COLOPL Annual Report 2018

Marking its tenth anniversary in 2018, COLOPL entered a pivotal transition phase necessitated by the maturation of the smartphone gaming market and a subsequent decline in financial performance. During the fiscal year ending September 30, 2018, the company experienced a 12.4% decrease in net sales to ¥45,776 million and a 46.2% drop in operating profit to ¥6,952 million. This downturn was largely attributed to the softening performance of core titles like White Cat Project and Quiz RPG: The World of Mystic Wiz, alongside significant impairment losses totaling ¥2.018 billion. Despite these fiscal pressures, the company maintained a robust financial foundation, ending the year with ¥60,400 million in cash and cash equivalents.

To navigate this period of stagnation, the company initiated a strategic pivot toward diversifying its business beyond mobile gaming. This includes expansion into virtual reality, console development, and non-gaming ventures, supported by a restructured management framework. Governance reforms, including the transition to an Audit and Supervisory Committee and the establishment of a Compensation Advisory Committee, were implemented to enhance transparency and decision-making agility. These structural changes are designed to balance the company’s core data-driven development culture with the need for rigorous oversight and long-term risk management.

Operational risks remain a primary concern, particularly the company’s heavy reliance on Apple and Google platforms for over 90% of its net sales and ongoing patent litigation with Nintendo. To mitigate these vulnerabilities, the company is prioritizing talent acquisition, internal control systems, and the cultivation of new intellectual property. By leveraging its strong liquidity and commitment to shareholder returns, including a commemorative dividend, the organization aims to stabilize its market position while fostering the next generation of creators through initiatives like the Kuma Foundation.