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Massive Social Growth Leads Konami To Profitable First Half

Massive Social Growth Leads Konami To Profitable First Half

November 4, 2011 | By Frank Cifaldi

Japan's Konami Corporation (Metal Gear, Silent Hill) saw its profits more than double year-on-year in the first half of its fiscal 2012, the company reported Friday.

The growth can be attributed primarily to its social gaming business, which saw sales more than triple during the period.

As always, Konami's Digital Entertainment segment -- its video game publishing arm -- was the company's primary sales driver, contributing 58.1 billion yen ($747.7 million) of a company-wide 123.1 billion yen (around $1.5B), a 6.3 percent increase from the 115.8 billion yen it generated in the same period last year.

Adjusted profits, after taxes, came out to 11.5 billion yen ($146.5 million) for the company, more than double the 4.2 billion yen it reported a year ago.

The Digital Entertainment division's operating margin nearly tripled from one year ago, from 8.7 percent to 26 percent, due to a focus on social gaming and digital transactions. While its consumer games business still generated the most sales within the division, its 17 billion yen is a significant drop from the 26.7 billion yen a year ago, and only slightly edges out its social gaming revenues, at 16.9 billion yen (versus 5.1 billion one year ago).

While the company's social efforts have not yet had impact in the Western world, Konami has seen a lot of success on Japan's Gree network, with titles like Dragon Collection attracting 11 million registered users and ranking at the top of its charts.

Other popular titles on Gree include Professional Baseball Dream Nine (which recently launched on iOS and Android), Hisho Collection and J. League Dream Eleven.

As usual, Konami's Pro Evolution Soccer was its primary packaged game driver. The combined 2.93 million combined franchise games sold during the half represented 39 percent of the 7.36 million games sold worldwide.

By comparison, the company's second best-selling series, its Pro Yakyuu baseball franchise, sold 970,000 copies.

In addition to its Digital Entertainment business, Konami also has a casino gaming division, a pachinko division, and a series of health clubs in Japan.

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