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Kadokawa FY3/23 Q1 Earnings release - Game Segment Net Sales ¥12,582M (+570.9% YoY) Operating Profit ¥6,569M (+Infinity% YoY) driven by Elden Ring

ggx2ac

ggx2ac

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Expert
(They publish Dark Souls)
This is the Q1 earnings release of the fiscal year ending March 2023 for Kadokawa.

Link to slides: https://ssl4.eir-parts.net/doc/9468/ir_material_for_fiscal_ym7/121437/00.pdf

Screenshots:
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I remember some kept arguing Kadokawa don't see much from Elden Ring, and I told them its simply that the revenue isn't recognized yet. They then kept insisting that is not the case.

Looks like some of us are proven right, and some others were trying to push a narrative.

Fiendslayer said:
Also, do not forgot that exported Japanese version copies (a very small segment) is technically Kadokawa sales, which is definitely included in "some overseas sales" and whatever partial royalties that Bamco might give from the period of 22 Feb and 31 Mar (big maybe, it all depends on the account practice in companies, which can vary alot, and the contract clause on the timing of royalty transfers...)
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Going from negative operating profit to such big numbers is just massive.
 
"We are considering a number of measures to help customers continue to enjoy this title" could mean DLC/expansions, but could also include the possibility of scaled ports to other systems.
 
And then we heard the news that Kadokawa is selling many of their IP's to Dragami as well Cygames lol. What a strange situation
 
AruanaRiva said:
And then we heard the news that Kadokawa is selling many of their IP's to Dragami as well Cygames lol. What a strange situation
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If someone approached them about dead IP it’s easy money for nothing. It’s not like they’re selling moneymakers

NediarPT88 said:
Guess we'll have to wait for BN, hopefully they share how much ER shipped in this last quarter.
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I guess the reason why Kadokawa don’t release numbers is because they’re only the pub for Japan, BN are the ones publishing elsewhere so yeah news from them. I suspect it wouldn’t be a high figure for Japan which is another reason to hold on that.
 
slipperyfishes said:
I guess the reason why Kadokawa don’t release numbers is because they’re only the pub for Japan, BN are the ones publishing elsewhere so yeah news from them. I suspect it wouldn’t be a high figure for Japan which is another reason to hold on that.
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Even the JP numbers were given by BN, it might just be what they are saying of them not disclosing sales numbers of individual titles in general
 
AruanaRiva said:
And then we heard the news that Kadokawa is selling many of their IP's to Dragami as well Cygames lol. What a strange situation
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Dragami is still a subsidiary of Kadokawa, it was just reorganized to be under Extreme instead as a direct subsidiary. TBH, that move was probably a branding move since going forward, Kadokawa is going to be releasing more games based on their publishing IPs and leaving the brand open for a Disney Interactive style publisher
 
Astrogamer said:
Dragami is still a subsidiary of Kadokawa, it was just reorganized to be under Extreme instead as a direct subsidiary. TBH, that move was probably a branding move since going forward, Kadokawa is going to be releasing more games based on their publishing IPs and leaving the brand open for a Disney Interactive style publisher
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Not doubting you, just curious about the source as I'm not seeing this mentioned on the Kadokawa Group Companies page. Either way, divesting Kadokawa Games to Dragami Games & selling the Metal Max IP to CyGames at this moment in time was the right decision. Draw a line under the past, move on to bigger & better things starting with the huge sales for Elden Ring.

Regarding the financial report, some quick fire ideas on how to achieve strong results on a regular basis:
  • Negotiate better pay, larger upfront fee and/or royalties contract with Bandai Namco for Elden Ring 2 or any other future project with international publishing rights outside Kadokawa.
  • FROM SOFTWARE to self publish outside Japan and/or through Spike Chunsoft US (create an EU division as well), maybe start with mid-sized projects like the next Armored Core.
  • Restructure to place all of its game studios under one department to streamline decision making, emphasis on talent retention, staff & technology exchange. Long term goal to create a single in-house game engine for all teams to improve workflow & technical performance (FROM!).
  • Ports, remasters & remakes for Switch / next console from Nintendo plus PC/PS5/Xbox with a focus on FROM SOFTWARE & Spike Chunsoft back catalogues. Sequels too (Shiren!).
  • As mentioned by @Astrogamer above, can license or contract developers to work on IP. While it's mainly for anime/manga rights, if FROM still owns Tenchu, can license or contract Acquire.
  • Cross overs for RPG & Pixel Game Maker. Anime / Manga, FROM SOFTWARE & Spike Chunsoft themed spin offs or expansions. Shiren the Wanderer is a good fit, help promote sequel.
  • 3D RPG Maker (Sword of Moonlight) with FROM games & Sound Novel Maker (Adventure Player) with Chunsoft games featured. Tenchu level design competitions with or without Acquire.
 
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The contract with Namco must be variable cause Kadokawa made more profit this quarter than last despite Elden Ring sales likely being 60%+ down.
  • ¥19.5B -> ¥12.6B (includes two Spike titles for commission)
  • ¥5.2B -> ¥6.6B
Guess we'll have to see Namco's results for a clear answer.
 
enpleinjour said:
The contract with Namco must be variable cause Kadokawa made more profit this quarter than last despite Elden Ring sales likely being 60%+ down.
  • ¥19.5B -> ¥12.6B (includes two Spike titles for commission)
  • ¥5.2B -> ¥6.6B
Guess we'll have to see Namco's results for a clear answer.
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The likelihood is that Namco takes at least a month before transferring over Kadokawa shares.
 
enpleinjour said:
The contract with Namco must be variable cause Kadokawa made more profit this quarter than last despite Elden Ring sales likely being 60%+ down.
  • ¥19.5B -> ¥12.6B (includes two Spike titles for commission)
  • ¥5.2B -> ¥6.6B
Guess we'll have to see Namco's results for a clear answer.
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They specifically said in the slide that this includes Q4 overseas revenue for Elden ring. They mentioned months ago in Q4 that overseas revenue was going to be represented in this quarter.
 
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