COLOPL Q4 FY2021 Operating Results Briefing: Question and Answer Summary

Key insights

6 takeaways

01
COLOPL projects a 20% to 30% revenue decline for existing titles in the upcoming fiscal year, necessitating a strategy to offset this with the launch of three to four new mobile games and approximately ten console titles.See it on page 2
02
Q4 FY2021 operating profit declined despite revenue growth from anniversary events for Shironeko Project and DRAGON QUEST WALK, driven by high advertising costs for new releases and the sunsetting of legacy games.See it on page 1
03
The Japanese mobile gaming market is experiencing a scarcity of new releases and intense competition, with major titles like Cygames’ Uma Musume Pretty Derby negatively impacting the performance of existing portfolios.See it on page 1
04
COLOPL is prioritizing the 'Live Playing Game' genre as part of a long-term VR and AR development strategy that has been in place since 2014.See it on page 2
05
The company has temporarily paused new graduate hiring due to pandemic constraints, focusing instead on optimizing its current workforce while maintaining steady turnover rates.See it on page 1
06
Future growth is expected in the investment and development segment as the company begins to realize capital gains from portfolio exits.See it on page 2

Summary

The Japanese smartphone gaming market is currently characterized by a state of maturity, driven primarily by a reliance on a limited number of high-performing hit titles amid a broader industry-wide scarcity of new releases. Competition remains intense, with major external releases like Cygames’ Uma Musume Pretty Derby exerting a measurable impact on the performance of existing portfolios due to overlapping user demographics.

Financial performance for the fourth quarter of fiscal year 2021 reflected a divergence between revenue and profitability. While net sales saw growth fueled by anniversary events for flagship titles such as Shironeko Project and DRAGON QUEST WALK, alongside revenue from entrusted development projects, operating profit declined. This contraction was largely attributed to elevated advertising expenditures associated with major promotional campaigns for new titles and the conclusion of long-running legacy games.

Operational strategy for the upcoming fiscal year focuses on balancing the revenue decline of existing titles—projected at 20% to 30%—with the launch of three to four new mobile titles and approximately ten console releases. Internally, the company has maintained steady turnover rates but temporarily curbed new graduate hiring due to pandemic-related constraints, opting instead to optimize existing human resources.

Technological development remains centered on the evolution of VR and AR, areas where the company has maintained a long-term investment strategy since 2014. Current initiatives emphasize the integration of live elements into gaming experiences, exemplified by the development of the Live Playing Game genre. Furthermore, the company anticipates future growth in its investment and development segment as capital gains from portfolio exits begin to materialize.