the economy right now, everyone is dealing with inflation, high interest rates, and a shaky foundation in terms of spending with Blue Ocean fading away due to high costs. Much larger studios are going to begin cutting their losses and focusing in on more safe IP investments as a whole and are probably going to focus on more value orientated Video Games for the Red Ocean, than larger scale projects.