Kadokawa Dwango Financial Results for the 2nd Quarter Ended Sep 30, 2018

Key insights

7 takeaways

01
Kadokawa Dwango reported a year-on-year increase in both revenue and profit for the first half of the fiscal year ending March 31, 2019, with total revenue reaching 102,129 million yen and operating income at 2,864 million yen.See it on page 6
02
The Publication segment was a primary growth driver, achieving 55,079 million yen in revenue and 3,003 million yen in operating income, fueled by strong performance in e-books and e-magazines via the BOOK☆WALKER store and external sales channels.See it on page 20
03
The Video and Game segment saw revenue grow to 23,809 million yen and operating income to 2,532 million yen, bolstered by high overseas demand for anime licenses such as 'STEINS;GATE Zero' and 'Over Lord'.See it on page 22
04
Niconico's premium member count continues a long-term downtrend, though total paid members—combining premium and Niconico Channel users—reached 2.78 million as of September 2018.See it on page 19
05
The company is aggressively pursuing a VR ecosystem, launching the 'VRM' 3D model format and achieving one million downloads for the 'Custom Cast' app within 11 days of its release.See it on page 13
06
Niconico Manga daily active users (DAU) reached 420,000 by September 2018, contributing to a 139% year-on-year sales increase for the platform.See it on page 19
07
Web Services reported an operating loss of 100 million yen for the first half, though this represents an improvement compared to the 393 million yen profit in the same period of the previous year due to infrastructure cost-cutting measures.See it on page 5

Summary

The financial results for Kadokawa Dwango for the first half of the fiscal year ending March 31, 2019, reflect a diversified performance across its core business segments. The company reported total revenue of 102,129 million yen and operating income of 2,864 million yen for the six-month period. While the organization faced challenges in its Web Services and Mobile segments, these were offset by growth in the Publication, Video, and Game divisions, leading to a slight year-on-year increase in both revenue and operating profit.

The Publication segment emerged as a primary growth driver, benefiting from the strong performance of the BOOK☆WALKER e-book store and increased licensing revenue. Similarly, the Video and Game segments saw positive momentum, fueled by robust overseas licensing of anime titles and successful packaged software sales, including titles like Dark Souls Remastered. Conversely, the Web Services segment, specifically the niconico platform, continued to experience a decline in premium membership numbers, though the rate of attrition slowed as the company implemented infrastructure improvements and expanded access to non-logged-in users.

The company’s balance sheet remains stable with an equity ratio of 44.7%. Capital investment remains focused on supporting digital infrastructure and content development. Looking forward, the company is prioritizing the expansion of its VR ecosystem through tools like VRM and Virtual Cast, alongside new educational initiatives such as the N Progressive School. These strategic investments aim to leverage existing intellectual property and technical expertise to capture new user bases and diversify revenue streams beyond traditional subscription models.