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The Square Enix group (the “Group”) is continuing determined efforts to strengthen the competitiveness andprofitability of its business segments of Digital Entertainment, Amusement, Publication and Merchandising.Net sales for the fiscal year ended March 31, 2024 totaled ¥356,344 million (an increase of 3.8% from theprior fiscal year), operating income amounted to ¥32,558 million (a decrease of 26.6% from the prior fiscalyear). In foreign exchange rates, the weakness of Japanese yen compared to the rate as of the end of lastfiscal year has resulted in the booking of a foreign exchange gain amounting to ¥9,304 million. As a result,ordinary income amounted to ¥41,541 million (a decrease of 24.1% from the prior fiscal year). Profitattributable to owners of the parent amounted to ¥14,912 million (a decrease of 69.7% from the prior fiscalyear), partly due to the recognition of ¥22,087 million in losses on disposal of content as an extraordinaryloss. These losses stemmed from the termination of development efforts for some key pieces of content inthe Digital Entertainment segment. A project-by-project review of continued development feasibility foundthese particular efforts to be incompatible with the Group’s revised approach to the development of highdefinition (HD) games, which reflects such objectives as multiplatform development and the strengthening ofinternal development capabilities.
The Digital Entertainment segment consists of planning, development, distribution, and operation of digitalentertainment content primarily in the form of game. Digital entertainment content is offered to meetcustomer lifestyles across a variety of usage environments such as consumer game consoles (includinghandheld game machines), personal computers and smart devices.In the HD (High-Definition) sub-segment, consolidated net sales for the fiscal year ended March 31, 2024increased compared with the previous fiscal year due to the release of titles including “FINAL FANTASYXVI,” “FINAL FANTASY PIXEL REMASTER,” “DRAGON QUEST MONSTERS: The Dark Prince,” and“FINAL FANTASY VII REBIRTH.” However, operating losses grew due to higher development costamortization and advertising expenses, as well as higher content valuation losses versus the previous fiscalyear.In the MMO (Massively Multiplayer Online) Game sub-segment, net sales and profits declined compared withthe previous year.In the Games for Smart Devices/PC Browser sub-segment, net sales and profits declined compared with theprevious fiscal year as the June 2023 launch of “Dragon Quest Champions” and the September 2023 launchof “FINAL FANTASY VII EVER CRISIS” were unable to compensate for factors including weak performancesby existing titles.Net sales and operating income in the Digital Entertainment segment totaled ¥248,109 million (an increase of1.0% from the prior fiscal year), and ¥25,468 million (a decrease of 38.3% from the prior fiscal year),respectively.
1. The content subject to impairment losses consisted largely of titles slated for release in FY2027/3 and beyond, so any impact on our income statements during this medium-term business plan will be minimal.
SEGA SAMMY HOLDINGS Inc. (“the Company”) hereby notifies that it has resolved to transfer shares of PHOENIX RESORT CO., LTD. (“Phoenix”) to Yugao GK an affiliated company of Fortress Investment Group LLC (collectively with its affiliates. ”Fortress”) at Board of Directors meeting on May 10, 2024. In addition, we hereby notify that we expect to record extraordinary income in connection with this transfer.
[...]
Even after the Phoenix's achievement to profitability, we have been considering various measures to further increase its corporate value, and have decided that the best way to maximize corporate value of Phoenix is to bring in Fortress, who has extensive experience and knowledge in the hotel and resort business, as a strategic partner, transfer our Phoenix shares to them, and have Fortress take the lead in Phoenix's operations.
Fortress has acquired 176 hotels with 27,457 rooms in Japan since 2011, and manages various hotels, including the Kanpo no Yado portfolio in 2021 and Hotel New Akao in Atami in 2022, with are long-established roots in their local communities. MYSTAYS HOTEL MANAGEMENT Co., Ltd. ("MYSTAYS"), which is the core of Fortress's hotel business in Japan, has a track record of successfully leading the business reforms of numerous hotels and leisure facilities.
Through the execution of this transfer, we will work with MYSTAYS in Phoenix's facilities operations, as well as develop the necessary strategic renovation plans for each building and facility in order to improve the utilization rates and expand the target audience. We believe that with Fortress's support, we can continue to make Phoenix’s current employees involved in the operation of Phoenix, and work with local companies and residents to maximize the potential of the "Sheraton Grande Ocean Resort" and "Phoenix Country Club" brands to enhance the overall corporate value of Phoenix.
We will continue to support Phoenix's further growth and increase its corporate value based on the strategic partnership agreement. In accordance with this stock transfer, we expect to record a gain on stock transfer as an extraordinary gain in the fiscal year ending March 2025.
