Editorial by Dungeonbuster

Konami: Delisted but not Doomed

Konami: Delisted but not Doomed

Konami's delisting from the NYSE shouldn't be a surprise. They filed notice to do so way back in November citing reasons that essentially boil down to consolidation. Their actions earlier this year in shuffling around executives (and removing Hideo Kojima's name from the list of active officers) also point to an internal restructuring, though information has generally been very scarce as to exactly why they're doing this.

When they listed their shares in 2002, e-trading wasn't quite the global monster it is today allowing anyone to play the market from the comfort of their PC thanks to a growing array of platforms that have advanced the art of the stock trader since then such as Ameritrade and E*Trade. At the time, they wanted to raise awareness of their brand as well as “raise funds” – something any publicly traded corporation wants to do.

So what happened? Apparently, their shares weren't seeing as much action on the NYSE lately as they did in Tokyo. The gist they gave was thanks to how global share trading is nowadays and the access anyone can get to international markets (like Tokyo's) with a few clicks, decided to focus that action to both Tokyo and London by voluntarily delisting themselves from the NYSE. If you're not seeing a lot of business on a particular corner, you close up shop and move everything to another corner – or a corner where you're already doing well. Konami voluntarily chose to leave the NYSE – they're not in the kind of financial ruin that delisted a company like Interplay in 2002. That's a lot worse.

But what does this mean for Konami as a whole? From a business perspective, I think they're going to do just fine as a company. But as a gamer, it feels like a continuation of a trending decline in the number of high profile releases compared to where they were in the late 80s on through the 90s. It's not a problem specific to Konami, but it's a direction that they've slowly moved themselves towards. And one of the reasons is likely because they've built up an appetite in sticking their fingers into a lot of other pies.

It's telling that Konami began hedging its bets outside of traditional arcade and console gaming in the early 90s. Today, their portfolio includes sports clubs, health apps, and real estate distancing themselves from a Capcom or a Sega whose main aim is still to make games. Konami still does, but many of the ones they're interested in aren't quite the same kind of games that I remember growing up with unless I lived in a pachislot parlor or Las Vegas.

In addition to continuing in expanding their health offerings, they're also tightening their focus on pachinko and there's little reason to doubt why. According to their last fiscal report, their pachinko business net revenue grew at “a year-on-year increase of 99.6%.” In other words, that's about double what they took in the previous year. That's like going from the pea shooter you start with to hitting the spread-fire power up in Contra.

Mobiles have also become a huge focus for Konami (and many other Japanese developers), especially when Japan constitutes 45% of digital games revenue across Asia.

So where does that leave traditional console games? I remember growing up with home versions of games like Gradius and Lifeforce with Konami's Ultra label featuring games like Metal Gear, but the same variety of fun insanity has largely been absent in the last few years focused as they are on only a dwindling number of franchises. At least in the West. The only major release anticipated from Konami this year is Metal Gear Solid V: The Phantom Pain after which its creator, Hideo Kojima, is speculatively expected to leave the company. 

Konami has issued boilerplate responses to the fate of Silent Hills and Metal Gear Solid saying that they'll continue. As to what form they might continue as, especially MGS without its principal visionary, that's anyone's guess. Like those in the businesses that they're keen on expanding into, they're playing those cards close to their chest.


Dungeonbuster quests to discover old games and new, sometimes writing about them when not being devoured by a grue or in space hiding behind an asteroid. You can follow him @Dungeonbuster on Twitter.

Editorial by - 4/28/2015 9:22 AM468 views

Comments

Flaco_Jones
Flaco_Jones
4/28/2015 10:06 AM

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Great commentary on the state of Konami. I remember when I worked for the company, walking through the offices with the framed box art of games like Blades of Steel and Castlevania hanging on the walls, yet we were working on The Winx Club or a terrible Frogger reboot. Now they don't even crank out crappy license games anymore so I guess the writing has been on the wall for a while.

I don't blame them really. It's tough to tell a group of investors you need a ton of money to make a big console game when tiny games like Five Nights at Freddy's and the Frogger inspired Crossy Road pull in so much cash, especially on mobile.
act_deft
act_deft
4/28/2015 10:46 AM

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Yeah, Konami won't disappear, they probably don't have as many financial problems as we all think too. But they probably just don't see a future in gaming.

It's curious though, many people are saying that they'll go to mobile when it all points that they'll stick with other stuff other than gaming.

All I have to say is, thanks for the good Konami. They made games and created franchises that are memorable to all gamers. Sad to see them go and dissapear of the gaming spotlight.
TigerClaw
TigerClaw
4/29/2015 3:49 PM

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Konami will still be around, But they won't be how you remembered them.
Dungeonbuster
Dungeonbuster
4/30/2015 12:01 PM

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One thing I should have also mentioned was that for the last few years, Konami's net revenues have also been in decline (http://www.konami.co.jp/en/ir/financialinfo/sales.html). It's not "omg they're dying" decline, but it's probably significant enough to factor into where they want to go -- and what might have to change to get them there.

And now I need to play a little Gradius to cheer myself up.
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