Japanese game outsourcing studio faces trouble amid cancellations
KYOTO, JAPAN — Tose, a Japanese game outsourcing studio renowned for its contributions to major titles like The Legend of Zelda: Breath of the Wild, Final Fantasy, and Resident Evil, is facing significant financial difficulties.
The studio’s financial statement for the period from September 2023 to May 2024 reveals a 27.6% drop in net sales compared to the previous year, resulting in an operating loss of 599 million yen ($3.7 million).
Game cancellations hit hard
The primary reason for Tose’s financial struggles is the cancellation of multiple game development projects across the industry.
The studio has cited policy changes and other factors from their clients as the main causes for these cancellations.
This trend has left Tose unable to recover profits from games that were already in development.
Broader gaming industry challenges
The broader gaming industry is also feeling the impact of these cancellations. Square Enix, a frequent collaborator with Tose, recently announced the cancellation of several unannounced games, resulting in approximately $140 million in “content abandonment losses.”
Similarly, Bandai Namco, another major publisher that has worked with Tose, reported scrapping at least five games last year due to profit losses.
Tose’s response and industry implications
Despite the challenging economic conditions, Tose is working on strengthening its project management and aims to launch currently scheduled projects to improve its business performance.
The company has revised its annual earnings forecast, lowering its net sales expectations from 5.52 billion yen ($34 million) to 4.84 billion yen ($30 million), reflecting the ongoing uncertainty in orders and development conditions.
The case of Tose highlights the precarious state of the gaming industry, where even long-established studios are not immune to the financial impacts of game cancellations.
As the industry continues to navigate post-pandemic challenges, the future remains uncertain for many developers and publishers alike.
