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Bandai Namco Cutting 630 Jobs Amid Mounting Losses
by Kris Graft [PC, Console/PC]
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February 2, 2010
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Tokyo-based Tekken maker Bandai Namco on Tuesday reported accelerating losses that the publisher plans to curb with the implementation of a "restart plan" beginning at the start of its next fiscal year in April.
The restructuring plan involves cutting nearly 10 percent of Bandai Namco's total workforce, or around 630 of its 7,000 total headcount. The company said the plan is in response to an "urgent" need to make the publisher more flexible and more profitable.
The job cut announcement came as Bandai Namco reported loss of ¥5.70 billion ($63.17 million) for the fiscal third quarter ended December 31, 2009. Quarterly revenues dropped to ¥110 billion ($1.22 billion) from ¥124.85 billion ($1.38 billion) a year prior.
Bandai Namco recorded a ¥11.74 billion ($129.88 million) loss for the first nine months of the fiscal year, versus income of ¥9.02 billion ($99.84 million) for the same period a year ago. Revenues for the period were down to ¥282.83 billion ($3.13 billion) from ¥315.65 billion ($3.49 billion).
Bandai Namco expects the headcount reduction to reduce personnel expenditure by about ¥3.5 billion ($38.72 million) in the coming fiscal year. Company-wide streamlining is expected to reduce costs by ¥8 billion ($88.5 million).
The company attributed the declining sales and profits during the nine months to "weak market conditions" for its home console games. Bandai Namco said it missed most of its console software sales projections, outside of Tekken 6, the latest in the company's long-standing fighting franchise.
For the full year, Bandai Namco revised its sales down to ¥380 billion ($4.2 billion), down from the previous forecast of ¥400 billion ($4.43 billion). Operating income projections were lowered to ¥1 billion ($11.07 million) from ¥15 billion ($166.02 million).
"Consolidated financial results show that the Bandai Namco Group generally faced an uphill battle in the first nine months of the fiscal year ending March 2010 (April 1, 2009 to December 31, 2009), during which market conditions for the Group remained severe," the company said in a statement.
Bandai Namco said it will also "bolster quality control in Japan" and carry on improvements into the company's Japan and U.S.-based Worldwide Studio, introduced in April 2009.
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If managers knew what they were doing these problems would rarely ever happen. Basically massive layoffs suggest to me that the company in question is admitting "Ooops, we either put way too many personnel on that project or weren't realistic about the profit it would make." Games can sell in a bad market. Production management can make a reasonably close estimate on resources needed vs ROI and decide whether to greenlight something or how to cut losses part way through.