Tose, one of Japan’s largest game outsourcing companies, reports losses due to game cancellations

Tose, one of Japan’s leading game co-development companies, has released its financial statements for the period from September 1, 2023 to May 31, 2024. According to the report, Tose saw a significant decline in profits in its digital entertainment business, mainly caused by the cancellation of several ongoing games.

With a long history of private projects and co-development, Tose has been involved in the Dragon Quest Monsters series, Bandai Namco’s Scarlet Nexus, numerous Dragon Ball games, and a wide range of other titles.

According to Tose’s recently released financial report, the company’s net sales decreased by 27.6 percent from last year to 3,243 million yen (about $20 million). In addition, the company recorded an operating loss of 599 million yen, an ordinary loss of 580 million yen, and a final loss of 367 million yen.

The company said several game development projects were cancelled due to changes in customer policies and other factors. Due to these cancellations, the company was unable to recoup profits from games that were already in development since the beginning of the financial year.

This led Tose to revise its annual profit forecast. The company lowered its previous net sales forecast from 5,520 million yen to 4,830 million yen, noting that it expects orders and development conditions to remain uncertain due to policy changes on the customer side. Tose is working to strengthen project management and intends to gradually launch currently planned projects to restore its business performance.

The economic situation of the video game industry is deteriorating worldwide, prompting major publishers to cancel their development projects, including outsourced work. While Japan is not experiencing mass layoffs, its outsourcing and co-development studios are suffering. The fact that even a large company like Tose is recording losses is indicative of the difficulties studios are facing.