Outsourcing overlord Tose is feeling the sting of the recession. A major Xbox 360 and Nintendo DS game were delayed to the next fiscal period. One PSP game was outright canceled. Year over year sales and operating income are down, but somehow net income is up substantially.
We’ll get to why in a bit. Gloss over Tose’s fiscal year (that’s September 1, 2009 – August 31, 2010) projections first. The number in brackets is the year on year change.
Sales: 5,385 million yen ($58 million) [-11.7%]
Operating income: 417 million yen ($4.5 million) [-10.9%]
Ordinary income: 426 million yen ($4.5 million) [-5.9%]
Net income: 242 million yen ($2.6 million) [+143.2]
Despite lower revenues, Tose anticipates higher profits. One reason why is Tose believes the market is flooded with small-scale game studios set up by laid off creative professionals. These studios, according to Tose, win contracts by underbidding, but can’t stay afloat due to tight profit margins. After these studios go bust Tose scoops up the contract. Tose also expanded their sales infrastructure and are making bank from an unnamed Wii karaoke game. We’re guessing this is Joysound.
While Tose lost some games, they gained contracts for downloadable games. The studio is actively working on digitally distributed WiiWare, DSiWare, and PSP games.
This emerging market [downloadable games] is a tremendous opportunity for TOSE, where we have development experience on every platform imaginable, as well as having built extensive development skills around communications-based content in the mobile field. We expect that demand for work in this segment will experience steady growth.
Here’s what Tose plans to develop in the next fiscal year.
Nintendo DS – 26 (6 DSiWare)
PSP – 6 (1 PSN)
Xbox 360 – 2
PlayStation 3 – 3
Wii – 10 (6 WiiWare)