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As Costs Rise, Japanese Publishers Reduce Release Count

With an eye toward cutting costs in a declining market, major Japanese video game publishers Sega, Tecmo Koei, and Konami are reducing the number of games they plan to release in the 2010 fiscal year.
With an eye toward cutting costs in a declining market, several major Japanese video game publishers are reducing the number of games they plan to release in the 2010 fiscal year. This January, Enterbrain released data showing a 6.9 percent drop in Japanese game sales to 542.6 billion yen ($5.9 billion). While that was an improvement over the previous year's 17.4 percent drop, the compound effect of the consecutive losses has caused concern among major industry players. According to a story by Japanese business publication Nikkei as reported by GameSpot, Sega, Tecmo Koei, and Konami have all shrunk their game counts, citing various specific reasons including boosting profit margins, reducing outsourcing costs, and improving average project quality. Sega's fiscal 2010 release count will be 56, down 15 percent from the previous year, and the company also intends to institute a 1.5 billion yen ($16.9 million) cut in research and development expenditures. While these adjustments are expected to decrease game revenue by 18 percent to 100 billion yen ($1.1 billion), that comes alongside the projection of an 11 boost in operating profits to 7 billion yen ($78.8 million). Tecmo Koei's development cuts will be even more significant, with a decrease in outsourcing expenditures of 3.5 billion yen ($39.4 million) and 11 games shaved off its slate compared to last year. It hopes those efforts will help it increase operating profit more than fivefold from 700 million yen ($7.9 million) to 4.3 billion yen ($48.4 million) this fiscal year. And while no specific intended effects for Konami were given, the publisher plans to reduce its game count by about 10 percent from last year.

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