It is striking how rarely the months-long wave of layoffs in the video game industry affects Japanese studios. Sure, there was one very high-profile case with Tango Gameworks, but that originated at Xbox in North America. Japanese companies currently seem to be in a good position.
However, due to the current situation, games are also being canceled in Japan. It was recently announced that Square Enix had canceled numerous projects. This may lead to consolidation of the companies in the long term, but it also impacts partners.
Of course, companies with many partners are hit harder. One of these is the development studio TOSE, which works as an external studio on numerous video games. Most recently, it has been developed for Bandai Namco, Nintendo, and Square Enix. The “dark figure” is larger: TOSE is known for not even appearing in the credits if it requests it.
Now one of Japan’s largest co-developers is reporting a significant drop in profits for the fiscal period ending May 31, 2024, mainly due to the cancellation of various projects. Compared to the same period last year, net revenue fell 27.6 percent to about $20 million. The bottom line is an operating loss of over $3.7 million.
The effects of the current industry crisis are also being felt in Japan. “Although there are no mass layoffs in Japan, the outsourcing and co-development studios are suffering. The fact that even a large company like Tose is reporting losses is an indication of the difficult circumstances the studios are facing,” estimates the Japanese Automaton Media.
