Q&A for 3Q FY2023 Operating Results Briefing

Key insights

7 takeaways

01
COLOPL is pivoting its strategic focus toward blockchain gaming to leverage shorter development cycles and lower costs compared to traditional mobile titles.See it on page 1
02
The company plans to generate sustainable revenue from Web3 projects through initial asset sales and long-term secondary distribution fees from NFT gemstones.See it on page 1
03
COLOPL is actively engaging in Japanese government policy discussions to improve the regulatory landscape for crypto-asset operations.See it on page 2
04
The current smartphone gaming market is characterized by flat growth and high barriers to entry, with established titles and international competitors dominating market share.See it on page 1
05
Financial management remains disciplined, with the company delaying capital deployment until public and private company valuations align more favorably.See it on page 2
06
Operational expenses, including royalty ratios, are being adjusted in tandem with revenue fluctuations to maintain stable profitability during lower-sales periods.See it on page 2
07
The third quarter of FY2023 served as a preparatory phase for major upcoming anniversaries for key titles, specifically Shironeko Project and DRAGON QUEST WALK.See it on page 1

Summary

COLOPL’s third quarter fiscal year 2023 performance reflects the inherent volatility of the smartphone gaming sector, where revenue is heavily influenced by seasonal cycles and major anniversary events. The company identifies the third quarter as a preparatory phase for significant upcoming milestones, such as anniversaries for key titles like Shironeko Project and DRAGON QUEST WALK. Market conditions remain challenging, characterized by a flat growth environment where established titles and international competitors dominate market share, creating high barriers to entry for new domestic releases.

Strategic focus is shifting toward the emerging blockchain gaming sector, where development cycles are shorter and more cost-efficient than traditional mobile titles. The company anticipates a sustainable revenue model for these projects, driven by initial asset sales and long-term secondary distribution fees from NFT gemstones. This initiative aligns with broader Japanese government efforts to foster a robust Web3 business environment, with the company actively participating in policy discussions to improve the regulatory landscape for crypto-asset operations.

Financial management remains disciplined, with the company maintaining a flexible approach to investment. While emerging market valuations show signs of recovery, the company intends to wait for a more favorable alignment between public and private company valuations before accelerating capital deployment. Operational expenses, including royalty ratios, are managed in tandem with revenue fluctuations, ensuring that profitability remains stable even during periods of lower sales volume. Long-term strategy continues to prioritize the sustained engagement of existing user bases through high-quality content updates and the pursuit of innovative, technology-driven gaming experiences.