Recently, an increasing number of companies have revealed the harsh business environment when it comes to contracted development of smartphone games. Geeks <7060> recently announced that publishers are being cautious about placing orders for new smartphone game development projects, and orders from subsidiary G2 Studios have been delayed, and major contract developer Tose <4728> similarly commented that the number of cases is on the decline.
NJ Holdings <9421> disclosed the status of projects under contract development in the game business in its first quarter financial results briefing materials, revealing that there are four projects related to packaged software such as home game consoles and PCs. . Regarding smartphone game development projects, there are 0 projects, unchanged from the previous announcement. The company has Game Studio and Tri-Ace under its umbrella.
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Contracted development of online games, not just smartphone games, has been described by some as “a business that’s twice as good as it is” (a major securities underwriter). This is because not only can you earn profits by taking on development work up to release, but you can also earn stable and continuous profits by continuing to take on post-release operations.
Contract development companies have maintained relatively stable profits compared to publishers, but now it appears that they are increasingly having difficulty acquiring projects.
The background to this is that, as the smartphone game market is said to be maturing, competition is intensifying and the development and marketing costs required to develop new titles are rising, making publishers more cautious about investment than before. can give.
Rising development costs have been pointed out every year since the smartphone game market began to expand in earnest, but now 2 billion yen is not uncommon, and the management risk of a single title failing is extremely high. It’s going up. Not only mobile game companies, but even major game companies are suffering considerable damage.
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It is still fresh in our minds that the news that the development costs for Genshin exceeded 3 billion yen shocked the industry. Some people in the industry said, “The works whose development costs become a hot topic are almost always due to abandoning something that had been made halfway through and remaking it.” However, there is no doubt that development costs continue to rise. do not have.
Publishers who place orders are closing down unprofitable titles and concentrating resources on existing titles that are producing a certain amount of results to strengthen operations, while also working to improve the quality of new titles in terms of development and management. Therefore, there is a movement to reduce orders to external companies and shift to in-house production.
Under these circumstances, TOSE, mentioned above, continues to work on developing mobile games, and is trying to create novelty products such as targeting a different demographic from traditional game users and incorporating new elements that were not present in previous games. He said he would like to work on a certain project.
On the other hand, some contract development companies that had been devoting resources to mobile games are increasingly seeking new sources of revenue, such as working on console games and Steam, and expanding into Web3-related areas such as blockchain games and the Metaverse. .
Although it is difficult to see this as an overt movement among unlisted development companies, the owners and presidents sell their shares to major overseas game companies such as China, become affiliated with them, and seek to survive by contracting out work from them. There is some movement (I have heard that there are cases where they are having trouble because they are not receiving as many orders as expected).
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Some game development companies that have made their profits primarily through contract work have increased their profits in recent years by focusing on mobile game development, but it appears that a change in strategy is required.