In the fiscal year ended March 31, 2024, various factors, including favorable performance in the pachislot and pachinko machines business and the Japanese and Asian consumer area, and the addition of Rovio Entertainment Corporation to the Group, resulted in sharp sales growth from the prior year. Both operating income and ordinary income increased significantly from prior year.
At the same time, in the consumer area, due to challenging conditions in European studios, there was a pressing need to make rapid structural reforms to improve earnings. The Group recorded an extraordinary loss of approximately ¥19.2 billion in the fiscal year ended March 31, 2024 due to various factors, including the decision to implement structural reforms in the Europe region. As a result, net income attributable to owners of the parent decreased year on year. However, the Company believes these structural reforms have laid the groundwork for future earnings improvements.
« Entertainment Contents »
Sales increased while profit fell in the fiscal year ended March 31, 2024 from the prior year. Sales growth was due primarily to favorable performance in the Japanese and Asian consumer area, and the addition of Rovio Entertainment Corporation to the Group. The lower profits resulted mainly from challenging conditions in the European consumer area and structural reforms in Europe.
With regard to the structural reforms in Europe, efforts including (i) lineup revisions, (ii) normalization of fixed costs, including staffing cuts, and (iii) the sale of some studio stock resulted chiefly in the recording of various costs, which
contributed to lower profits in the entertainment contents business. However, these swiftly implemented structural reforms laid the groundwork for future earnings improvements. At the same time, the Company made progress in revising the management structure and strengthening its globalization, strengthened and optimized the publishing capabilities with unifying the functions located in Europe and U.S., and revised the development process in Europe, thereby reviewing to adopt a process to promote development and evaluation.
* Impact of European structural reforms on financial results in the fiscal year ended March 31, 2024: approximately ¥6.6 billion in cost of sales and approximately ¥17.8 billion in extraordinary losses.
At the same time, the Company was responding to management issues in Europe, a number of new titles also proved to be hits. These included the new titles "Like a Dragon: Infinite ∞ Wealth" and "Persona 3 Reload", each of which was the fastest in its series to sell one million units; "Football Manager 2024", an established title, and "Unicorn Overlord" developed by VANILLAWARE Ltd., each of which recorded strong sales backed by favorable reception among users.
Other factors contributing to results in the fiscal year ended March 31, 2024 included repeat sales and steady sales of existing F2P titles.
« Pachislot and Pachinko Machines »
The pachislot and pachinko machines business recorded sharp growth in sales and profit due to strong sales of pachislot machines, centered on the Company’s leading title "Smart Pachislot Hokuto No Ken".
The high utilization of "Smart Pachislot Hokuto No Ken" since its introduction has spurred strong sales of other titles as well. Pachislot sales volume grew sharply year on year to approximately 180 thousand units. While pachinko sales were down year on year to approximately 88 thousand units, this was due in large part to delaying the timing of the sale of some titles, including some major titles, to the fiscal year ending March 2025 following revisions of the sales schedule.
Sales of titles introduced during the fiscal year ended March 31, 2024, including "P Hokuto No Ken Bokyosei", were strong overall.
« Resort »
In the resort business, Phoenix Seagaia Resort in Japan was profitable for the second consecutive year, due to stronger than expected recovery in group guests. Paradise City in Incheon, South Korea, showed favorable performance, centered on Japanese VIP guests, helping to move the resort business into the black with equity method income of ¥0.9 billion in the fiscal year ended March 31, 2024.
FY2024/3 Full-Year Results
Ordinary income increased, driven by Pachislot and Pachinko Machines, Japan and Asia CS*, and Resort
• Ordinary income increased due to steady performance of Pachislot and Pachinko, Japan and Asia CS, Pachislot and Pachinko Machines Business, and Resort Business
Recorded losses associated with structural reform in Europe and tax expenses increased/B]
• Profit attributable to owners of parent decreased due to loss from structural reform in Europe and increase in tax expenses etc., which had been low in the previous fiscal year, etc., because of the decrease in taxable income from net loss carried forward etc.
