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The latest  Metal Gear Solid  too late to save Konami's falling profits
The latest Metal Gear Solid too late to save Konami's falling profits
May 8, 2014 | By Mike Rose

May 8, 2014 | By Mike Rose
More: Console/PC, Business/Marketing

Konami saw its earnings more than halved during the last fiscal year, due in part to a heavy drop in profits from its video game business.

Although the company said that it recorded "solid sales" for titles like Metal Gear Solid V: Ground Zeroes and Professional Baseball Spirits 2014, Konami's Digital Entertainment business video game sales dropped sharply.

The company sold 10.81 million video games during the last fiscal year, compared to 13.61 million sold year-over-year. However, Konami hopes to turn this around this year, stating that "Business opportunities in the game industry are increasing and the gaming business is expected to continue to grow."

This will, in part, involve Konami building more games for smartphones and tablets, as the company's belief is that it can achieve greater earnings through increasing the number of platforms that it brings its games to.

As for traditional video games, Konami plans to unveil new titles at E3, including some new sports games, while also revealing more Metal Gear-orientated information. Boosting PlayStation 4 and Xbox One development is key, said the company.

Notably some of Konami other sectors, including Health & Fitness and its Pachinko business, weren't so hot either, with drops in earnings found there too.

For the fiscal year ended March 31, 2014, Konami's Digital Entertainment business recorded revenues of 104.3 billion yen ($1.0 billion), down from 116.4 billion yen ($1.1 billion) year-over-year, and operating income of 11.7 billion yen ($114.9 million), nearly halved from the previous year's 21.2 billion yen ($208.3 million).

Konami as a whole recorded revenues of 217.6 billion yen ($2.1 billion), down from 226.0 billion yen ($2.2 billion) year-over-year, and profits of 6.2 billion yen ($60.9 million), more than halved from last year's 13.2 billion yen ($129.7 million).

For the current year, Konami is forecasting another drop in profits for Konami's video game business, down to 10 billion yen ($98.2 million) in operating income -- although it believes the company as a whole will see slightly increased profits.

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Jed Hubic
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Not surprising. I'm just happy there's not a business case where selling a demo at full price turns a company profitable now.

Kelvin Bonilla
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I think too many people are getting hung over by this kind of claim.
Are we not allowed to experiment and learn from our mistakes?
Why must we chastise others for trying things we don't necessarily agree with?

I believe we are entitled to fail, learn from mistakes, and improve.
How else to we learn without blindly imitating others?

Hopefully they are reevaluating their decisions in order to improve upon them.

Jed Hubic
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So I can't have an opinion on a practice I don't like? Painting people as having an opinion as close minded is far worse. I guess I'll have to determine what thing to have a personal opinion on a bit better next time.

Bryan Powell
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Well when you're up, you're up, and when you're down, you're down. What's left for them now is to begin right where they left off. They can right the ship by remembering what got them here. It's not going to happen overnight, but it would be a start.

Bryan Powell
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What I was going for there was the Konami code embedded in the paragraph if that's not clear, lol.

Jeferson Soler
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While I feel that it is a double-edged sword for mainstream game companies (especially eastern mainstream game companies) to get into the mobile phone game business, I can see Konami as the one company that could truly do it and that's because Konami has the Yu-Gi-Oh! franchise on its side. The Yu-Gi-Oh! franchise could actually work on a tablet if done right.

Michael O'Hair
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That's always the caveat: "if done right".
But with Yu-Gi-Oh! being a sort of card game already, it would do well on a mobile platform even as a concept. The same may be possible (read: almost assuredly) for Konami's Metal Gear Ac!d and musical rhythm games such as Beatmania. In fact, it may be very difficult to get those games wrong as mobile products.
Unfortunately, other game developers mistakenly thought that simply porting their previous products to mobile was enough to open up the mobile money sluice for them; Cave Co. Ltd. and their scrolling shooter games, for example. The average mobile game player will probably pass on games that are too complex.

Kevin Fishburne
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That's what happens when you haven't made a decent Castlevania game in 17 years. If they'd just drop every other project they're working on and devote all their resources to making nothing but decent Castlevania games they'd have enough money to bail out governments if it suited them. Konami's got a fever, and the only prescription is more Castlevania.