Business Report: KADOKAWA DWANGO CORPORATION (Fiscal Year 2018)

KADOKAWA DWANGO CORPORATION (hereby referred to as Kadokawa Dwango or the “Company”) in their business report filing with the Tokyo Stock Exchange (TSE) saw positive growth for the fiscal year of 2018 which ended in March 31, 2019. The Company recorded a net sales of $1,923,338,100 for the fiscal year (up 0.9% y-o-y) with an operating profit of $24,958,540 (down 13.9% y-o-y). This puts the Company in a comfortable position, recording an ordinary profit of $38,757,485 which is an increase of 13.2% compared to the previous year.


 

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Kadokawa Dwango is a Japanese Public Listed Company headquartered in Chiyoda Ward, Tokyo


Throughout the fiscal year, the Company saw some changes to its organizational structure in order to strengthen its IP business capabilities and at the same time, saught to enhance its governance as well as its business efficiency. As a result, its wholly-owned subsidiary, KADOKAWA CORPORATION in an absorption style split, to which all of its business was transferred over to the Company making Kadokawa Dwango the operating holding company as of July 1, 2019.

The Publication Business segment, despite the shrinking paper publishing market, saw its net sales jumped 2.9% y-o-y totalling $1,068,885,096 with an operating profit of $66,850,901 (up 20.9% y-o-y). This is thanks to the increase of sales of its e-books and e-magazines which registered a strong sale for the fiscal year. Some of its major titles such as “Yotsuba&!, Vol.14”, “Delicious in Dungeon, Vol. 6”, “The Rising of the Shield Hero” and etc, have contributed to the strong sales. To improve the segment further, a state-of-the-art digital facility will be introduced in the fiscal year of 2020 which integrates manufacturing and logistics to help decrease costs of doing business plus, increase the efficiency to help drive up sales.


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Tate no Yuusha no Nariagari or The Rising of the Shield Hero¬† in English, is one of KADOKAWA’s successful titles, 2 sequels were announced in September 2019 though release dates are still unconfirmed, picture from Crunchyroll


On the side of the Company’s Video and Game Business, net sales of $445,135,015 was recorded for the fiscal year, an increase of 1.8% y-o-y with an operating profit of $36,121,423 (up 36.3% y-o-y) registered. The good result achieved is said to be attributable to a number of titles such as “STEINS; GATE 0” and “Re: Zero Kara Hajimeru Isekai Seikatsu” for the Video Business while “SEKIRO: SHADOWS DIE TWICE” and “DARK SOULS REMASTERED” both are some of the examples of titles which contributed to the sales for the Game Business. To further fortify this side of the business, the Company wishes to bring in more IPs into video works while the Game Business would be fine-tuned further with a primary focus on planning, development and sales of original packaged game software.


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SEKIRO: SHADOWS DIE TWICE was produced by FromSoftware, Inc., a wholly-owned subsidiary of KADOKAWA DWANGO CORPORATION, picture from Playstation.com


Unfortunately, things did not bode well for the Web Service Business segment which saw a 10.9% decline in net sales with a total of $238,206,121 recorded for the fiscal year. The Company registered an operating loss in this segment amounting to $23,740,416. The previous year, the Company registered an operating loss of $9,833,472. The loss is a result of a decline in the number of “Niconico premium members” which decreased to 1.8 million at the end of the fiscal year. The Company also cited that the review and divestiture of the business as also one of the reasons for the loss. As a result, the Company aims to improve its revenue structure and deliver better user satisfaction for its Web Service Business.

The net sales were up 6.3% to $204,092,031 for Others business though, the Company recorded an operating loss of $24,084,021 for the segment. This was an increase considering a $12,498,252 of operating loss registered the previous year. The sales were derived from the Company’s educational programs and merchandising business. The Company expects sales to increase for the coming year of 2020 when the Olympic games are held as the losses incurred were the result of the Company preparing for the major event with the opening of Tokorozawa Sakura Town in 2020.

Notes:
1. KADOKAWA DWANGO CORPORATION is listed on the Tokyo Stock Exchange, ticker symbol 94680.
2. KADOKAWA CORPORATION, BOOK WALKER Co., Ltd., FromsSoftware, Inc. and Spike Chunsoft Co., Ltd. are all wholly-owned subsidiaries of KADOKAWA DWANGO CORPORATION.
3. Niconico is operated by DWANGO Co., Ltd., a wholly-owned subsidiary of KADOKAWA DWANGO CORPORATION.
4. YEN PRESS, LLC is 51% owned by KADOKAWA DWANGO CORPORATION.
5. Y-o-y denotes Year-on-year.

Source:
1. NOTICE OF THE 5TH GENERAL MEETING OF SHAREHOLDERS, May 31, 2019
2. Audited Securities Report (Japanese)
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