* Entertainment = Entertainment Contents Business, CS = Consumer area
FY2024/3 Full-Year Results
Sales increased due to steady performance of Japan and Asia CS*, and Rovio's entry into the group
Profit decreased mainly due to weak performance of CS in Europe
[Consumer]
• Steady sales of new titles in Full Game from Japan studios and repeat sales of titles released in the previous fiscal year
• Incorporated Rovio's results from Sep. 2023
• Promptly implemented structural reform since the profitability in European region has been lowered
+-------+------------+------------+------------+------------+------------+-------------+
|System | This Week | Last Week | Last Year | YTD | Last YTD | LTD |
+-------+------------+------------+------------+------------+------------+-------------+
| NSW # | 57.022 | 43.016 | 88.713 | 1.029.275 | 1.305.985 | 32.815.931 |
| PS5 # | 26.756 | 22.778 | 54.054 | 611.454 | 1.093.582 | 5.576.311 |
| XBS # | 2.812 | 2.523 | 800 | 41.866 | 39.426 | 581.973 |
| PS4 # | 120 | 82 | 960 | 10.445 | 26.993 | 9.501.504 |
+-------+------------+------------+------------+------------+------------+-------------+
| ALL | 86.710 | 68.399 | 144.569 | 1.693.202 | 2.467.828 | 73.076.811 |
+-------+------------+------------+------------+------------+------------+-------------+
| PS5 | 23.034 | 19.999 | 44.601 | 510.738 | 924.752 | 4.808.908 |
| PS5DE | 3.722 | 2.779 | 9.453 | 100.716 | 168.830 | 767.403 |
| XBS X | 1.321 | 1.661 | 335 | 26.137 | 13.198 | 271.121 |
| XBS S | 1.491 | 862 | 465 | 15.729 | 26.228 | 310.852 |
|NSWOLED| 41.461 | 31.131 | 70.092 | 767.538 | 867.060 | 7.195.696 |
| NSW L | 9.219 | 7.028 | 5.843 | 159.771 | 188.131 | 5.833.845 |
| NSW | 6.342 | 4.857 | 12.778 | 101.966 | 250.794 | 19.786.390 |
| PS4 | 120 | 82 | 960 | 10.445 | 26.993 | 7.925.781 |
+-------+------------+------------+------------+------------+------------+-------------+
Capcom Co., Ltd. today announced that in its consolidated earnings for the fiscal year ended March 31, 2024, net sales were 152,410 million yen (up 21.0% year-over-year), operating income was 57,081 million yen (up 12.3% year-over-year), ordinary income was 59,422 million yen (up 15.7 % year-over-year), and net income attributable to owners of the parent was 43,374 million yen (up 18.1 % year-over-year).
During the fiscal year ended March 31, 2024, Capcom’s core Digital Contents business drove results, delivering annual sales of 45.89 million units for its home video game software, marking a year-over-year increase. The company achieved this with Street Fighter 6, which leads the Group’s esports activities, the release of Dragons Dogma 2 launched in March 2024, and promotional activities to gain wider recognition for its IPs and acquire new fans. Further, the company expanded earnings by leveraging its major brands in movies, character merchandise, and esports, while promoting efficient operations and new store formats in its Arcade Operations business, and introducing smart pachislo machines in its Amusement Equipments business. As a result, Capcom achieved record-high net sales, the seventh consecutive year of record-high profit at all levels, and its eleventh consecutive year of operating income growth.
Moving forward, for the fiscal year ending March 31, 2025, Capcom anticipates net sales of 165,000 million yen and operating income of 64,000 million yen, which would result in twelve consecutive years of operating income growth and eight consecutive years of record high profit at all levels.
In Digital Contents, Street Fighter 6 (for PlayStation 5, PlayStation 4, Xbox Series X|S, and PC), the latest title in the series leading the Group’s eSports activities, was released in June 2023 to global acclaim. As a result, the game achieved sales of 3.3 million units, which contributed to improved segment results.
In addition, Dragon’s Dogma 2 (for PlayStation 5, Xbox Series X|S, and PC) was released in March 2024 as the first all-new game in the series in 12 years. Dragon’s Dogma 2 is an open world action role playing game where players can enjoy adventure in a fantasy realm, and thanks to strong support from series fans and a surge in new users, the game performed well, selling over 2.62 million units while also contributing to sales growth of Dragon’s Dogma: Dark Arisen, a catalog title in the same series.
Regarding catalog titles, in conjunction with the announcement of Monster Hunter Wilds, an all-new addition to the Monster Hunter series, sales of the same series’ catalog title Monster Hunter: World were solid. The game achieved cumulative sales of 25.32 million units worldwide, while sales of Monster Hunter World: Iceborne and Monster Hunter Rise: Sunbreak also continued to grow.
Further, in addition to reaching a cumulative total of 7.02 million units sold for Resident Evil 4, which launched in March 2023, and contributing to catalog sales growth, the Company conducted proactive promotional campaigns to gain wider recognition for its IPs and acquire new fans, focusing primarily on series title sales, such as Resident Evil 2. As a result, catalog title sales reached 36.29 million units, exceeding 29.3 million units in the same period of the previous fiscal year and boosting earnings.
In Mobile Contents, Monster Hunter Now (an out-licensed title for iOS and Android) was released in September, representing the latest mobile game in the Monster Hunter series. The number of worldwide downloads of the game exceeded 10 million, driving wider recognition of the IP.
As a result, the segment earned net sales of 119,841 million yen (up 22.1% year on year), and operating income of 59,831 million yen (up 11.8% year on year).