Despite Surging Revenue, Konami's Profit Drops Sharply

The company's net profits fell by almost 38 percent over last year, to 13.6 billion yen ($105 million). In a rare case of seemingly conflicting results, the company's revenues actually spiked by 31.5 percent, hitting 225.6 billion yen, thanks in large part to strong sales of Metal Gear Solid 2. But its slumping profits during a period of high revenues show how significant Yu-Gi-Oh!'s high margins were to Konami's bottom line last year. The company lowered its forecast for the year, saying it expected a 48 percent decline in its net profit for the current fiscal year, based on declining sales of its card games and increasing videogame development costs. "We expect royalty payments and development costs in videogames to rise as we plan to release 122 games, against 105 last year," said Noriaki Yamaguchi, a Konami executive.